InstantAction CEO Says Retailers "Horribly Abuse" the Industry

[uppitycracker]

That's funny, because seeing how little revenue our store got when I worked in the gaming retail industry for new game and console sales really sickened me. Made me realize why used games are such a big push for the retailers.

I don't know what retailer you work for but Gamestop itself makes more money than almost every big budget publisher. You didn't see all this backlash for the many years used games were being sold at reasonable prices because people still bought new games; back then a used game was an impulse purchase. You would say, it's only $5 so I'll get that AND the new game I was planning on getting. Now people buy a used game at $50 and think, well that's all I'm buying for right now.

Stores with schemes like Gamestop are bad for the publishers and the consumers. The publishers recognize it but it seems that consumers are more than happy to put up with being ripped off as long as the moron behind the counter is willing to pretend to be their friend. And this is why gamers are considered the biggest suckers this side of new car lots; we get scammed and come back asking for more.

However, I disagree that gamestop (and the like) are the only ones to blame. They have to take some responsibility themselves. I know I started renting after buying a couple of really poorly made games that everyone was raving about. I think the reason people rent and trade is because some games just aren't worth $60 but that's the price (more or less) they're all sold at. If some of the shorter (and less resource heavy) games were cheaper, people would probably take a chance more often.

I think they should also have a bone to pick with the console makers as well. There are a lot less ps3 and 360 owners than there were/are ps2 xbox owners. Both consoles are really expensive and I know a lot of gamers who just wont buy either because one has horrible hardware problems and the other has horrible support problems. Most people I know with a next gen console have a wii and that has a really bad software attach rate.

So what it comes down to is that everyone has to clean up their act. The retailers have to stop gouging prices and make new games more available (yes, even to those who didn't pre-order), the publishers either have to lower the launch prices or start making more games that are actually worth $60, and the console makers have to either start making more affordable consoles or make ones that work and are updated with new features.

You nailed the reason why used games are such a big deal. Of course, we're in an age where that kinda media is really hard to avoid, due to the high demand and mad money to be made.

But my point was more geared towards the retailer. If the retailer doesn't have an opportunity to make much money off of the new products they sell, where is the incentive to push new copies as opposed to used copies? That was the big issue where I worked, and why we were so geared towards used sales.

But yeah, yer absolutely right. It's gonna take a big change, from all sides, before things get any better for anyone. Including us, the consumer.

 

[asinann]

Wow, this has to be the first time (or so) I actually agree with one of those articles xD

I'm not from the US and buying "used" games is frowned in parts of the EU... Personally, I only buy new games or not at all...

Rentals are fine though, I won't debate those here


What I don't understand is the mindset of the people in the Seller and Buyer position...

As far as I understand it from what I've heard of "GameStop" is that they buy games from people for 5-15$ and then sell them for 45-55$ (only 5-10$ short of the original list price)...

Now here comes my dilemma:

As a seller: If there are people willing to spend 45-55$ on used games, why not sell it to them using eBay or other Auction tools instead of selling it for points and an ice-cream and get you know... actual money...

As a buyer: If the price-difference of a new and used copy is only ~5$ why in hell would you get that one, knowingly that the actual developers/publishers (e.g. the people who made the game you like enough to buy) will get nothing out of it and the money made will all go to the retailer?

Because if the game sucks, you can take it back and get ALL your money back instead of $15-$20.

I'd have more sympathy for developers if they'd stop putting out garbage and then spending more money and time hyping the game than they did actually making it.

 

[Low Key]

Wait a sec. The guy doesn't even make retail video games anymore and he's still bitching? I guess the saying "opinions are like assholes" never rang truer.

 

[jamesworkshop]

Yes because their is no possible way that used game sales might allow people with low incomes to buy new games

 

[Matt_LRR]

Dear games industry: shut the f&%$ up already. EVERY industy and medium has a used product market.

-m

And none of them are ridiculously cutthroat as used games. The profit margins at places like Gamestop are insane. Let's compare!

New DVD: $15-20 (considering single disc, no collections)
Used DVD: $5-7
Price used DVDs are bought for: $3-5

I will point out this is what GAMESTOP uses for DVDs even. No other rental stores near me to poll for information.

New Game: $60
Used Game: $55
Price used games are bought for: $15-35

MW2 used copies the day after launch were bought for $35, typically the highest Gamestop will go. If you don't seem the problem here, you're a crazy person and not worth my time.

If the prices GameStop offered to people were unfair, or if people felt they were not getting enough for the games they trade in, they wouldn't do it. Bottom line. I WORK for Gamestop and I don't do it. Precisely because *I* percieve more value than that in the games I own. Most peopel don't.

