Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
September 16, 2014
arrowPress Releases
September 16, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


GameStop to game devs: Please love us
GameStop to game devs: Please love us Exclusive
August 6, 2012 | By Colin Campbell

August 6, 2012 | By Colin Campbell
Comments
    60 comments
More: Console/PC, Business/Marketing, Exclusive



In the last decade, there have been very few occasions when I have been able to get a GameStop executive on the phone, talking to me about the retailer's operations. This is a company that usually speaks through anodyne press releases and investor notes.

So here I am sitting in the company's carpeted business suite in Grapevine, TX, sipping on a latte and chatting to the CEO, the company president and various other friendly, charming departmental heads. This is what is known as a Big PR Push. There is even a party, with beer and enchiladas. Experience tells me that, at some point, a goodie bag will be making an appearance.

The point of all this is that GameStop now seems to realize that it cannot forever rely on all those gazillion locations in retail strips and malls for its brand presence; that it cannot live forever on taking out glossy inserts in local newspapers; that it must move on from the tried and tested techniques of badgering every stray browsing consumer into becoming a premium club member, and then blasting them with emails.

This is GameStop angling itself as an organic part of the games industry, rather than as merely an adjunct, a service provider. It is GameStop, donning the white cowboy hat, a sartorial must in these parts, seeking to become a good guy in the eyes of the biz. Convincing people who make games that GameStop is good for them -- these days, this matters to GameStop.

It's Not Easy to Love

I've tended to think of the used games business as a piece of commercial opportunism that sucks income away from the good people who make games, and towards people who make games move from A to B in trucks and makes 20-year-olds stick them on shelves in boxy retail outlets and makes a lot of money doing these prosaic things. For someone who thinks that creativity ought to be rewarded, it's not easy to love this company.

But perhaps this is snobbery. Consumers have a right to trade their goods in, and GameStop does a good job of facilitating that right. While I'm visiting the company I get the full tour of the company's facilities plant, where old games and old consoles are cleaned up and made ready for resale. It's an impressively efficient operation.

If all this sticks in the craw of game-makers, well, that's just too bad, unless of course they are kicking Toyota a slice whenever they trade in that old car, which I doubt.

GameStop takes a more reasonable tack in negotiating this emotional minefield. Company president Paul Raines draws the stats from his holster, saying that 70 percent of income that gets handed over to consumers for traded goods is immediately spent on new games. That's a $1.8 billion injection into the games industry.

Many of us, at some point, have turned up at a GameStop outlet with the express purpose of buying a new game for as little cash as possible, via our old games. It's part of the business.

Raines says, "We are not ashamed of the pre-owned business and in fact we believe that it's good for the industry."

This is a line the company has long taken, most usually for the benefit of its direct partners, the publishers. But it's the development community who are usually most aggrieved by used games, and these development professionals are becoming more powerful and more influential as they build up loyal armies of friends and followers on social networks.

Raines says, "The knowledge of how this model helps drive sales really resides at the publisher level. We have not been successful in communicating to developers how this business really helps. Now, if I'm a developer, I know that [used games] give me heartburn, to see a game..." He tails off, aware perhaps that saying the words 'to see a game I poured my heart and soul into selling at close to retail prices without yielding up a cent in royalties.'

This is something else that the retailer is keen to talk about. We have all been into a GameStop store and been offered a new release, used, sold at $5 lower than the new price. The company insists this is a tiny percentage of its business and, in reality, happens rarely. People generally hang on to new games for at least six weeks, the execs say.

Raines regroups: "...We're really not cannibalizing new game sales. That's a common misconception. So my answer to developers is that we are driving growth in a category that needs to grow. We think there's a real lack of awareness as far as how it's good for the industry. The transparency you're seeing from us is because we want people to know about it, helping people understand what we're trying to do for the industry."

Marginal Purchases

Whenever I've written about the used games business for my employer IGN, I've found vociferous and passionate opinions from consumers, almost entirely in support. They see this stuff as currency and they see it as their way of affording new games and, via the used game racks, sampling games that they might otherwise see as marginal purchases.

Raines says, "A lot of our consumers tell us that the pre-owned business has allowed them to learn more about video gaming. There's a disconnect between a lot of the blogosphere and what consumers tell us."

This is an interesting aside, the idea, often heard, that what Twitter and Reddit has to say about a brand isn't always the way people who park their cars and wander malls and buy giant pretzels actually feel.

GameStop talks up its "net promoter score," a qualitative brand ranking that scores based on negative and positive feedback.

Company CEO Tony Bartel says, "Our customer base, the people buying from us, typically rate us at about an 85, which is up around the Harley-Davidsons and Neiman Marcuses of the world."

He adds, "There are a lot of people on the internet who are going to say some negative things about us from time to time. It's going to get picked up. There are a lot of people [on the internet] who tend to be very developer-centric, they love the developers. Anyone who is perceived as doing anything whatsoever to detract from the developer is going to catch some vitriol from the [internet] folks."

