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Forums - Gaming Discussion - Second hand trade hurts developers as much as software piracy...

jammy2211 on 01 February 2010
NJ5 said:
jammy2211 said:
NJ5 said:
jammy2211 said:
NJ5 said:
jammy2211 said:

The big retailers, Gamestop, GAME, Best Buy etc buy games at ~ $45 per copy for a $60 game. They simply couldn't afford to pay that, or order as many copies of games as they do currently, if there wasn't a used game market to bring them the money.

^ Ummm no that part's not true. There are plenty of retailers which don't sell used stuff and are perfectly able to order as many games as they need.

 

 Not in the UK - and are those retailers video game only or do they sell a variety of media as well as video games? Cause if they've got other sources of revenue then er... that kind of proves my point.

 As far as I'm aware these stores pretty much lose money selling first hand software - once you include the costs of running the store, paying staff, taxes etc.

It doesn't prove your point. They sell more stuff and have more revenue but they have more employees as well, being bigger retailers.

I don't see how a decent games store would lose money by selling only first hand software, given that it has like a > 33% gross margin that many businesses would kill to have.

 

It has a 33% gross margin if it sells every single copy of a bulk order at full price - they won't though, and as soon as that 500000 order of a 'sure hit' bombs - you can bet the retailers is going to bleed money from it. Yes they have protection in place to not make it hurt too bad, but for all the games they make money on at full price there are games they're forced to sell below what they paid for it.

 By selling more media, thus attracting a bigger market, the costs of running the store, paying staff, taxes, location rental, brand marketing etc etc is less significient as they make bigger revenue. That's why (UK example here) a shop like WHsmiths can afford to only sell first hand video games, it's just one part of a range of product - and their whole revenue doesn't rely on it.

 The video game retail industry is by no means a 'cushdy' and easy place to make money, and third parties wouldn't be selling their games with such minimal profit margins for retailers if the second hand market didn't exsist. 

 

Reduce the gross margin to 20 or 25% and that's still enough to make a healthy profit, for a company which only spends money on rent and low-wage hourly employees. Provided you have a decent sales volume of course, because if you're selling 20 games a day you might as well file for bankruptcy immediately.

Historically there have been plenty of stores which only sold new games. Just because Gamestop is big and sells used games doesn't mean they need it to make a profit.

 

 What gross profit margin of 20%? It's just as easy for a game to bomb and lose them lots of money as it for them to sell all their stock of just one game at full price. They're not in a position where they make a profit on everything they sell, the developers have control over that as much as they do and you can bet Activision and EA arn't going to let them order 10000 copies, sell them all, order another 10000, sell them all, order another 10000 - i.e. have the most safe, risk free strategy imagineable. There's a huge amount of risk just like any retail industry.

 Only spends money on rent and employee wages? Yeah right. If you honestly think that's all the expenses there are in running a multi-national retail chain you're deluded.

 I personally have never known a store which relies entirely on first hand video game and console sales to fuel its business, with no other form of media or product at all. Maybe it happened 10 years ago - maybe the margins were better - but in todays climate it would be impossible for such a store to exist.

 Just curious, where are you getting your ideas and analysis of the video game retail industry from. I've spoken in depth to this with a friend on the internet - who owned an independent video game store but ultimately was forced to sell it. 



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Davey1983 on 01 February 2010

Sorry, second hand markets are just fine. When a game is sold used it is because the original owner is no longer happy with the game (for whatever reason-- it was a bad game, they no longer have any interest in it, etc.).

If you are saying that developers should get some money from used game sales, you are basically saying developers should get rewarded for failing. If I was a developer and I got sales from used games I would purposely make a bad (or mediocre) game and hype the hell out of it. Get tons of sales initially from new copies, and then get tons more as all the games are sold used. Then get even more when the second owners sell it. Then even more when the third owners sell that game (and so on).

Sorry, but used game sales does not equal a lost sale for a new game. Developers need to realize that spending ridiculous amounts of money to develop a game that does not sell is their own fault. Create a game people want and you won't have to worry about used sales. (ie, see Nintendo and NSMBWii, Mario Kart, Wii Fit, ect.-- while you can find these games used, you also see these games in the top ten years after they are released).



Kasz216 on 01 February 2010
slowmo said:
AnthonyW86 said:
When you buy a copy of a game you pay for the right to use the software, you don't OWN the software lolz.


Congratulations, you've been conned by them into thinking their way.  I own the license to play that game, I should have the right to sell that license to whomever I please.  Your point is semantics, you know perfectly well what people are arguing.

actually... I want to know why if I pay for the liscense to use the software... why I'm restricted specifically to the copy on one specific disc?

If i'm actually buying a liscense it shouldn't matter which copy i use since I'm paying for the right to use the software.


If I say... bought  the liscense to Age of Empires 2.  Then my dumbass friend brole my copy of Age of Empires 2...

Why is it illegal for me to play a pirated version of Age of Empires 2.  I own the liscense to play the software aferall.



JaggedSac on 01 February 2010

Companies are going to start providing more new purchase incentives.

And if you are going to sell a used game to someone, don't use a middle man(at least not one that puts such a high margin on used games), sell it directly. The seller would get more money, and the purchaser would get it for cheaper. Win, win.



Bamboleo on 01 February 2010

DVD's, Car's, Movies, Bikes, Houses...

Second Hand hurts the market in every way...



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NJ5 on 01 February 2010
jammy2211 said:

 What gross profit margin of 20%? It's just as easy for a game to bomb and lose them lots of money as it for them to sell all their stock of just one game at full price. They're not in a position where they make a profit on everything they sell, the developers have control over that as much as they do and you can bet Activision and EA arn't going to let them order 10000 copies, sell them all, order another 10000, sell them all, order another 10000 - i.e. have the most safe, risk free strategy imagineable. There's a huge amount of risk just like any retail industry.

 Only spends money on rent and employee wages? Yeah right. If you honestly think that's all the expenses there are in running a multi-national retail chain you're deluded.

 I personally have never known a store which relies entirely on first hand video game and console sales to fuel its business, with no other form of media or product at all. Maybe it happened 10 years ago - maybe the margins were better - but in todays climate it would be impossible for such a store to exist.

 Just curious, where are you getting your ideas and analysis of the video game retail industry from. I've spoken in depth to this with a friend on the internet - who owned an independent video game store but ultimately was forced to sell it. 

My statements are because I have seen plenty of stores which only sell first-hand games. Even back in the ZX Spectrum era when games were dirt cheap. They're just much more rare today as bigger chains bought them.

 



My Mario Kart Wii friend code: 2707-1866-0957

jammy2211 on 01 February 2010
NJ5 said:
jammy2211 said:

 What gross profit margin of 20%? It's just as easy for a game to bomb and lose them lots of money as it for them to sell all their stock of just one game at full price. They're not in a position where they make a profit on everything they sell, the developers have control over that as much as they do and you can bet Activision and EA arn't going to let them order 10000 copies, sell them all, order another 10000, sell them all, order another 10000 - i.e. have the most safe, risk free strategy imagineable. There's a huge amount of risk just like any retail industry.

 Only spends money on rent and employee wages? Yeah right. If you honestly think that's all the expenses there are in running a multi-national retail chain you're deluded.

 I personally have never known a store which relies entirely on first hand video game and console sales to fuel its business, with no other form of media or product at all. Maybe it happened 10 years ago - maybe the margins were better - but in todays climate it would be impossible for such a store to exist.

 Just curious, where are you getting your ideas and analysis of the video game retail industry from. I've spoken in depth to this with a friend on the internet - who owned an independent video game store but ultimately was forced to sell it. 

My statements are because I have seen plenty of stores which only sell first-hand games. Even back in the ZX Spectrum era when games were dirt cheap. They're just much more rare today as bigger chains bought them.

 

 Do you still see any of those stores today?



Paul on 01 February 2010

I borrowed punch out from the library today, great fun and Nintendo didn't get a penny from me.



NJ5 on 01 February 2010
jammy2211 said:
NJ5 said:
jammy2211 said:

 What gross profit margin of 20%? It's just as easy for a game to bomb and lose them lots of money as it for them to sell all their stock of just one game at full price. They're not in a position where they make a profit on everything they sell, the developers have control over that as much as they do and you can bet Activision and EA arn't going to let them order 10000 copies, sell them all, order another 10000, sell them all, order another 10000 - i.e. have the most safe, risk free strategy imagineable. There's a huge amount of risk just like any retail industry.

 Only spends money on rent and employee wages? Yeah right. If you honestly think that's all the expenses there are in running a multi-national retail chain you're deluded.

 I personally have never known a store which relies entirely on first hand video game and console sales to fuel its business, with no other form of media or product at all. Maybe it happened 10 years ago - maybe the margins were better - but in todays climate it would be impossible for such a store to exist.

 Just curious, where are you getting your ideas and analysis of the video game retail industry from. I've spoken in depth to this with a friend on the internet - who owned an independent video game store but ultimately was forced to sell it. 

My statements are because I have seen plenty of stores which only sell first-hand games. Even back in the ZX Spectrum era when games were dirt cheap. They're just much more rare today as bigger chains bought them.

 

 Do you still see any of those stores today?

I'm not sure... I'm not much of a shopper and I mostly go to malls these days, which of course have the obligatory big-chain games shop.

Is there any reason to believe that margins on games are lower today than before? I'd be willing to recognize I may be mistaken, if such data actually existed.

 



My Mario Kart Wii friend code: 2707-1866-0957

joshin69 on 01 February 2010

NJ5 has very valid point, If i couldnt sell a game that had little replay value once it was finished then i wouldnt buy that game. the used market encorages buyers to take more risks with the games they buy. I realize that there is a whole other side to the arguement but this is rarely pointed out.



 

 assumption is the mother of all f**k ups