The fact of the matter is that people aren't being bilked out of money. They are being offered a portion of the value of the game back to use for something else. They have plenty of other options; Ebay, the classifieds, craigslist, any number of other local used product websites. They simply decide that taking less money for being rid of the game right now is worth more than the additional effort and hassle of spending the time to find a buyer, shipping it and so on. Gamestop is a guaranteed buyer - and for the majority of consumers that's enough to make it worth their while.

-m

Edit: for the record, my car has a blue book trade value of $400. The going rate for the same car on autotrader and craigslist (and even car lots) is about $3000. I'd say that a 10x markup is a LOT more cut-throat than your typical $20 trade in for a $60 new game.

 

[Dexiro]

I don't know what the situation with game retailers is like, but the game industry is losing tons of money to piracy and preowned games.

I'm all for anyway to get more money into the game industry provided it isn't exploitative (like the shovelware Activision throw at us).

On the off-chance that i become part of the industry at some point, STOP STEALING MY MONEH! :c

 

[Drakey]

I noticed the lack of rental places such as Blockbuster there.

Also, I have the right to resell my properties. Whether solid or intillectual end user licenses. Just because I buy it doesnt mean im forced to own it till the end of time. I intend to have the freedom to choose this, and I intend to make good on that right when I see fit. I dont still own every car I bought in my life. (good thing too (I know cars are different but the principle is the same).

Life goes on.

 

[Skinny Razor]

Used games don't really take money from the publishers, because many used purchases wouldn't occur if the item was full price.

 

[tehroc]

If there were no rentals I'd probably stop console gaming. Your game is not worth $60, most arent.

 

[Aardvark Soup]

Strangely enough I have never yet heard publishers complain about libraries horribly abusing the book industry...

I mean, almost every product can be rented or sold second-hand. There is no reason why this shouldn't be the case with video games. Just live with it.

 

[asinann]

Dear games industry: shut the f&%$ up already. EVERY industy and medium has a used product market.

-m

And none of them are ridiculously cutthroat as used games. The profit margins at places like Gamestop are insane. Let's compare!

New DVD: $15-20 (considering single disc, no collections)
Used DVD: $5-7
Price used DVDs are bought for: $3-5

I will point out this is what GAMESTOP uses for DVDs even. No other rental stores near me to poll for information.

New Game: $60
Used Game: $55
Price used games are bought for: $15-35

I've never in my life seen a place take in a used DVD for more than $1.50, then they turned around and sold it for 5-10. The profit margin on NEW (that's important to read there that word) is less than $5. The publishers sell those games new to retailers for 40-45, the only way for them to make a sustainable profit is to sell used games. I don't like the trade-in rates on the games, but at least if the game sucks and you bought it used you can take it back and get all your money back as opposed to getting $20 in store credit when the game is taken in as a trade-in.

 

[targren]

So how long do we reckon until they (vidya game insudstry) become as greedy and as fucked as the music industry?

We passed THAT milestone a LONG time ago.

 

[Caliostro]

It's funny as hell to see people try to discredit his point and trying to legitimize used games sales and rentals, and at the same time saying piracy kills developers!

Two sides to the same coin people. You can't say piracy is bad because the developers don't see any money out of it, but then say used games and game rentals are fine, because the developers don't see any money out of that either.

"LOL HIPOCRISY LOL!"

 

[Luke5515]

Well I for one injoy walking into gamestop, talking to the people there, finding what I'm looking for, and being suprised by things that I'm not looking for.
But, one day when the harddrive for consoles becomes large enough to store many games, then we might see the decline of stores.

 

[UtopiaV1]

Dear games industry: shut the f&%$ up already. EVERY industy and medium has a used product market.

-m

That is a good point, and I stand behind your reasoning. However, you were wrong about "EVERY industy and medium" having a used product market. I will now list several, for common-sense sake.

1. Bandages
2. Condoms
3. Toilet Paper
4. Ammunition
5. Margret Thatcher key-chains (not for the same reasons as above, just no-one seems to want to buy them. Incidentally, I have a whole box of them in my garage, if anyone's interested?)

 

[Matt_LRR]

Dear games industry: shut the f&%$ up already. EVERY industy and medium has a used product market.

-m

That is a good point, and I stand behind your reasoning. However, you were wrong about "EVERY industy and medium" having a used product market. I will now list several, for common-sense sake.

1. Bandages
2. Condoms
3. Toilet Paper
4. Ammunition
5. Margret Thatcher key-chains (not for the same reasons as above, just no-one seems to want to buy them. Incidentally, I have a whole box of them in my garage, if anyone's interested?)

I see what you did there. Point taken, but you know what I meant.