So GameStop is on a charm offensive, and the target is the kind of people who read Gamasutra, that being game developers and snarky/smart internet commentators.

For Raines, it's important to be accepted as part of the game industry family, rather than as some parasite. He targets those other retailers as the ones who don't give a rat's ass about the games industry, and, on this, he's not wrong.

"We don't sell appliances," he says. "We don't sell groceries. We are all about gaming. I play four hours of video games a week. Our office is filled with gamers and people who are into video games. We are authentically into gaming. This isn't a company that dabbles in it. Yeah, we have a business model, we have to make profits, but we're really into video gaming."

He makes one last point about the used games business, one that many of us who earn an actual salary tend to forget. "The pre-owned business is not going to go away overnight. No matter what happens, there will be people who want a $9.99 Madden 07. They don't have $59 to pay for the new game. We've got a ton of customers still playing PS2 games. I mean, where do you buy PS2 games anymore except GameStop? There's a consumer for that."


Related Jobs

Vicarious Visions / Activision
Vicarious Visions / Activision — Albany, New York, United States
[09.16.14]

Animator-Temporary-Vicarious Visions
Raven Software / Activision
Raven Software / Activision — Madison, Wisconsin, United States
[09.16.14]

Network Engineer - Raven
Raven Software / Activision
Raven Software / Activision — Madison, Wisconsin, United States
[09.16.14]

Sr. Gameplay Engineer - Raven
Raven Software / Activision
Raven Software / Activision — Madison, Wisconsin, United States
[09.16.14]

Senior FX Artist - Raven










Comments


Daniel Martinez
profile image
Then there's the sentiment I hear from pretty much everyone I have spoken to about downloadable games: "I want a physical copy." Even with TV shows I used to watch as a kid, I eventually want a physical copy of Beast Wars, Power Rangers, Tintin, Reboot, or more-recently: Late Night with Conan O' Brian in the same way I want a physical copy of A Link to the Past for the SNES. Yeah it's nice to have it on the Wii Virtual Console, but I want my cartridge.

David Navarro
profile image
Maybe I'm weird, but since I got Steam, I don't want anything to do with physical copies.

Jakub Majewski
profile image
Daniel, I'm also someone who prefers a physical copy. I think it's a generational thing, though - while there's quite a few people my age and up (I'm thirty) who still prefer physical copies (though many have made the transition to digital already), I believe that for people younger than 25, this group is almost non-existent. People who grew up with the internet are used to consuming digital media.

For example: I have hundreds of music CDs. I still buy them. My wife, who's six years younger than me, had ONE music CD before we got married. She's got a few more now because I buy them for her, but otherwise, she'd only download.

As for me, while I wouldn't be caught dead buying a digital music record, I'm definitely getting used to buying games this way. The developers are doing a great job weaning me off the physical copy, simply by making it worthless. Why own a box, if the only thing in it is a two-page "manual" and the game itself?

David Navarro
profile image
@Jakub, I'm 42 - perhaps I hate physical copies because I've had more time to get sick of moving them around and finding space for them?

Maria Jayne
profile image
I'm 35 and I don't miss physical copies at all, have about 50 digital games across three online retailers and I love not having them take up redundant space on a shelf, gathering dust, wasting resources on packaging and manuals and eventually me having to throw them away or find them a new home via ebay or something.

I find it strange in an era when we spend money via a plastic card, watch movies via the internet and listen to music on a mobile phone why anyone would want a physical copy of a digital product. These days whatever gets shipped on disc needs so much patching/updating that you really are buying nothing useful on that disc.

John McMahon
profile image
@Maria So it's useless to have a physical copy I can install my game when my internet connection is down or the publisher's servers are under a DoS attack. Yeah, I'll keep my physical copies while keeping my options open and my personal information out of as many hands as possible.

I don't want to be apart of an attack like PSN had or countless other companies.

Eric Geer
profile image
@Maria--" These days whatever gets shipped on disc needs so much patching/updating that you really are buying nothing useful on that disc. "

And this is yet a greater issue with the industry. Shipping unfinished products

David Navarro
profile image
@John, pretty soon you won't be able to *play* your game when your internet is down or the publisher's servers aren't available, so it's a moot point.

Michael Pianta
profile image
I prefer a physical copy for sure. Many of my friends do too. Since age/generational gap is part of the question here, I'll go on and tell you that we're about 25. My preference however does not stop me form buying digital when its convenient - or when it's the only option. I've bought a number of XBLA games, most of which do not have physical copies of any sort. On the other hand, I didn't buy Super Meat Boy because I wasn't sure I really wanted it. Then I saw the physical PC copy in a store and it promised a special collectors book inside and bought it immediately without hesitating.

There's a strange psychology going on here - I think a part of it is the question, "what do I really want?" I don't just want to the experience of playing the game. At $60, the experience of playing the game is almost never worth it to me. I would say, in this entire generation, there have been maybe 10 games that have actually been worth $60 as game play experiences.

