Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 25, 2014
arrowPress Releases
October 25, 2014
PR Newswire
View All





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


GameStop's argument for preowned video games
GameStop's argument for preowned video games
February 13, 2013 | By Mike Rose

February 13, 2013 | By Mike Rose
Comments
    33 comments
More: Console/PC, Business/Marketing



The last year hasn't been especially kind to video game retailer GameStop, as the retail market continues to decline and take the company with it.

In particular, the holiday period was rather disappointing for GameStop, as its preowned business showed signs of faltering.

During a question and answer session at the Goldman Sachs Technology and Internet Conference in San Francisco, GameStop CFO Rob Lloyd went into detail regarding how the company plans to go ahead with its preowned plans, and what the next console generation could mean for preowned sales.

He also touched on GameStop's store plans for 2013, including various shop closures and acquisitions.

We've highlighted some key moments from his talk below.

On the future of preowned

"Publishers understand that a healthy preowned games market helps them to sell more new games. And the reason is that our buy-sell-trade model puts over $1 billion worth of currency in the customer's hands every year. And that currency goes primarily toward the purchase of new games. So by offering trades to customers, we sell more new games for the publishers. So the publishers understand that it's important to have that ecosystem in place.

"What we see from consumers is that they will buy new games, and some games you can play through faster than others, and so those games will start to come back in trade. And then when customers are done playing their games, they'll bring them back and trade them in. What publishers understand, and what we've helped to educate them on, is that only about 4 percent of our used game sales are games that were released in the last 60 days. So it does not have a big impact on the sales of new products. That's why publishers understand how important the preowned business is to them.

"Sony has said publicly that they don't intend to block used games on their next console. Microsoft has not commented on the rumors that have hit the marketplace. But over the course of the last year, we've had the opportunity to do research, and share that research with the console makers, and to demonstrate to them that consumers want the ability to play preowned games. They want portability in their games, they want to play physical games. To not have those things would be a substantial reason for them to not purchase a new console.

"I think approximately 60 percent of customers have said that they would not buy a new console if it didn't play preowned games."

What if the next generation blocks preowned sales?

"We'll be able to sell the new consoles regardless of what features, or what they do or don't allow.

"We'll have leading market share on the sales of those consoles, we'll adapt to what it does to the preowned business, and one of the ways we'll do that is through a continued healthy preowned business for today's generation of consoles.

"In the last year or so, we are starting to scale down what we sell for the PlayStation 2, which means that PS2 is still selling healthy in the preowned market in our stores for about 12 years after launch. We see a long lifecycle for the 360 and the PS3 as we move forward in the future with these new consoles."

Store closures and acquisitions

"In 2013, we might open 60-70 stores in selected locations, which is less than we opened in 2012. We see a need to add stores particularly in tertiary markets. But we will close approximately 250 stores in 2013. This enables us to deal with the very small percentage of stores that we have that are unprofitable, but also to close marginally profitable stores, and actually make more money by moving customers to other nearby stores.

We're pursuing the purchase of 40 former GAME locations in France, because GAME has recently shut down its operations in the French market."

The Wii U's performance

"For us, it performed at expectations. I think what we're seeing is that the interest has not been to the overall level that they [Nintendo] had hoped for. It's not performing like the Wii did.

"There are a variety of theories as to why that might be -- among them is that there hasn't been a blockbuster title from Nintendo. Nintendo understands that need to have that first-party software available to drive Wii U sales."


Related Jobs

Digital Extremes
Digital Extremes — London, Ontario, Canada
[10.25.14]

Sound Designer
Disruptor Beam, Inc.
Disruptor Beam, Inc. — Framingham, Massachusetts, United States
[10.25.14]

Lead 3D Artist
Red 5 Studios
Red 5 Studios — Orange County, California, United States
[10.24.14]

Graphics Programmer
Red 5 Studios
Red 5 Studios — Orange County, California, United States
[10.24.14]

Gameplay Programmer










Comments


GameViewPoint Developer
profile image
"I think approximately 60 percent of customers have said that they would not buy a new console if it didn't play preowned games."

Until they see the new COD.

Joe Rielly
profile image
The CFO of EA pointed out why used games are important to the industry. Used games provide market liquidity. Take used games away people will still buy games, just not as many.

Joe McGinn
profile image
"Old dinosaur calls for care of old dinosaurs" shocker.

The actual effect of such a feature on console games will be zero percent. Even the extremely small and extremely vocal minority who always go apesh*t about this issue will buy the console as soon as Fifa or COD is out.

Joe Rielly
profile image
Agree 100% with you. People will only buy the tried and true franchises, COD, Fifa, or other highly critically acclaimed games. As soon as used games are not allowed the residual value of a game in an open market is worthless. Consumers will only buy the games that they know they enjoy the most. Exploration of different genres or less critically acclaimed games will be much less. You think the console market has a problem with stagnant AAA IPs now.

Alex Rose
profile image
60%? Where did they pull that number from? Did they ask 5 people and 3 said they wouldn't?

Absolute nonsense - even if that number were accurate, people would just say they would refuse to buy the console to put on a facade, like when MW2 was "boycotted" for not having dedicated servers.

Jimmy Albright
profile image
Kotaku did a survey as well and came up with something surprisingly close. I think 64% of their audience felt the same way.

Rodolfo Rosini
profile image
60% of people would not buy a car unless they could strap a horse to it.

Michael Pianta
profile image
No, 60% of people would not buy a car if they could not trade that car in.

Dave Ingram
profile image
... or if they absolutely had to pay the full $30,000 for a car and had no option to buy an older model for $5,000

Nick Harris
profile image
60% of people would not buy a horse unless they could sell it to Findus.

Michael Dawe
profile image
Why do people still compare used games to used cars? What percentage of car makers would be out of business if a used car was precisely identical to a new one? Software is not a tangible good, even when sold on tangible media.

Joe McGinn
profile image
60% of all statistics are made up on the spot.

James Coote
profile image
Gamestop are probably desperate that the new generation of consoles don't prevent used game sales at a time when they are already getting hammered by digital downloads.

Also this 60% figure presumably consists of people who still come into the shop to buy their games. Those who are already perfectly happily buying online and/or downloading directly from Steam or whatever else are probably not going to end up included in that survey.

For me personally, my PC's DVD drive is broken, and has been for a year or two. I can't remember the last time I bought a game in a shop, but the last game I bought was an old title from GoG that I can guarantee would not be stocked in any shop

Matt Robb
profile image
Gamestop is far more heavily weighted towards console games, so I get the impression you aren't in their primary target customer group. The locations around here have the walls dedicated to consoles and one small rack in the middle with PC games. Only time they get more attention is alongside a matching console release like a Call of Duty or when there's something extremely high profile like a Blizzard product.

Daniel Erickson
profile image
James' point above made me think of my favorite thing about the Steam model: no competition for store shelves means I can (and do) go buy games that are more than a year old without having to go used. That means paying the original sellers of those games directly and, if it were taken to a console model, having full access to the entire catalog of that console. More selection and still putting the money where I want it to go. Steam has shown that prices naturally fall with time so the model still supports the consumer who wants a more affordable experience without having to support a secondary market.

Scot White
profile image
I'm against anyone who dare to delay the inevitable.

So, gamestop will disappear. along with every crap electronic stores.

Chris Hendricks
profile image
It is also inevitable that game consoles will disappear, along with every form of mass entertainment. Delaying the inevitable is what most of us are doing for a living.

Eric Geer
profile image
To those that are doubting Gamestop---remember all people on here are avid gamers or devs or somehow thoroughly involved in the gaming industry. My guess is that we are a small portion of the majority of people who don't give a shit whether a game is new or used--$5 off a game is better than nothing in many eyes.

