Why pre-order?

[Alkohallick]

Quick question hoping someone could shed some light on this for me.

What the big deal with company's always wanting us to pre-order?

 

[Akumajou]

because you get cake.

 

[Alkohallick]

because you get cake.

The cake is a lie

 

[AlNom]

Maybe to gauge interest so they can determine whether they should get more or less copies for the store - of course, this means comparing to previous games & pre-orders & sales data. *shrug*

 

[Alkohallick]

Maybe to gauge interest so they can determine whether they should get more or less copies for the store - of course, this means comparing to previous games & pre-orders & sales data. *shrug*

I guess i just figured they would gauge interest prior to spending money developing the game

 

[Rangers]

Quick question hoping someone could shed some light on this for me.

What the big deal with company's always wanting us to pre-order?

Good topic. I have noticed this a lot lately. Companies pressure to get you to preorder is higher than ever. Usually you even get a code with special content now just for preordering. For preordering Gears 3 you get access to the MP beta. Etc etc etc.

I've always wondered what the big deal is as well. I believe it basically is the main way retailers judge demand prior to release, and how much to market a title and how many to order.

It was best summed up by crytek after the PC Crysis 2 leak. They said they got tons of messages of support, but the best thing to do to show support was pre order the game. They said they couldn't read every message of support, but they got a printout of preorder numbers every morning, or something like that.

 

[DuckThor Evil]

I think preorder is a good way to lock your customer in. You get a commitment from the customer, but customer don't have to put money in yet atleast not the full price, so it's easy to preorder. I think that leads to more sales.

It is said that wanting is more pleasing thing than having, preorder is the ultimate form of wanting

 

[Cheezdoodles]

Quick question hoping someone could shed some light on this for me.

What the big deal with company's always wanting us to pre-order?

cash now is allways better than reciving same cash in the future. Simple time value of money

Also this scheme lets you sell the game on hype alone, not actual reviews =]

 

[DuckThor Evil]

In most cases they don't get the cash until the release date though.

edit: actually I'm not too sure how the policy is on those. Steam charges money immediately, but lot of big etailers dont.

 

[Alkohallick]

cash now is allways better than reciving same cash in the future. Simple time value of money

Also this scheme lets you sell the game on hype alone, not actual reviews =]

Do the companies get any of the preorder money prior to the sale though? Im sure the $5 down is not going to say EA and even when ive preodered from EA directly i wasn't charged until they actually shipped the game

 

[Rangers]

cash now is allways better than reciving same cash in the future. Simple time value of money

I dont think this really plays into it at all.

The time value of $5 (typical preorder) over say, 6 months or less (likely typical preorder window), is very little. This also only benefits gamestop, not the publisher.

If anything I suspect people laying now the $5 and then forgetting all about it forever is possibly a bigger profit incentive (this seems like it would happen fairly easily, I almost did it with Bulletstorm), although even then, it would probably have to be predicated on that consumer never ever returning to gamestop ever again (because one assumes the computer would identify that customer in the system, and that he's owed $5) which seems unlikely.

It's probably a customer loyalty thing too. Once preordered, they are locked in to buy only from where they got the preorder. It also guarantees a second trip to the store later. Anybody familiar with retail knows how important getting customers into the store as often as possible is also. It's the same idea as, price milk at way below costs, so people will come buy the milk, but also likely buy some other profitable stuff while there too.

 

[RobertR1]

Pre ordering doesn't do much for the consumer. It's great for the business side of things though.

The parent company get a good gauge for initial production run. The distribution channels and retails don't hold excessive inventory. It all leads to having better financial forecasting.

As it's benefits are numerous there is the added incentive of pre order bonuses now being attached to most games. Within that, retailers are now fighting for the best pre order incentives to draw in consumers.

 

[Silent_Buddha]

Quick question hoping someone could shed some light on this for me.

What the big deal with company's always wanting us to pre-order?

Pre-order is huge for the retail space, it allows a company to better judge how many copies of a game they should make prior to release.

By having a better idea they can attempt to lower their risk investment. Make too many copies and you'll lose money on your game. Homefront for example making 2.4 million copies and selling only a bit over 1 million is a problem. They may or may not have made any money due to that. Hence, their share prices dropped massively. They have to now hope that there is enough ongoing demand that they can sell through the rest of those copies without heavily discounting them. And Homefront isn't even a worse case scenario. There's been games made where they made 1-2 million copies and only sold a few hundred thousand. The problem gets worse and worse the lower the sellthrough.

The flipside to that, of course, is that if you don't make enough copies you're leaving profit sitting on the table that may or may not still be there when you have another batch made and sent out to retail. Since retail demand is heavily weighted towards the first 2-4 launch weeks, if you have a shortage in that time you're likely to have lost potential profits. For example, if you made 2 million copies but demand might have sold 4 million copies during launch month you basically lost out on 2 million units worth of sales. Now you manage to new stock back in say week 3 or 4. But by that time maybe 1 million of those that originally wanted it due to hype or whatever have either lost interest or changed their minds after playing it on a friends computer or hearing friends talk about it.

Games like COD which continue with strong demand after the first few weeks are VERY rare because most games either can't match the hype or don't offer long term value (once you play through a single player game most people are done, and if they did that on a friends copy due to not being able to buy it, you lost a sale). Single player games also have the problem of losing sales to the used market. There's not much incentive for a buyer to keep their copy, and so if you couldn't buy it in the first couple weeks due to low supply, it's easy enough to get it in the used market where the publisher and more importantly the developer will never see a single dime for all those years they put into making the game.

DD copies don't have this problem. But if you are offering pre-orders on the retail copies, people want to be able to pre-order their digital copies. But for the publishers, there's not a huge benefit from it other than perhaps knowing X number of games will be sold and then knowing they can perhaps spend more time debugging and QAing the game prior to launch. IE - if you have 500k preorders it's probably safe to delay your launch by a month or two or three in order to have it be more polished.

Pre ordering doesn't do much for the consumer. It's great for the business side of things though.

The parent company get a good gauge for initial production run. The distribution channels and retails don't hold excessive inventory. It all leads to having better financial forecasting.

As it's benefits are numerous there is the added incentive of pre order bonuses now being attached to most games. Within that, retailers are now fighting for the best pre order incentives to draw in consumers.

Well, there are some benefits to the consumer in the little pre-order bonuses. But the risk is high. It's fantastic if it's a game you love and play the everliving crap out of (like DAO or W40k: DOW 2 and expansions for me), but it can be a serious downer if the game ends up sucking.

Also, for some really popular games it can be a very good thing. Diablo 2, for example, completely sold out at lauch in my area and was hard to get for 1-2 months. But if you had pre-ordered it (like me) then you could be happily playing while some of your friends were still trying to find a place to buy it.

Basically pre-ordering is high risk with anything you aren't absolutely positively sure you are going to want to play a LOT.

Regards,
SB

 

[Alkohallick]

Pre ordering doesn't do much for the consumer. It's great for the business side of things though.

The parent company get a good gauge for initial production run. The distribution channels and retails don't hold excessive inventory. It all leads to having better financial forecasting.

As it's benefits are numerous there is the added incentive of pre order bonuses now being attached to most games. Within that, retailers are now fighting for the best pre order incentives to draw in consumers.

Thanks kind sir!

 

[Rangers]

Also, for some really popular games it can be a very good thing. Diablo 2, for example, completely sold out at lauch in my area and was hard to get for 1-2 months. But if you had pre-ordered it (like me) then you could be happily playing while some of your friends were still trying to find a place to buy it.

It's hard to imagine actual scarcity being a problem much anymore, unless perhaps you are dealing with carts.

I cant recall a major disc game that I cared about ever "selling out". In fact this is something I find highly disingenuous about one of gamestops typical pressures to preorder, "you need to preorder game x to be sure you'll get it on the first day!". When in every case I know I can go down the street to Wal Mart and they'll have tons.

In your Diablo 2 example, now you would just get it from steam where it can never be sold out.

 

[Silent_Buddha]

It's hard to imagine actual scarcity being a problem much anymore, unless perhaps you are dealing with carts.

I cant recall a major disc game that I cared about ever "selling out". In fact this is something I find highly disingenuous about one of gamestops typical pressures to preorder, "you need to preorder game x to be sure you'll get it on the first day!". When in every case I know I can go down the street to Wal Mart and they'll have tons.

In your Diablo 2 example, now you would just get it from steam where it can never be sold out.

Yes, but we're in the console forum, and I'm assuming most are interested in pre-order ramifications with regards to that format. I only used a PC game as an example as it's the first that came to mind where if I hadn't pre-ordered a game I may have had to wait quite a while to play it.

And yes, you don't run into under-production as much as you used to. But then again less games actually make a profit now days compared to 10-15 years ago also. Overproduction may be part of the problem.

Regards,
SB

 

[Alkohallick]

Pre-order is huge for the retail space, it allows a company to better judge how many copies of a game they should make prior to release.

By having a better idea they can attempt to lower their risk investment. Make too many copies and you'll lose money on your game. Homefront for example making 2.4 million copies and selling only a bit over 1 million is a problem. They may or may not have made any money due to that. Hence, their share prices dropped massively. They have to now hope that there is enough ongoing demand that they can sell through the rest of those copies without heavily discounting them. And Homefront isn't even a worse case scenario. There's been games made where they made 1-2 million copies and only sold a few hundred thousand. The problem gets worse and worse the lower the sellthrough.

The flipside to that, of course, is that if you don't make enough copies you're leaving profit sitting on the table that may or may not still be there when you have another batch made and sent out to retail. Since retail demand is heavily weighted towards the first 2-4 launch weeks, if you have a shortage in that time you're likely to have lost potential profits. For example, if you made 2 million copies but demand might have sold 4 million copies during launch month you basically lost out on 2 million units worth of sales. Now you manage to new stock back in say week 3 or 4. But by that time maybe 1 million of those that originally wanted it due to hype or whatever have either lost interest or changed their minds after playing it on a friends computer or hearing friends talk about it.

Games like COD which continue with strong demand after the first few weeks are VERY rare because most games either can't match the hype or don't offer long term value (once you play through a single player game most people are done, and if they did that on a friends copy due to not being able to buy it, you lost a sale). Single player games also have the problem of losing sales to the used market. There's not much incentive for a buyer to keep their copy, and so if you couldn't buy it in the first couple weeks due to low supply, it's easy enough to get it in the used market where the publisher and more importantly the developer will never see a single dime for all those years they put into making the game.

DD copies don't have this problem. But if you are offering pre-orders on the retail copies, people want to be able to pre-order their digital copies. But for the publishers, there's not a huge benefit from it other than perhaps knowing X number of games will be sold and then knowing they can perhaps spend more time debugging and QAing the game prior to launch. IE - if you have 500k preorders it's probably safe to delay your launch by a month or two or three in order to have it be more polished.



Well, there are some benefits to the consumer in the little pre-order bonuses. But the risk is high. It's fantastic if it's a game you love and play the everliving crap out of (like DAO or W40k: DOW 2 and expansions for me), but it can be a serious downer if the game ends up sucking.

Also, for some really popular games it can be a very good thing. Diablo 2, for example, completely sold out at lauch in my area and was hard to get for 1-2 months. But if you had pre-ordered it (like me) then you could be happily playing while some of your friends were still trying to find a place to buy it.

Basically pre-ordering is high risk with anything you aren't absolutely positively sure you are going to want to play a LOT.

Regards,
SB

Extra thanks for you sir! Ok now this clears it up for me

 

[Rangers]

Yes, but we're in the console forum, and I'm assuming most are interested in pre-order ramifications with regards to that format. I only used a PC game as an example as it's the first that came to mind where if I hadn't pre-ordered a game I may have had to wait quite a while to play it.

And yes, you don't run into under-production as much as you used to. But then again less games actually make a profit now days compared to 10-15 years ago also. Overproduction may be part of the problem.

Regards,
SB

Is production really that expensive? Plastic case and disc, small manual?

Also it seems unlikely to me that even in the case of a big bomb, the first run wont EVENTUALLY sell out or close anyway. Take the homefront case listed here, that game will eventually be at a $20 price point. I imagine they will sell all 2.4m eventually. It'd just be the case that, they wont need any more runs, but if it sells well and they need more, then they will produce them.

Not saying it's not a factor, just kind of dont think it's a big one.

I think from developer side the primary reason for pre order pressure is that it's retailers primary gauge of title demand. Title demand surely influences things like store ad placement, which can increase sales. If you go in a gamestop, which titles are even listed on the preorder "board" and which are not is probably a big deal. Which titles get bigger posters, display cases, and in which areas of the store? All that is big.

From retail side, it's probably mostly reasons I listed: People forgetting their $5, locking in people's purchase, and locking in a future store visit. As well as probably gauging demand for orders.

 

[JPT]

Is production really that expensive? Plastic case and disc, small manual?

I think you need to pay a license per copy to the platform holder also, which probably is the biggest part of it.

 

[NavNucST3]

Is production really that expensive? Plastic case and disc, small manual?

Also it seems unlikely to me that even in the case of a big bomb, the first run wont EVENTUALLY sell out or close anyway. Take the homefront case listed here, that game will eventually be at a $20 price point. I imagine they will sell all 2.4m eventually. It'd just be the case that, they wont need any more runs, but if it sells well and they need more, then they will produce them.

Not saying it's not a factor, just kind of dont think it's a big one.

I think from developer side the primary reason for pre order pressure is that it's retailers primary gauge of title demand. Title demand surely influences things like store ad placement, which can increase sales. If you go in a gamestop, which titles are even listed on the preorder "board" and which are not is probably a big deal. Which titles get bigger posters, display cases, and in which areas of the store? All that is big.

From retail side, it's probably mostly reasons I listed: People forgetting their $5, locking in people's purchase, and locking in a future store visit. As well as probably gauging demand for orders.

Amazon doesn't charge me anything for pre-ordering, I get their lowest price guarantee and typically get same day release delivery included in my prime membership. If I "know" I'm going to purchase a game any way I don't see the need to wait until release day or beyond (especially since I typically don't know release dates). The flip side to that is that since it takes me so long to even get to my games I could probably purchase them at a greater discount when I am more apt to actually play the title. The majority of my recent purchases have been from games on demand (I don't want to argue about digi-distro purchases being a good/bad idea).