But a physical game is more than the experience - it is also an asset that stores value, and potentially something that can make a statement about me. So, if I buy it and I hate it, I can sell it and recover some of my losses. This makes the financial risk lower and encourages me to make riskier purchases. But, truthfully, I almost never sell games because the value of adding them to my collection, which grows in visual impact with each addition, is usually worth the price. David Navarro said he got sick of moving his physical copies around and finding space for them - wow, that's one of my favorite parts! Also reorganizing them! By system, alphabetically? Or by system, by genre, alphabetically? Or by genre, by system alphabetically? So in conclusion, I think it is not generational. I think it's a mindset. Whether you have an acquisitive, collector's mentality or not. I will say most of the things I download, whether music of movies or games - I download the things I don't really care about. If I REALLY care, I will pay the premium (often not actually a premium at all) to have the physical copy.

Aaron Fowler
profile image
I think it's kind of nice to not have to deal with discs anymore.

Sylvester O'Connor
profile image
I have to say that it's important that we all recognize both perspectives of the spectrum. I hear the argument being made for doing away with physical media and that's fine for some. I understand the pleasure of just going online and looking at what you want to play and getting at it. I experience this with Netflix as having their streaming service has become so good because unlike waiting for the dvd to come and then send out another, I have access to everything right in front of me. So it is valid.

However, I am on the other side of this argument as I love having the physical disc. I will also agree with someone that mentioned the fact that they have reduced the game manual so much that is it almost like looking at a flyer. However, I like looking at my collection and choosing what to play. Someone else mentioned them taking up space, but I have a media tower that is just reserved for my games so that they can be placed anywhere.

I also saw someone else mention that you won't be able to play games offline which is not true. Depends on the game itself. This is actually one of the reasons why I am very selective when it comes to what I purchase digitally. God forbid the day that they no longer support a particular game, or a certain publisher has legal issues and games made by a certain developer can no longer be played digitally.

And someone else mentioned that games in discs have to be patched. That actually applies to digital games as well. I bought Oblivion digitally for 360 and it received the same patches that it would have had to receive if I had the disc. The reason I know is because I had the disc at one point and the same 1.02 patch that I experienced with the disc I also experienced with the digital copy. So I'll keep my games for as long as I can.

Sherman Luong
profile image
My reasoning is more practical. I like Physical because I still have a 1.5MB download speed. It is unrealistic for me to keep buying anything digital at that speed.

At my office my speed jumped to 20mb but I can't share those games back at my house.

Another fear is if I buy digital and the company shuts down, your SOL on your digital content most of the time.

John Flush
profile image
As someone that really likes physical copies too, the industry shot itself in this regard. The last few games I have bought physical copies of came with little more than some cheap plastic, a cover on it, a bunch of inserts for other games I don't want, the disc, a very thin 'manual' that said little more than how I have no rights to the game I just bought in 2-3 different languages and how to use xbox live (really...), and an insert for a one time activation code guaranteeing me that even if I keep the game it isn't any good because I'll only get to play a part of it on my next console or in the future.

Yeah, I'll resell that garbage any day.

Steam on the other hand provides me with sales that make up for lack of game, and gaming booklets, with sales and discounts. The big part here though is 'no physical anything is worth at least $20 off for me'. I know that never was how much they spent to print them, but that is about where I'm at with the pricing structure in my mind. $50 games won't really get considered until they hit $30 or less, etc.

Even better on GOG (once they get there), I get all sorts of freebies with my purchase - which if I'm really crazy I can print out and everything on nice paper if I want something physical. For the most part though I like to read all the materials, not necessarily hold them. That and taking them into the crapper with me is easy with my iPad so no worries there either. It would be nice for Steam to merge such goodies into their own product store.

Brad Grenz
profile image
It's cute to brag about adding 1.8 billion a year to the industry through trade-in value going towards new games. The problem with that argument is they sell almost 3 billion a year in used games, so that's still a net loss of about 1 billion a year for the industry. The only real beneficiary in that arrangement is GameStop, which Raines well knows.

Jakub Majewski
profile image
The trouble with this logic is that you assume everyone who buys used at GameStop would otherwise buy new. Companies often like to throw magical numbers like that around - "oh, we sell our game for $60, it's been pirated ten million times, so this means we lost $600 million in profit." But this is not true. People prefer to buy used because it's more affordable, and there can be no certainty they would buy new, just like there's no reason to believe pirates would buy games if they couldn't pirate them.

It's a more complex problem that's not really helped by complaining about GameStop. GameStop and piracy are symptoms of the illness - they are not the illness itself. The industry has caught itself in a bind, because games are hugely overpriced... and games are hugely overpriced because that's the only way they can generate a profit. We may have simply reached the point where games have gotten too expensive for the market that sustains them.

E Zachary Knight
profile image
Jakub,

You can add to that that a lot of sales are for games that are no longer in Print. Just as the GS exec pointed out, people are still buying PS2 games. They are still buying Call of Duty 1 and 2. You can't get those games new any more. So used is an essential part of the industry for games over a year or two old.

k s
profile image
@Jakub Majewski this is one of the reasons why I think another market crash is coming, the budgets have gotten so big that many developers will buckle under the weight and forcing the $60 price point on many games that don't justify it. Consumers have more options now then ever and lower prices is one of them.

Michael Pianta
profile image
Yeah, people like to rag on GameStop, and certainly some of their practices are questionable, but I know for a fact that without GameStop I would buy fewer games across the board. For instance, I had heard about Rune Factory: Frontier on the Wii. It was out of print and cost a fortune on Amazon, so I bought it used at GameStop. I loved it, and then I bought the sequel new. There's no way I would have bought the sequel If I had never gotten to play the first one. Other than that kind of situation, most of the games I buy used are games that I'm pretty sure aren't very good. Maybe I want to try them out because I'm a fan of the licensed property, or whatever but the point is absent the used copy I would certainly NOT be buying the new version. But on some occasions these used games have impressed me - I am pleasantly surprised and I would be more likely take this studio's next game seriously. Then you have the value of having a dedicated enthusiast store with a better selection than Wal-Mart or Best Buy. Especially when I was younger I discovered a lot of games this way - just browsing the shelves, or talking to the other gamers.

Sylvester O'Connor
profile image
Also Michael, let's not forget that Gamestop also serves as a free rental service. One thing that I have taken advantage of is the fact that I can return a used copy of a game within 7 days of purchasing it. It helps because I always try a game out whenever I bring it home and if I don't like it, I can still bring it back to GS and get something else.

I know many just hate GS because they feel that they detroy the industry and take money away from developers. However, I have found GS to be very economical. Bare in mind, I am not the average gamer either. I don't mean causal vs. hardcore. I mean more that if I buy used, it's usually on games that are old and I really can't find new anymore. Take for instance, I just bought Arkham Asylum a week ago. I could not find it new at GS, but I already had enough store credit so I got it used.

I know I sound like I am defending them, but these days, with a wife and kids, I don't have the money that I used to. So, I can fit a new game in probably twice a year. But through using Gamestop's trade in deals and discounts, I am able to at least get up to 5 games used a year as well. Also, due to my backlog, and it's not like it's on purpose, I end up finishing a game at a point where another one's price has dropped. But I just wanted to add that there because I know tons of other fathers and mothers that game and have to game on a budget. Gamestop fulfills that need.

Bob Johnson
profile image
@brad

Without GameStop, the industry would lose new game sales because fewer would take the risk of buying a $60 game without the safety net of the trade-in.

....so I won't be so quick to think they are taking away a billion dollars from developers/publishers.

Brad Grenz
profile image
If publishers could swoop in and sell new copies at the exact same price as the used ones for every single used sale Gamestop gets, they would. You can't talk about what credit from trade ins adds to the industry without considering what is also lost. There is no market for new, legacy titles because publishers can't compete with a glut of used inventory. They can't compete on price because Gamestop will always offer less in trade than whatever wholesale price they set. Gamestop has customers on a trade-in treadmill where they think they are gaining value, but all they really do is lose more money every time they come back. We have an example of what would happen without used games in the mix, and the result is a digital distribution wonderland of value from Steam and Amazon for PC games at very low prices, even with very recent titles. So yeah, without used game sales people wouldn't be able to trade in 5 games to get $30 off that new release. Instead they'd probably be able to wait a month or two and get it half price without trading in anything.

Gamestop's greatest value to the industry is its widespread retail presence, but their current business model is predicated almost entirely on cutting actual game producers out of the money loop as much as possible. That is a wholly unsustainable model in the long term and publishers & developers should by no means be happy about it.

David OConnor
profile image
yeah, I think most people would prefer to have the resalability/'touch factor' of the physical product (CD/DVD/cartridge), and also the convenience/'available everywhereness' of the digital product.

However, having the physical product is a luxury, which in the future may cost a large premium. This is also true of music, print media, movies, etc.

Digital distribution of media products can be done for free, with no physical input costs (plastic/paper/etc) or manufacturing costs. There are huge physical distribution costs (and many middle men) and plenty of physical input costs for a physical product, as well as transportation.

At the moment, publishers are doing really well from digital-only products... margins are WAY high.

Ian Fisch
profile image
It's crazy to think about it, but this one chain of stores has had a huge effect on this entire entertainment medium.

Do you want to make a tight, focused, 15-hour single-player game? Forget it! You'll need to pad that out with about 20 more hours of boring fetch quests and monotonous enemy encounters, unless you want to see it back on gamestop's shelves in 3 days.

Once digital distribution takes over, and gamestop is a distant memory, I predict a renaissance in overall game quality.

Matt Robb
profile image
Not sure I want to pay $4/hr to play a game on hardware I already shelled out a few hundred on, but that's just me. Of course, if it had replayability, I'd get more for my money and it'd stay off the shelves longer.

I guess I prefer more play in my games.

Ian Fisch
profile image
$4/hour is cheaper than what you pay to go to a movie (unless it's a 3 hour epic).

Personally I'd rather not play a game that wastes my time inbetween the good stuff.

Bob Johnson
profile image
Good point Ian!