 

[ryo02]

http://www.gamepolitics.com/2010/04/14/study-us-piracy-and-counterfeiting-data-unsubstantiated#comments

hee hee hee (I dont pirate by the way)

 

[Gildan Bladeborn]

Spoiler: snippety

Dear games industry: shut the f&%$ up already. EVERY industy and medium has a used product market.

-m

This is quite true, but there's a difference between used furniture and new furniture, used cars and new cars, and so on - unless the physical media has been scratched to oblivion (in which case it really shouldn't have been resold at all), there is no difference between used software and new software. There are no dog eared corners or coffee stains, no tears in the upholstery, no weird smells or engine problems - you'll probably be missing the original packaging and the manual but most people throw those away anyways.

So you have an identical product that the retailers can keep selling over and over and over, buying it back each time for a pittance, all the while netting the creators zilch. The media might wear out through abuse, but games themselves never do, since what you are selling is just data.

I agree that expecting to see revenue from any re-sale of your product is an unreasonable expectation, but it's another thing to be aggravated at a supposed 'partner' when their business model seems specifically designed to undermine your sales figures by selling the same damn units over and over and over. Retailers of video-games really have become parasites, simply pointing out that used markets exist for everything else isn't a very good rebuttal.

Except that there's little evidence that it is actually the case that the model actually undermines new sales. Most used game retailers drive used trade in through promotional deals on pre-order and new release titles - these deals facilitate higher rates of day 1 sales of new games than the publishers would see in the absence of trades.

Take that trade in option away and full-price sales will necessarily drop. A sizable portion of the people who would have taken advantage of the trade promo to buy the game new, will simply wait until the game has seen significant price reductions. (What that portion actually amounts to, I admittedly don't know). It's the same as saying that every pirated copy of a game is a lost sale - no they aren''t many of the people who pirated the game did so because they were unwilling to pay for it, and so given the option of not paying and going without or buying the game at a cost, they will opt to go without.

Every used game was a new sale at one point. The majority of used games are post-prime titles. The majority of used game trades facilitate new game purchases. A large number of game trades provide financing of additional game purchases that (new or used) the consumer couldn't have afforded to purchase without.

Trade ins and used sales are good for the consumer (questions of fairness in pricing aside), and good for the market. They may not be great for publishers loooking to milk every possible dime out of consumers, but they're not exactly hard done by.

-m

Fair enough, but in counterpoint I'll hold up Gamestop, a company that will give you crap about not pre-ordering any new title you wanted as if you've done them an immeasurable disservice, conveying the message that stocking new games so that you the customer can, you know, buy them, is an immense inconvenience they'd prefer to avoid.

This is of course if they even have any units left to sell you to begin with, which they probably don't (since you didn't pre-order, you dirty customer you). Sure, they advertise new games like crazy, but unless you've pre-ordered it from them you there's a very high chance you will not find brand new games available for sale less than a week after they're released.

As for used game sales being utilized to finance the purchase of new games, well that much is obvious. The pertinent question though is whether the game is "new", or new - a used copy of a new game I've yet to play is still "new" to me after all. And the pricing being good for consumers? Well of course it is! But you know what else would be good for consumers? Lowering the prices of brand new games to the levels 'new' used games are typically sold at. Retailers don't actually want to do that though, because why lower prices across the board and sell more copies, when you can avoid ever having to pay what the bulk of your inventory is worth and keep selling it over and over for almost as much money as the new copies sell for but way the hell more profit margin?

Understand I'm not suggesting that used video games sales are somehow immoral and that anyone buying used should feel deeply ashamed of themselves, merely pointing out that the video-game after market has gone from being a nice extra option retailers provided us with, to the primary focus of major chains that are ostensibly in the business of selling new video games. Anymore, they really aren't.

 

[UtopiaV1]

-snip-

-snip-

I see what you did there. Point taken, but you know what I meant.

I think the guy was just pissed off that retailers still make a 27-30% profit on something they had no hand in producing, but that's still not as bad as the publishers (whom are nearly as guilty) gaining upwards of 30-40%. It's a corrupt system that is being put under pressure by Steam and XBLA and other electronic distribution.

As for Gamestop etc, well... no-one likes the middle-men

 

[theaceplaya]

I didn't have a PS2 until 2008 when I was able to purchase it myself. Thanks to used game stores, I was able to catch up on games that I missed years ago such as the MGS series, Jak and Daxter, GoW 1&2 and the GTA Series. Playing those games got me excited to play MGS4, Uncharted 1&2, GoW 3 and GTA4, all of which I bought new.

Point being, I'll buy new when I can, but if the game is not on the shelves, then I don't have many other options. I could buy online I suppose, but I like instant gratification.