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Used Games Are Not the Problem
June 25th, 2010 by worldblee

Videogame publishers and analysts are blaming used games for shortfalls in revenue and profit. But the problem goes much deeper than can be explained by any increase in the sales of used games. If people are flush with cash, they will buy a new car. If they’re worried about money, they’re going to buy a used car.

It’s similar with games. Consumers aren’t trying to rip off game developers when they wait a month or three to buy a used copy of the latest hit game—they’re spending less and forcing themselves to wait patiently because a new AAA game is $60, and that money is slotted for rent or food or childcare.

Publishers, led by my friends at EA, have struck back with new pay-for-play access to online features. If you buy a new game, you get a coupon for online play. Buy a used game, and you’ll have to fork over $10 or so for those privileges. Will this slow used game sales? I doubt it. Will it increase revenue for publishers? It will increase DLC sales figures, but it won’t affect the fundamental problem for the industry: there are only so many dollars that can be allocated toward entertainment. The $10 EA takes in from the guy who bought Madden two months after launch is $10 he won’t be spending on NBA Live (sorry, NBA Elite—as one of the guys from the original NBA Live launch, I have trouble letting that one go).

If you try to nickel and dime your customer in a time of financial hardship, you’re endangering your customer relationship over the long haul. In these days of quarterly performance, that lesson is often lost in the boardroom—but ultimately the price will be paid. It will probably just become the problem of a new management team that’s brought in after the current regime is forced out because of declining market share.

A harsh assessment? Most definitely. But I’ve said it before and I’ll say it again: a better strategy is to lower pricing on frontline games. You want to put the hurt on used game sales? Try selling your sports game for $20. Make online play an extra charge, let hardcore fans buy roster packs and extra levels, release limited editions, do what you have to do to extract more value from those willing and able to pay more. But realize that recession is a time to increase market share, not a time to boost profit margins. Maintaining revenues vs. 2008 or 2009 is not going to happen. Publishers will make less money, because there’s less money in the hands of consumers.

If you want to blame someone, blame the financialization of our economy that is transferring cash from the hands of workers into the hands of bankers and other financial wizards who ran up bad bets they expect taxpayers to cover. That’s the real reason people have less money in their pockets for games.

But don’t make the cost of entry so high your customer starts looking for a new door. Like the one to his or her local Gamestop, where they can buy a used copy of last season’s hit game for $40 less than your brand new game. Give your customer a real choice. Put yourself in their shoes and price your games accordingly.


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