The retail marketplace in the games industry has definitely seen its struggles over the last year or so. While GameStop's used business is booming, the used games push will only drive retail further into the ground, argues InstantAction CEO Lou Castle. Speaking to IndustryGamers as part of an in-depth talk on his company and the future of gaming, he said second-hand game sales are essentially part of an evil trifecta, adversely impacting the overall games business.
"...the retailers themselves are helping to drive [the market] into the ground. The publishers that are out there that are depending on bricks and mortar can’t say publicly what everybody knows is the problem. When you have your distribution channel competing with you for sales, it's very difficult to survive; that model doesn’t survive very long. It’s a combination of used games, rental games and piracy – those are the three things that are killing the retail market," Castle remarked.
He added, "Each one of them is a pretty bad thing in and of themselves, but they multiply when you put them all together. And so, I know the GameStop guys and Walmart guys are kind of bemoaning the fact that software sales are down, and it’s like 'yeah, and whose fault is that?'"
11 Comments
August 18, 2010
You know its funny..... No one ever asks the publishers about how they drive franchises into the ground, ala Guitar hero, Rock Band, Tomb Raider, Tony Hawk, and many many other once great ip's.... They publish this crap year in, year out like clock work and wonder why sales are falling?
Are they really that short sited? Bad economy is why used games are booming. Cheap prices, games people missed the first time around that are most of the time out of publish. It has nothing to do with retail and more to do with the dev's / publishers... Sooner they figure this out, the better off we will all be.
August 18, 2010
cldgin2, that's true up to a point, but what Castle says has merit as well. Franchise fatigue is a real problem, though. It's sort of a dual edged sword because consumers often don't give new IP a fair chance, so publishers keep going back to the well, perhaps one or two or three too many times, and they milk the shit out of their franchises. The best companies can do enough to reinvent the franchises and keep the brand alive and well without feeling stale.
August 18, 2010
I think you are being a little dramatic. Retail game sales are not going anywhere. The retail gaming industry isn't alive because the game developers allow it to. It is around because the consumer still chooses to buy games at retail. The power of the dollar is what dictates where and how games are sold. No matter how much complaining is done about used game sales, rentals, and piracy the game developers are still making a lot of money. Long (short) live the PSP Go.. :)
August 18, 2010
I'm so tired of hearing people in the video game industry whine that "used games are killing us we should get some money off the resale of our games". By that sort of logic Detroit should be complaining that used car sales are killing them and they deserve money from the resale of their cars.
Grow up and suck it up! Any product that is manufactured can, and will, be resold and the original manufacturer DOESN'T DESERVE A DIME OF THE RESALE! Give us better games, at lower prices, and you might see the sales of your first time product go up.
August 18, 2010
I think the availability of inexpensive used games is indeed hurting sales of new games. But so is the availability of free-to-play games like League of Legends and D&D Online, and social games, and mobile games. Publishers need to refine their business models, explore different types of payment structures like free-to-play, and think seriously about lowering retail prices (especially for digitally distributed titles).
August 18, 2010
Retailers aren't entirely to blame, but places like Gamestop are certainly part of the problem, not the solution. When they can put out games at a $5-10 discount almost immediately after the initial launch, and none of that money goes back to the game company, how are game companies supposed to make their own money?
The used car analogy is a decent one, but not a great one, since a car is a long term investment, someone buys one they'll likely have it for years before it hits the used market, and it'll have greatly depreciated due to wear, while a game can be beaten and resold within a week or two, and by that point will be in just as high a demand as at launch, and even after months or years, the game is still just as good as it ever was (just not quite as good as the new stuff, generally).
That's why I applaud efforts like Bioware's in having a system in which, if you buy the game new, you get access to a bunch of free goodies. If you buy it used, you can still get those goodies, but it'll cost you an extra $15 or so, so if you ever want those goodies, then either the used copy has to sell for more than $15 less than the retail, OR the retail version ends up being the cheaper option.
August 19, 2010
How many times are we going to hear this "Ahh the sky is falling" exclamation from X industry before we stop believing it? The VCR is killing the movie industry. The cassette is killing the music industry. Blah blah blah. If I buy something, it is mine. If I sell it, I should get the cut, because it is mine and I am choosing to sell it. On every used game, the devs and publishers have ALREADY BEEN PAID. Otherwise it wouldn't BE used in the first place.
The key is, as Ohoni pointed out, that you have to give people a reason to buy the new version. Bioware is doing very well at that. For so many businesses it's just easier and less costly to try to get legislators to protect their creaky business models, rather than trying to innovate. I'm sure there was a horse-and-buggy lobby talking about how cars were killing its industry too.
August 19, 2010
Also, the title of an article linked on the right side of this very page:
Used Games Market About a Tenth of New Game Sales - Report
Posted July 21, 2010 by James Brightman
I fail to see how 1/10th of a market can kill the other 9/10ths...
August 19, 2010
sorry I have to argue back against those of you who say that used games are destroying the industry, they don't they fuel more sales for the hard core gamers who are around 60% or more of overall game new sales. I have worked for a business who did used game sales in the past and we did lots of studies showing the benefits of taking used product in for trade. How many gamers out there are going to trade in their current X360 for the new Halo X360 bundle. I know a lot of hard core gamers who will be trading in theirs and I can not imagine they are any different then the other Halo lovers out there who purchased the last Halo bundle. Used games are not driving the industry into the ground they are helping it. Also I don't think it is fair to throw rental in to this mix either. What happened to the studies a few years ago that said one and 4 renters purchased the game? Do you thing the causal gamer likes putting down $60 for a game they are not sure of? Most companies do not let you try a game first and rental provides that opportunity. Games have continued to grow thru the years so how can anyone say one element is driving it into the ground. Maybe all the facts should be looked at before people jump in and accuse one area.
August 19, 2010
I'm still waiting for the article about publishers and developers finally getting enough common sense to lower the price of new games to attempt to offset the used game market. You can bitch and complain about used games, rentals and piracy all you want but I guarantee you that the main problem starts with that $60 price tag for new games.
August 30, 2010
I agree with the 1 2 P, and I'll add that more importantly, manufacturers also need to widen margins on new products.