Although 60% seems a bit high, I wouldn't doubt it to be terribly off---whether people are using gamestop to by used games or Amazon/ebay/craigslist/bestbuy/walmart/target/mom&pop shops etc----there are lots of used games out there that people are buying up and playing.

I personally buy lots of used games if I am just trying out a new IP/etc. Likely there are more people that buy used no matter what. Also, selling used games has allowed for me to buy lots of new games.

I personally would second guess buying a new console if used games weren't playable.

Chris Hendricks
profile image
I know I wouldn't buy a console if it couldn't play used games, if for no other reason than the fact that game publishers don't publish an infinite supply of any game (at least, not physical copies). If there's a game I want to play, and it was last sold new 3 years ago, used is my only option.

Ben Sheftel
profile image
@Chris I think that Microsoft would be DOA if they announced used-game blocking without following that up with a serious road map for better digital distribution. Games on Demand simply wouldn't cut it in its current form.

Jimmy Albright
profile image
Kotaku did a survey after they read about the Gamestop numbers and found close to 64% of their audience wouldn't purchase a console if it didn't play used games. I don't think Gamestop is inflating their numbers, it sounds about right to me. I enjoy buying new games and only twice in the past 10 years have I bought used, once was replacing a ruined GTA4 copy and another was a day 2 pickup of Dark Souls. I bet my friend someone would mistakenly buy Dark Souls without knowing what it was only to return it. 2nd day of release I saved 5 bucks to buy a hardly used game. Not *Really* worth it over a funny bet with a friend, but still.

As far as GameStop goes I have had some absolutely horrible experiences at my local GameStop. If you go in at any point in the day, if only 2 people are in front of you in the line expect to wait 20 minutes. I really wish this was an exaggeration, but they are the slowest cashiers I've ever seen at a business. On top of that, they will outright mock and belittle you if you try and pick up a game on or shortly after release without preordering. Recently I wanted to pick up Far Cry 3, the conversation went something like this.

Me: Hey do you guys have Far Cry 3 in on Xbox 360?
GS: Yeah we got some copies, did you preorder?
Me: No, I didn't preorder.
GS: What?!?! *scoff* Well all of ours are for preorders, and GOOD LUCK FINDING ONE ELSEWHERE. You need to preorder next time through us if you want to get your hands on new titles.

Another conversation I've had with a GameStop employee, this was about a week or so after the WiiU release

Me: Hey, you guys happen to have any of the WiiU editions in? The deluxe or the normal?
GS: *HA! Those sold out so fast! There is a WAITING list FOR the WAITING list! GOOD LUCK GETTING YOUR HANDS ON ONE OF THOSE!*
Me: Did you pick one up? How do you like it so far?
GS: No way man, I want one but I'm on the 2nd waiting list, going to be weeks before we get more in. Go talk to the Cashier if you want to sign up.

I then walked about 50 yards in the same mall to Best Buy, where they had a shelf full of them, normal and deluxe. That was the last time I went to my local GameStop.

Between experiences like that and others where they offered me 7 dollars for a game like Bayonetta (this was within the first month of Bayonetta release), I just have no reason to give them any business. I can go to any electronics outlet, get my games faster, not have to deal with being ridiculed for not pre-ordering and I'll be in and out at least 2x as fast. I realize my experiences are with my local GameStop stores and might not be a proper representation of the chain as a whole, but in my experience fuck those guys.

Eric Geer
profile image
^I agree with a majority of your points--but I disagree with the employees--I think it depends on where you go, not all of their employees are like that---I have 3 stores near me with really cool employees that don't fall into the "elitist" gamer.

This elitist nature isn't unheard of at other boutique stores either---I find this attitude to be rampant in bike stores, model gaming stores(see games workshop)/hobby shops, comic books stores, etc.