Francisco Javier Espejo Gargallo
profile image
We need to stop needing physical things. It's enough with all the plastic and shit we're trowing on our planet, so we need to quit all the unnecesary shit from the sales. Gaming is one.

Michael Joseph
profile image
The only problem I have with Gamestop is that they don't have that local hobby/gaming store vibe. Their stores are just like most other sterile, inorganic/artificial, superficial, glitzy-sales-over-quality-product, consumer drone stores. But a lot of that comes with the territory when a sub-culture goes mainstream.

Something corporate this way comes...

Christopher Brooks
profile image
The people who buy Madden 07 for $9.99 aren't a problem at all for me, as a developer.

The thing that drives me crazy is Gamestop selling a used copy of a game that just came out for $55. That's the practice I see as really destructive to game developers. The person who pays $55 for that game would have paid $60, so that's a lost sale for the developer, and the profit all goes to GameStop instead.

Mark Kilborn
profile image
This.

And on the other hand of an argument I saw earlier in the comments, people like to assume that the guy buying the $55 used copy wouldn't pony up for the $60 new one. If it wasn't there, he would just turn around and walk out the door. I have trouble believing that.

Maybe I'm being narrow minded, but I still don't see how Gamestop benefits our industry. I see them playing a shell game with money and trying to look like they're benefiting us, but I don't see anything that seems to hold real water.

And now they're trying to improve their reputation with developers? Why now? Because they've suddenly decided "Hey, those developers think we're bad guys, but we're not bad guys! We're your friends!"

Or is it because digital is taking off, we're having the worst year of retail game sales in 6 or 7 years, rumors have flown about next-gen consoles not requiring a physical medium and they're concerned they'll be obsolete in five years' time?

Had they started talking this talk five years ago I might have believed them. Now I just see a kid with crumbs on his mouth who's trying to plead his way out of a well deserved spanking.

Matthew Mouras
profile image
Amen, Mark. I've some experience with Gamestop. They didn't buy out every other game retailer and claw their way to the top by being anything other than shrewd and efficient. I wouldn't criticize them specifically for those traits, but sometimes they hurt real people.

EBgames treated their employees well, and they lost the race in part because of it. I worked at EB during the buyout and it was ugly: "Work for half as much without any benefits or get lost and we'll find an 18 year old to replace you" was the message from Gamestop. I moved on to a better career and don't hold a grudge, I just continue to believe that their core business practices haven't changed much since 2004.

They are turning their sunny face to developers because devs appeared on their radar as a money-making opportunity for some reason. Smile back and receive their extended arm with caution.

Bob Johnson
profile image
I agree with you, but how frequent or rare is that? I never thought saving $5 was worth getting a used copy.

Brad Grenz
profile image
It's worse than that, because publishers and developers would gladly take $55 for the new copy if they had the opportunity. But there's no mechanism for that, and Gamestop will always undercut them because they control everything about the price of a used game, including how much it cost to obtain in the first place. In a race to the bottom Gamestop will always win.

Adam Moore
profile image
I'd like to point out that GameStop will not accept Madden 07 for trade as mentioned in this article. They do not accept past year sports games because they don't sell. They also don't accept used NES, SNES, Genesis, N64, Dreamcast, etc. games.

Most of the used games they stock are current games that could be purchased new off of store shelves. I take my business elsewhere because the used games that I seek can't be purchased new from Wal-Mart or even used from GameStop.

Mark Kilborn
profile image
That too. Old used games aren't sold at GS. You have to go to little mom and pop shops for them. And it's great, because you're supporting local businesses :)

Matt Robb
profile image
Old used games are still sold, just not the ones that are very unlikely to sell. You're still more likely to get a Madden 07 at Gamestop than elsewhere from a copy that was traded in before 08 came out. I get games at the $10 and lower price range all the time, they're not new.

Jonathan Murphy
profile image
The problems with retail and why it'll mostly die in America.

1.) Shipping costs continue to rise.
2.) A stigma where a growing amount of customers avoid all social contact.
3.) A growing number of customer order online.
4.) The owners are often inept, unable to adapt with the times. Create an environment of blinding hype, remove employees with new ones yearly, and pay meager wages while they make billions of dollars.

Nathan Mates
profile image
As much as it's fashionable for those in the industry to hate on Gamestop, the larger view from outside game development doesn't agree. When popular articles like http://finance.yahoo.com/news/12-things-to-buy-used.html say that videogames are better bought used -- granted not always from Gamestop -- then the general public has decided that new games are a poor deal.

Fix the general public's perception that new games are a poor choice compared to used games, and then this discussion about Gamestop will abate. Gamestop is not the problem. It is a *SYMPTOM*. Gamestop is merely catering to the general public's perception that used games are better. Fix the root cause -- preferably by moving away from the belief that any and every new console game should be $60 -- and things will be better.

Steven Stadnicki
profile image
How does this not simply replicate the problem at a smaller scale? It's self-evident that used games are a better value proposition for the player; the only reason for any gap in price at all is as a form of hedge against the very slim chance of the used goods being substantially degraded. As long as your odds of getting a 'bad' used game are less than 10% (and this is a key part of GameStop's service) , then the value of a used game to you relative to the price of a new title is at least 10% less. If the industry went to $40 new titles, GS would simply start selling at $35 or $36 and consumers would maintain their same behavior. If you cranked the price of a new title down to $15-20 then you might start to see some changes in buying practices, but there's simply no way to get the games for $20 that you can get for $60 or even $40.

Alan Youngblood
profile image
I've never understood why devs make such a big deal about used games sales. I always thought it was the publishers whining about it. The problem here seems to be devs not getting paid sufficiently enough, which did seem to be a current trend. I think that again goes back to the publisher.
Pure financials aside, a used market for games is beneficial to the industry because it increase public interest and thus demand for games (thereby creating more industry jobs). At a time where the game industry is so unstable like it is, it really only makes sense to embrace and work together with people who are on your same team. And in the game industry this includes developers from indie to AAA, publishers (though many have screwed things up, it's time to forgive and move on), retailers, online stores, platform creators, marketers, blogospheres, fans, gamers, consumers, and even some business folks and lawyers.
Or people could choose idle banter, or perhaps pricing themselves into a corner with archaic narrow-sighted business plans like cable tv providers in the US. Do we really want that?

Ed Macauley
profile image
Am I the only one that noticed the major discrepancy between this and the previous "used games don't hurt" article?

Today:
"Company president Paul Raines draws the stats from his holster, saying that 70 percent of income that gets handed over to consumers for traded goods is immediately spent on new games. That's a $1.8 billion injection into the games industry. "

July 26th:
"According to GameStop, it generated $1.2 billion in trade-in credit for customers in 2011, of which 17 percent went to new sales"

http://www.gamasutra.com/view/news/174825/Used_games_dont_hurt_ne
w_game_sales_they_help_according_to_GameStop.php

So which one is it, 70% or 17%? Someone is blowing smoke up someone else's tailpipe here.

Kris Graft
profile image
Hi Ed,

Thanks for this. I had to do a bit of digging here, because you're right, there is a discrepancy. This article accurately reflects Raines' claim. The article referring to 17 percent was a misinterpretation.

GameStop actually says that 17 percent of its new sales come from consumers' used game trade-in credits. So the retailer is arguing that without the used game ecosystem, the game industry could be missing out on 17 percent of GameStop's (sizable) sales.

So in sum, according to GameStop:

- 70 percent of consumers' trade-in credit is spent on new games
- 17 percent of GameStop's new game sales are paid with trade-in credit

We'll be updating the other articles.

Ed Macauley
profile image
Thanks Kris! Makes more sense now. For the record, I didn't think you guys were at fault. ;) I just assumed Gamestop couldn't keep its numbers straight. I really want to hate them, but that 70% figure isn't as horrible as I previously assumed, assuming GS is being accurate about it.

Douglas Gregory
profile image
I'd like a bit of clarification on whether that 70% goes to "new games" as in "customer's new purchases of games... games which may be new or used." The wording could be read both ways.

From watching friends who trade in games for other games, they usually buy used to stretch that dollar a little further. So I'd be very surprised if as much as 70% really went to new NEW game sales. Which would mean that "$1.8 billion" in economic activity may have much less impact to the developers.

(Just doing some back-of-napkin math, if 70% of trade in credit = $1.8 billion in new game sales = 17% of GameStop's new game sales.... then would that mean GameStop makes over $10 billion in new game sales alone? And yet they only report ~$2 billion in sales annually. The numbers don't look right, but maybe I'm missing something.)

Keith Thomson
profile image
I do like digital downloads, but prefer not to buy anything digitally for more than $30. Usually I top out at about $20 unless it's something I know I'll enjoy. I pay $60 for things with actual discs, because I know that it's not going to vanish and stop working if someone pulls the plug on their online service. If a company did put in copy protection that wouldn't allow used sales, then I would adjust my maximum price for those games down to $30 as well, because they could stop working at any time just like a digital download.

That said, even though I trade in my old used games to buy new ones, I only buy used games if they're completely unavailable new... Thus, my used purchases are usually very old games and ones for obsolete systems.

Jesse Tucker
profile image
Gamestop buys a game for $20, then turns around and sells it for $55. That's $35 that has been siphoned away from gamers and applied to rent and building costs, CEOs, advertising, etc.

As a developer, I don't mind if Jim sells his game to Amy. Jim would take that money and most likely (seemingly about 70% of the time according to Gamestop) buy more games with it. The way the system works now, Jim only gets a fraction of the money he would use to buy more games compared to if he had sold his game directly to Amy.

It's not unreasonable to expect some sort of transaction fee/service charge for being a used game middleman, and I believe that there is a balance where making it really easy for people to buy and sell used games can help the industry. However, Gamestop takes such a large cut that it is only *barely* worth it for the buyer and seller. The developer/publisher has no say in these transactions, and I find it pretty incredible that Gamestop is telling us that they have our best interest in mind when they are buying and selling used games.

Gern Blanston
profile image
Gamestop's practices don't look out for anyone but the people at the top of that company, and hurt consumers the most. Offering the general public [at most] half of what a product is actually worth [on eBay, for example], isn't doing the gaming community any favors. I just don't understand why people keep supporting that store that makes such insane profits from ripping people off. Is it really that hard to sell your games online? The answer is no, but maybe most consumers are just to lazy to try. And the fact that you can buy PS2 games on Amazon and eBay just as easily doesn't really help Gamestop's argument. They're just a bunch of crooks, and the used game marketplace gets a bad name from that company.

Bob Johnson
profile image
GameStop is really not making insane profits. Sorry.

And how do you feel about 2 friends swapping games with each other? it is money that isn't going to the industry.

Gern Blanston
profile image
Bob-

Using Jesse's example of selling Gamestop a game for $20, which they turn and sell for $55. This is standard operating procedure, and I consider that insane profits. What do you consider insane profits?

Those hypothetical games you mentioned had already purchased at retail. The developers have already made their money, and don't deserve to receive profits several times over on a single physical copy of any game (as many times as it changes hands). And you also assume that the people with those games would ever consider buying at retail in the first place. Many will never pay $60+ at retail. So that's not lost retail sales, it's a consumer playing a copy that they wouldn't have been able to if the used marketplace didn't exist. And with that used game in hand, the devs are able to make profits off of DLC, extras, future purchases. There is no loss from the exchange of used games via eBay, Amazon, etc.

And I'd bet you anything that used game sales help to prevent piracy, which does nothing but help developers monetarily.

Douglas Gregory
profile image
Personally, I have no problem with a store buying & selling used games, and having a used games section set aside.

A used sale is not necessarily a "lost sale," since there's no evidence that the customer would have been willing to buy the game at its full "new" price.

But the way GameStop does it, I can look through their new game shelves, see a new game I want, read the price tag for the full "new" price, and say to myself "I want to buy this new game. This game is worth this price." I pick it up and walk up to the counter to buy it as is.

AT THAT MOMENT the cashier is required to tell me "We have three copies of this game used for $5 cheaper, can I grab you one of those instead?" And hey, why wouldn't I? It's the same game, and cheaper, so most customers will take the offer.

Now, this is a lost sale. This was a customer who was willing to pay the full price for the game, of which the developers would see a cut, and GameStop's policies sniped that sale, cutting the developer out.

If they changed this one policy, and let customers buy a new game without trying to push used on them, I'd have no problem with their used games business. Customers have a right to sell their property, and GameStop has a right to profit from those transactions. They just don't have to be jerks about it. ;)

Gern Blanston
profile image
Joe-

If Gamestop didn't make big profits, they wouldn't be the monster of a retail chain that they are. It's a ridiculous argument to say that there is no proof of profit when they sell a game for 225% of what they paid for it. How about you prove they they don't make insane profits, that would be the bigger challenge. Saying there's no proof is simply politicking the answer.

Gern Blanston
profile image
Joe-

http://articles.marketwatch.com/2012-03-22/industries/31223148_1_
gamestop-video-game-retailer-profit

Between last year and this year, their quarterly profit was an average of about $200 Million. You say compared to Apple (the most profitable company on the planet), it's not much. Sure, comparatively it's not. But compared to the rest of the world it's some pretty insane numbers that make the people that run Gamestop pretty stinking rich. And if someone gets rich from something, that means they make some insane profits.

Did I mention they made the fortune 500 for the 6th year in a row? Every year they've moved up in the rankings, by the way.
http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/
11234.html

They're not posting losses like Sony is, fella. So until you actually have a counter-argument, I don't see the point of naysaying the FACT that Gamestop is making big profits.

Nat Tan
profile image
Surprising to see so many people suckered into what gamestop is saying.

The fact is: business is business, they are sensing a shift in the industry, they are now (for the time being) putting on a good face for the game production crew (us).

They honestly couldn't give 2 shits about devs, it's about making sure they have enough new product to keep themselves in business. That is why this CEO is coming out to try to give us more crap that they are good for the industry, when in fact they really couldn't care how low your bonus/salary, or how much time you spent making your game, or even how revolutionary your design is; as long as you keep churning out games for them to undercut on sales.

Matthew Downey
profile image
Stage of Grief: Bargaining

Matthew Downey
profile image
Achievement Unlocked: "Stages of Grief: Bargaining"

Matt Ployhar
profile image
My friend was able to loan me 6 Console (PS3/360) Games. Pretty awesome.... but I have to wonder how this isn't worse than the Piracy - as it saves someone the time of looking for a hack, and eating up my download/bandwidth. This same friend then turns around & sells them back to GameStop for an in-store credit when I give the games back to him.

My theory in short: Retail painted itself into a corner. Console games were artifically propped up somewhat by the ability of Retail to turn around & 'Re-sell' the game. (Where they make more margin). So Console games are sort of a 'Golden Goose' for Retailers. It's great for a while...but.. it also led to an artificial Console Market, Consumer dependency, Higher Cost, Higher Risk, and so forth. Now it's all starting to un-ravel.

In a perfect world - every content developer (Games ISV, Book Writer, Song Artist) would be able to simply self-publish. Reap the appropriate rewards.

This will be interesting to watch. IF GameStop wants to truly save themselves... I think they'll have to to somehow address the above issues.

Sylvester O'Connor
profile image
I agree with you Matt. It's a shame because I just think the foundation was set on sand instead of solid ground. Some of the responses included games being expensive. I think they are cheaper then in the past, but the problem is just like our jobs. The economy keeps sinking causing inflation and many people who love the hobby of games, to want cheaper alternatives and just like work, my raise doesn't always match what inflation causes.

Gamestop, as much as everyone hates them, took advantage of a good situation and started slowly but surely buying out FUncoland and EB Games. They quickly spread which caused some people, including a friend of mine in Michigan, to close his gameshop because the local Gamestop opened up and pretty much took over.

I think it is also a mental state of big business vs. the little people. I don't want to sound all political either, but I really do think that is the case. I also have an issue with people talking about devs not getting paid.

I worked on a game that when it came out, got a low Metacritic score (which by the way was tied in to what kind of bonus we received) thus causing us to lose out on our bonus period. People also need to understand that we as developers receive a pay check just as everyone else who works. Bonus's are surplus and although I was pissed when I found out, I also understand that the state of the games industry these days are really odd to what they were not even 5 years ago. Who knew that Metacritic would be the ones dictating as to what is good and what is bad as opposed to being an open source for some to field an opinion of a game.

So believe me when I say that Gamestop along with the industry are to blame. If they have a problem so much with the used game business, then I strongly hold the view of the publishers working something out with Gamestop. They keep giving GS the power. Yes, GS may withhold selling EA's games, but EA could also counter them with only selling to the Targets, Walmarts, and Amazon's of the world. And with offering some games as fully being downloadable through Origins, you can cut GS at the knees. It's a matter of calling each other's bluffs.

I also want to state that I do buy used when I feel that the purchase warrants it. For example, I will buy Skyrim new as a game of that size warrants me to fully purchase it that way. Then I bought Bulletstorm recently used. I thought that the campaign was a little longer but it turns out that I beat the game in 3 days although I was playing it slow and a speed run was not my intention as I like to enjoy games and their worlds. So I returned it to GS and got my money back. Now if it was digital, would there be a way to get my money back or would I just delete it and live the fact that my money was gone? If it was purchased new, GS, Best Buy, and Walmart would just take it as a trade in so I would still lose out. Just wanted to throw that in there to close out.

And please, if someone could answer the digital download question. I rarely buy something downloadable and have never bought anything I didn't quite like yet.

Peter Kozlowski
profile image
Sylvester

Generally with digital distributed games, you cannot get a refund if you do not like the game though this can vary between distributors. Personally, I think of it as just the trade-off for getting my games cheaper than in a retail store and I accept that I need to be more diligent in researching a game before I buy it.

I guess it really comes down to mindsets. I grew up in a culture where you did not return items to the store just because you did not like it. If you were not gonna use the item, you should not have bought it. This tends to color my view on the subject. Personally, it would never cross my mind to return a game to a store for a full refund just because I finished it and did not like it. I made a poor choice when buying the game and the game was still good enough for me to finish playing it.

Sylvester O'Connor
profile image
Thanks Peter about the digital content. I see your point. I guess I feel in a shopper frenzy and bought something on the spur of the moment. This cements my idea why I prefer physical media still. Again, it goes back to what you said and I should have researched it before I bought it. I won't make that mistake again though. Thakns again.

Cordero W
profile image
There is "one" reason why physical distribution is here to stay. It's one Nintendo pretty much understands. A physical toy is more important of a significance than a virtual one. Especially to the mainstream.

You need to go to retailers to buy food, clothing, tvs, computers, bathroom supplies, and essentially everything that is more important than video games. Placing your game online only is just a ticket to failure. Online sales are mediocre compared to physical sales of consumer counterparts. For someone like Notch, he can live off the sales of six hundred thousand sales of Minecraft. Most video games companies cannot. You need physical exposure like Gamestop, Walmarts, and other retailers to show it to the masses. Angry Birds? If it wasn't for the physical success of the iphone, Rovio wouldn't have had that many sells of their games. No PC enthusiast would have even touched a minor game like Angry Birds. They needed the help of physical distribution.

So no, digital distribution is not the end all. A lot of people don't realize that video games are still a minor importance compared to a lot of other things. The investment in physical distribution is worth it if you want even a small chance at getting noticed. Because most people who aren't gamers would rather be browsing at the store rather than an online venue. And if they're online, games aren't their biggest attention. And since most game companies care about profits, I'm very sure they've researched this already and have yet to single out physical distribution as an option. They have digital alternatives so online-loving/ hardcore players can stop whining, but essentially physical distribution is still king.


none
 
Comment: