Gamestop Offers Glimpse Into Their Used-Games Facility
from the they're-tired-of-being-labeled-the-villain dept
IGN has a very cool story about what happens to the used games that get traded into Gamestop Stores. The entire article is quite fascinating and a rare glimpse into a notoriously secretive company's business, but it's the why of this article I want to focus on. Or, more specifically, why Gamestop opened their doors for this piece.Used-game sellers generally, and Game Stop specifically, have been a constant target of game producers. They claim that used game sales keep people from buying games in their awesome new shrinkwrap. As the IGN article notes, this is a case of only looking at one side of the coin (those that are going to Game Stop to buy used games) without acknowledging the other side (those that are going to Game Stop to trade in used games). The article expands on this:
"GameStop’s bosses are obviously tired of hearing about how used games are killing gaming, about how unfair they are on the producers of the games who get nothing from their resale.So, if that number is correct, the interest in used games by some consumers is what drives the purchase of new games by other consumers. This is similar to what we've seen in book sales, where used books fuel the new book market. Being able to trade in games doesn't simply result in money collected for the retailer; it results in money collected by game producers as well. This goes beyond simply mentioning first sale rights. If used games are fueling the purchase of new games, what are producers complaining about? If Gamestop is to be believed, it's a significant part of the new games market:
One astonishing stat is repeated by three different managers during presentations. 70 percent of income consumers make from trading games goes straight back into buying brand new games. GameStop argues that used games are an essential currency in supporting the games business."
"GameStop says 17 percent of its sales are paid in trade credits. The implication is clear - if the games industry lost 17 percent of its sales tomorrow, that would be a bad day for the publishers and developers."So maybe game producers should be thanking Game Stop instead of griping.
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Filed Under: business models, economics, used sales, video games
Companies: gamestop
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I stopped reading at the first line.
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Re: I stopped reading at the first line.
their was correct!
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Question: where did that money come from? The other people buying used games. It's a misleading number, because someone has to be buying the used stuff. So 70% of what... how big is the resale business? That would be a good indication of how much used is eating into the new market, because clearly the money isn't just appearing out of the sky, people are buying used.
Considering that what gamers get for a used game is about 25% of the price of a new game, they have to sell 4 times as many USED games to buy a single new game. It doesn't add up very well, does it?
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Re: I stopped reading at the first line.
from the --->their dept
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from the their-tired-of-being-labeled-the-villain dept
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Re: I stopped reading at the first line.
Either way, I've fixed it.
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As much as I hate car analogies... you better not be driving around in a used car with that philosophy, or buying used furniture, or accepting it from family or friends. Think of the new sales!!!
Personally, I'm a late adapter and I'm the kind of people the game companies will say "good-bye" to if they continue down their current path. The Wii may be my last console purchase. No console sales = no sales period. I'm not interested in any system that requires an internet connection or that only sells part of a game on disc and makes you download the rest. I don't care how awesome the graphics are. I won't buy the damn system new or used!! Eventually something newer and better will come along, the online networks will go down, or the company will just go under, and I'll be left with a pile of trash that I can't sell or even throw in the garbage nowadays. I WILL however continue to enjoy my older systems, of which I have plenty, to keep my busy until I'm so old that I'm physically unable to play anymore.
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Re: Re: I stopped reading at the first line.
What's going on with the home page? If I refresh or come back later it always loads about a 1/4 way down the page at the same point.
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Remember: Game stop pays for the used games a low amount (I think it's 25%) and resells it at about 50% (of the original price). So for every "new" game sale they make (and make whatever their margin is, maybe 30%), they make 100% margin on the same cash value of used games sold.
They have a big vested interest in justifying the used market, it's where they make a huge margin.
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"So, if that number is correct, the interest in used games by some consumers is what drives the purchase of new games by other consumers."
Actually, it seems the reverse - by creating a market for used games, Gamestop is diverting potential new game buys away from the lower margin product, and towards their 100% margin used game department. Any new sales that come as a result are only a side effect of them maintaining this increidbly lucrative re-sale margin.
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There are, fo course, majhor exceptions to this. For example, Steam and its ilk, where, at the moment, there is no ability to transfer games to another account outside of gifting.
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They are basically attempting to justify their resale market by suggesting SOME of the money goes to new. But they don't address what used product buys MIGHT have done if they used product wasn't available... like save up a little more and buy new.
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If there's a gaming exec reading this...
Just ask 2K games (Bioshock), Bethesda* (Elder Scrolls), and Ubisoft (Assassin's Creed).
Give me a little more time to find other franchises. I just got my 360 about a year ago. I'm sure I'll find more good franchises.
And if you do it right...
*I bought the full package that included the Alduin statue.
:D
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What the MAFIAA understands: OMFG used games black market costs 17% of the world GDP! Something must be done about these filthy pirates, let us pass more bad laws!
No really, they still think Google and its botnet stopped SOPA, I strongly believe this scenario is possible.
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So basically, who the used market hurts the most? The very same ppl that file sharing may hurt.
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The only way to make 100% margin it for GameStop to buy a used game at 0% of the game value.
Leave creative accounting to the pros.
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Dear Game Producers
When I buy one of your games, please realize I do not have pockets that contain an infinite amount of cash. I cannot just go and buy everything that I might want, just because it is freaking awesome. I have to pick and choose what I can afford.
One of the factors in my decision is if there is a second hand market. If there is, I can offset the resale value and I might be able to afford it.
If not, I won't buy it.
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Buying and selling used products is a large part of what makes the free market engine work.
"Personally, I'm a late adapter and I'm the kind of people the game companies will say 'good-bye' to if they continue down their current path. The Wii may be my last console purchase. No console sales = no sales period. I'm not interested in any system that requires an internet connection or that only sells part of a game on disc and makes you download the rest. I don't care how awesome the graphics are. I won't buy the damn system new or used!! Eventually something newer and better will come along, the online networks will go down, or the company will just go under, and I'll be left with a pile of trash that I can't sell or even throw in the garbage nowadays. I WILL however continue to enjoy my older systems, of which I have plenty, to keep my busy until I'm so old that I'm physically unable to play anymore."
That's the message that needs to be sent to the big devs that want to make the transition to digital-only in the near-future, such as EA. Retro consoles can be played anywhere and at any time, without restrictions. That's one of the reasons why the retro market is still thriving; another reason being that the older classics are considered by many, myself included, to be superior.
The vast majority of contemporary software is cookie-cutter, heavily cinematic and void of compelling gameplay experiences. Their glorified graphic engines and glitch-laden sandbox environments are a huge turn-off. Yeah, 3D was great and all back when it was fresh and new but now it's become so commonplace that it's grown stale. What good is all this high-end technology without great imagination?
I actually long for the traditional 2D pixel-art of yesteryear. They rarely balance the playing field with great 2D offerings and even those few exceptions are almost always done up in that quasi-Flash animation style to compensate for their lack of artistic integrity. Just slap up some generic Saturday morning cartoon-looking characters with multi-jointed limbs in order to avoid having to manually draw the animation, add a dash of processing + special effects and call it a day.
Gamers were once considered dorks, nerds and losers with no social life, and yet funny how now practically every household has at least one console in it. It sure was great back when it was a niche hobby controlled primarily by Japanese developers during their bubble economy. But ever since gaming broke into mainstream sucess, corporatism has permeated everything, stomping out creativity for the sake of the almighty dollar. Everything revolves around how developers can maximize profit at minimal risk. They intentionally lock content so that later they can tack on an extra fee. They include online passes with software so that if you purchase a product used, they can charge you extra to connect (which is often required in order to play) and many developers are forcing an online connection, even to play solo. They use the consumers as unsuspecting guinea pig play-testers to weed out bugs and glitches they missed because they 'had to meet a deadline,' then have the nerve to charge consumers extra to patch their *finished* products. I could go on all day.
So, yeah, that's why gaming sucks right now. We never had to deal with all this crap back in the glory days of gaming, when most developers actually cared about things like quality, creativity, fun-factor, replay value, and giving gamers extra content (all of it free) as an added incentive to purchase their products.
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It's magician's flash paper. They are getting you to look OVER HERE at what they want you to look at, and hope you forget about the rest of the process.
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70% of trade-in credit goes to new games. Which means the remaining 30% is made up of buying other used games, or just ends up sitting in customer's accounts.
You make the (time and time again) disproven assumption that everyone who buys used games would have bought a brand new game at full retail price. Please learn some basic economics.
You also assume that in the absence of a trade-in market, the sale of new games would not drop. Some of those buying a new game are willing to pay the price because they know they'll play it for a few weeks or a month, and then trade it in and be able to recoup some of their money for another game.
The stat I'd really like to see: how many new games are purchased with any trade-in credit at all. That would be what new sales would drop if used sales were to go away. Those sales are what are going to the most dedicated gamers - the ones who are buying the games near release dates, playing them, trading them in, then getting the next release. They are the most loyal customers. They are the trend setters and the opinion influencers - beware of pissing them off.
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I won't buy them new.
" Meaning that if the game is crap you'll find a lot of it in the used market. "
I bought 'The Witcher ', X3 Terran Conflict,Dungeon Siege 2, Freelancer etc .. a very long list of games that I think are pretty damn good, and never paid more than 20.00 for them. Most of the bugs were found and patched by the time I bought them so I didn't have to pay for the privilege of beta testing. As long as there is no right of return for games and other similar media I won't buy new .. ever.
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Gamestop Cleaning Up, Oh My!
Yes, we've purchased used games, too. But if our only choice had been WalMart we probably wouldn't have purchased those because we'd have become discouraged by the entire process.
Why? Because for every 10 games we buy, only 1 really catches our interest. The other 9 will make us motion sick, or have a hokey game mechanic, or horrid voice acting, or simply isn't what we expected. How many times would we spend $60 before we gave up on the whole exercise?
Yet when we finally learn of a game we like (Call of Duty and Fallout come to mind) we zip on over the GameStop and buy it NEW — or even in a Special Edition. The ability to buy used games has taught us how to recognize what we'll like AND when we're ready the GameStop is conveniently close by. (It also doesn't hurt that their magazine — Game Informer — has lots of reviews to pique our interest).
If not for GameSpot, my wife and I would probably buy only one game a year. But because GS exists we buy about 3, two of which are pre-ordered.
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another thing to point out that nobody has mentioned is that publishers STILL get full price for the new games, even if people where to be able to trade in 4:1 to get them.
remember, gamestop buys the games they sell from publishers or their primary distributors, so they are just complaining that they possibly could have sold a few more copies at full price if gamestop didnt make it convenient and easy to trade in used stuff.....
the converse is that places where there is no gamestop (and even places there is one) you can find groups of people who just trade games or buy/sell/trade games because they cant afford to buy every new title that comes out....I was part of a group like this for PC games years ago, it was good some of the guys would even buy extra copies at full price and trade them for older titles or titles they couldnt buy locally....(managed to get 3 brand new titles for one older hard to find box set that cost me less then 1/2 the price of 1 of the new titles, he really wanted that box set....hehe)
my point is, unless your a total idiot, used buy/sell/trade programs do not equate to less new sales, they actually drive new sales, and they get people into new franchises much the same way deep cut steam sales have done for some less known games......
hell, i cant count the number of games I have on steam that I only got because of crazy sales that then lead to me buying the whole franchise AND on top of that, getting friends and acquaintances to buy in as well
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Flashpaper?
Some people can choose to buy a game for a slight deduction. they Choose to. They know exactly what is in the box when they are handing the money to the counter attendant.
So some people who want to pay a little less for a somewhat less valuable product get what they want, someone else gets to unload a product that is no longer very valuable to them in exchange for a small amount of cash or credit which almost always gets turned right around into new games one way or anther.
Where is the spooky scary magician trick?
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(im definitely not interested in their chump change they offer as trade credit.)
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Re: If there's a gaming exec reading this...
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I'm going to stop you right here because this is where your logic derails completely. You're assuming they would buy new given no other choice. That's simply not a good assumption. Furthermore you cannot make that assumption when the thing you're trying to prove is that used sales cannibalize new sales because it's begging the question.
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You also have yet to provide any actual evidence, other than your a priori assumption that it does, that used sales 'divert potential new game buys.'
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:)
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My son used to work at gamestop and I've seen the trade in value of a $49.00 (new) game be as low as 3 or 4 dollars. The resell price for the game, used, might be as high was $29.
It's a huge money making racket for gamestop.
I watched a guy bring in a stack of games, perhaps 20 games total, and they offered him about $80 cash.
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Re:used vs. New
Now like all parents, I like to think my kids are special. However, in this particular case, I doubt it. I'm sure some percentage of used games bought are due to pricing/finances. I'm reasonably sure that once you have a stack of games you rarely play and you REALLY REALLY want new game X but can not afford it, that a 'sale of old games' (private or commercial sale, trade, etc.) to fund the new one comes to mind (regardless of your age).
So yeah, I can believe that the used game market funds the new game market to some extent.
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Exactly. It's the same as the assertion that every download equals a lost sale. Neither assumption is true.
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Yes, 70% of the money earned selling used games goes towards new games. It's not shocking, because people who are selling used games are already game buyers. They have done it before, they will do it again. It's such a narrow part of the question, it's almost misleading.
The real question they will not answer is how many people purchases a used copy of a game rather than a new one, because both were available?
They are trying not to get you to look at that half of the business model, because that is where the new game sales are lost.
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Retail Model
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Re: I stopped reading at the first line.
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This is the same argument the **AA's have against bittorrent sites. These other companies are making too much money with our IP!! The horrors! If these other companies and/or sites are making so much money doing this why don't you just do it as well?
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Notice how after the initial release demand drops and sales gradually decline to the point it becomes cost effective to sell "new" (in the sense of not used) games for $30? Well without the cushion of a potential used sale, demand for the game on its initial release and afterword would be lower, meaning initial prices would be lower and/or price drops would be required.
If you look at downloadable PC games, which are non-transferable, their prices tend to be lower than console games. Interestingly, I just went over to amazon to double-check; of the six games proffered for pre-order (All AAA), you can pre-order 5 of them for lower than the console version, 4 of them for $45 or less. The only one at full price was Call of Duty: Black Ops 2.
So basically, even without trade-in money being used to purchase more new games, I think its reasonable to argue that without the used game market, prices for games would drop significantly. If every new game sold for $45, then the videogame industry would see revenue decrease 25% I doubt it would drop that low all the time, but a much more modest 10% revenue drop would still be disastrous.
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Re: I stopped reading at the first line.
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It's like sports cars, there's a much bigger market for used Porsche 911s than there is for new ones because more people can afford the used one, even though they might like to have a new one.
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Warning: Car Analogy Ahead
It's not the same (for one thing, games don't generally need regular maintenance and don't usually break down halfway through an weekend trip to see the folks) but it's a strong parallel. Starting with the fact that people expect to be able to sell the car when they're ready to move on, which helps finance the purchase of the next car.
Me, I'm a filthy selfish pirate who has never, ever bought a new car.
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At least with gamestop I'd assume that would be a fairly decent number, due to their practice of giving 'special deals' when you trade in a game and use the credit for a new one.
If I'm remembering correctly, they usually give a fairly high percentage bonus(the one listed on their site now is an extra 30%) to the trade in value if it's put towards a new game, and you also get a pretty decent amount if you trade in a game close to when it's released.
Combine these two and you've got good incentive for those kinds of people who will buy a new game, play it, and trade it in towards another new game in a short period of time, which helps everyone involved.
-It gives Gamestop a steady stream of used games to sell for full profit.
-It gives game publishers a steady stream of sales, actually benefiting from used games entering the market, because the credit from them goes to more new game purchases.
-And finally it allows gamers to buy more new games than they otherwise would have been able, or willing to, as it basically lowers the price of the later ones.
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Used shovel
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Used shovel
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Re: I stopped reading at the first line. Engrish
as in:
from the(they're)they are-tired-of-being-labeled-the-villain dept
Their is a possessive pronoun - in the plural form:
These aren't Mike & Brandon's books. Theirs are digital.
Please tell me you are not in the US and Engrish is not your primary language.
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Try and find a PC game in their stores. That's what drove me away.
DRM.
If I have to buy DRM laden crap, i don't want to spend more than 20 bucks on it.
Just bought new in packaging but from ebay:
Max Payne 3 (PC, 2012) - $31.99
Deus Ex Invisible War - $10.99
Deus Ex: Human Revolution - 16.98
Take the always on DRM out of the mix and I will gladly pay 40-50 again.
If there is a chance I wont be able to play my games 5 years down the road you are not worth more than 20 bucks a pop.
I AM A PAYING CUSTOMER.
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http://trendygamers.com/2012/05/25/gamestop-posts-trade-values-systems-ps-vita-worth-125/
I f your wii is older you should have been offered 40.
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Thats why I get my buddy to download the cracked versions.
I still pay, never full price, and if I have to wait a year to get what I want then so be it. If I have to buy them from ebay, then oh well.
Console graphics dont come close to the PC versions. IMHO.
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https://en.wikipedia.org/wiki/Game_Boy
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People buy their games used because most games are not worth anywhere near that much money, if the publishers priced their games more realistically then used games sales would drop dramatically. I know I would buy a lot more new games if they only cost 5 or 10 dollars more then the used version, because the guarantee that the disc won't be scratched up and the manual and dlc codes won't be missing is worth that much to me.
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As I just finished explaining, I don't like that Flash- animation-style; Flash animation smacks of laziness and looks forced. I prefer traditional 2D artwork (or pixel-art, if you prefer). Think Street Fighter III. However, I'd gladly take the 8- and 16-bit styles as well. Unlike The Banner Saga, Disney animation is hand-drawn frame-by-frame, though I don't like how they incorporate CG into their more contemporary offerings. Animation always looks best when it's authentic. Heck, Winsor McCay animated 'The Sinking of the Lusitania' all by himself.
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fun online game for free
Know more about fun online game for free | Know more about addicting games for you
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Re: I stopped reading at the first line.
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