Jimmy Albright
profile image
That's why I made sure to mention this is a problem with my locations. I've heard problems on other sites though from gamestop employees who have told me that management really enforces pre-orders and that's why they always do what they can to get people to do it. It might not be a proper representation of all their stores, but everyone I've been to in my state (5 or 6 so far) have had similar experiences.

Matthew Mouras
profile image
"I think approximately 60 percent of customers have said that they would not buy a new console if it didn't play preowned games."

I wonder how many of those people surveyed have heard of Steam. If MS and Sony had a digital distribution service with Steam's pricing model, very few people would care about used games.

Kevin Fisk
profile image
It's not going to have Steam prices. The PC is open to many competing digital distribution services. If MS and Sony do it there will only be one service so they will be less aggressive in pricing.

Andy Lundell
profile image
This would be a real opportunity for Sony to get back on top in the console wars.

If they come out and advertise that they won't let manufacturers "lock-out" used and rental games, people will flock to them.

(Sure, they'd lose a few developers, but if the PS4 successfully became the dominant next-gen console, those developers would come crawling back.)

Sean Maples
profile image
Just think of it like Gamestop is Tower Records, and the Next Gen Consoles are iTunes. Having physical copies and being able to sell them didn't stop Tower Records from dying, and it won't stop Gamestop either.

Losing trade ins and the death of video game stores is an easy trade off for the coming age of widespread 100 mbps+ broadband connections and instantly buying and playing a new game from your couch. Just like losing record stores was an easy trade off for being able to stream anything I want on my phone anywhere for less then the cost of a pizza a month.

Adam Bishop
profile image
I have another argument for preowned games: a software company should have no right to put in place measures to prevent me doing whatever I want with my own personal copy of a piece of software once I've paid for it.

Jesse Tucker
profile image
I'm not against the sale of used games. If Amanda likes to buy the newest games and she can afford that in part due to Chris buying the games she no longer plays, everyone wins. Heck, even if Amanda sells her games on on Ebay or whatever, she gets a competitive price for her game.
On the other hand, you have Amanda selling her game to Gamestop. They have it in their best interest to give Amanda as little as possible for her game and turn around and sell it to Chris for the highest markup they can get away with. Think about how many more games Amanda could buy if she got $30 from Chris instead of $6 from Gamestop.

Eric Geer
profile image
$6 of least effort is sometimes worth more than the $30 of more effort. Not everyone wants to wait for a buyer to sell something...Gamestop is fast and convenient compared to selling/waiting for buyer.

Dane Warnick
profile image
For those of you complaining about GameStop and their infamous policy on giving you next to no money for games, come off it if you are a gamer worth your weight in salt you already knew this, therefore it is a moot issue also agree with another post if Sony does not block used-games they stand to make a killing. Although I would like to play devil's advocate in that what if all three of the major console makers are unanimous on this matter?

John Flush
profile image
The PC sector of the gaming industry doesn't have 'used' games and I feel like the PC area is starting to thrive again. Probably not from retail in the least, but I know a lot of people getting gaming rigs, buying games off steam, gog.com or wherever and playing. And no they don't need used games at all.

Do I even buy used games anymore? Nope. with Digital downloads, the 'gambles' I use to take at $10-$20 just aren't needed anymore. I don't care if I have these sort of games on physical copies when I try them out, I just need a reasonable digital download sale for me to dive in and by. As long as such a market exists I don't need used and neither does the industry.

Carl Hodler
profile image
We're already seeing AAA titles like Dishonoured encourage players to keep their discs with the promise of new d/l content and I suspect this strategy will just become more widespread and better integrated with the core game experience. I wouldn't be surprised to see AAA titles released for 20 with 4 - 5 hours of basic gameplay that can be enhanced and extended through ingame purchases. The platform holder isn't preventing the used marketplace, but the disc only holds a minor part of the game's real value.

In this future I can't see where Gamestop fits in and to be honest I doubt we'll even be talking about physical media in 5 years time.


none
 
Comment: