Opinion: Who's Afraid Of GameStop?
June 2, 2008 4:00 PM | Simon Carless
[In this editorial, originally printed in Gamasutra sister publication Game Developer magazine, senior editor Brandon Sheffield tackles the difficult relationship between developers/publishers and retailers such as GameStop, suggesting it's time for a change.]
Shamefully, almost everyone in the industry seems to be afraid of retail. I spoke with a number of people at the DICE Summit a while back, and while some agreed that digital downloads are making headway, nobody sees it replacing retail.
One trend I’ve noticed in talking to people about this issue is that there’s a tinge of fear of retailers, GameStop in particular, as though that relationship needs protecting. We don’t want to badmouth them or ignore them because we don’t want to make them mad.
But how much do they really do for us these days? GameStop makes the vast majority of its profits off used games, as we all know, and it’s the largest shop in which to purchase electronic entertainment.
To encourage consumers to buy used games, they often have limited stock of new releases – when was the last time you were able to buy a large new release from GameStop without a preorder? Did you then drive a few miles to a Best Buy or a Target and see the game in piles?
It doesn’t take a genius to see what’s happening here, when GameStop makes 50 cents on the dollar for a used game, versus 21 cents on the dollar for a new one. Since GameStop and Game Crazy are the only major retailers where you can return games, they’ll be the ones re-selling them used, no matter where you bought them.
Why Be Nice?
Why then, do publishers, and developers by extension, so carefully defend GameStop and their ilk? Why not move to digital distribution? Why aren’t downloads the dominant model for PSP games?
Nobody is returning XBLA or PSN titles, and consumers aren’t complaining either, because the games only cost $5-$20 apiece. On top of that, they got to try the game before buying it.
Target has recently announced that it will begin selling more used games. This likely means more games sold, but less profit for the industry itself. So why is everyone afraid to bash retail?
Now is the time to do something about this. Some games already can’t even make it into GameStop, and are only sold online in places like Amazon.com. Why then, do we kowtow to GameStop, and indeed, let their buyers choose what games may grace their shelves?
To boil down a very complex issue, it seems to me that it’s because we let them. It’s not possible to outlaw used game sales, I can’t pretend that. It’s been attempted in Japan – almost any import Dreamcast game or early-mid PS2 game will have a ‘not for resale’ warning on the back, but it gets resold anyway.
These companies rely on developers and publishers for content, but they make more money off the games than we do, in many cases.
Cold Feet
Industry leaders seem to be wary of moving online for a few reasons: not everyone has a game-capable PC, downloads can be large and slow, and then there’s piracy. But console game downloads are also becoming quite viable (Warhawk), with full games released on all major consoles now, even on the PSP.
People will wait for downloads, and broadband penetration is better than ever, besides. As for piracy, how many people are pirating World of Warcraft? Or Steam?
My friend Thomas Grové has an idea for a content delivery portal for PCs in which a single person, or group of persons with a little money, put together a non-profit portal. This portal would take only 5-10 percent of the games’ revenue (or whatever it took to maintain minimal staff), and give the rest to the developer directly.
In this scenario you could charge much less, and still make decent money if your game is any good. It would move developers from being work-for-hire to work-for-profit.
If someone had the time, energy, or resources to accomplish this, it would be the de facto delivery platform for game content, and service the industry as a whole more than it would service a specific company. I’m not totally sold on this idea, but it’s a step in the right direction.
That’s what we should be thinking about now – how can we get content into the hands of consumers without giving a third party a big piece of the pie? I’m asking you. I’m not the creative genius here, I just ask the questions.
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6 Comments
21 cents on the dollar kind of sounds like a lot. When I worked in a game store we only made 3-5 dollars off of each new game almost always. From what I've heard from people who work at larger retail chains they don't get it much better. We did usually make about double what we paid for the used games though.
C.G.B. Spender | June 2, 2008 3:57 PM
"To encourage consumers to buy used games, they often have limited stock of new releases – when was the last time you were able to buy a large new release from GameStop without a preorder? Did you then drive a few miles to a Best Buy or a Target and see the game in piles?"
This is something that really irks me and unless there's a game that I know I probably won't get without preordering (like, say Wii Fit), I just avoid Gamestop altogether these days. Heck, I don't buy most games new these days, anyway, and Gamestop's used game prices are often much higher than I can elsewhere, so why bother with them?
I understand the logic of "If you want it, preorder it" but making an extra trip to do so often costs time or money I don't have. EBgames.com used to have an option where you could preorder online and pick up the game in-store, but I don't think it exists any longer after the Gamestop/EB merge. They WANT you to come in to the store to preorder because, in the long run, you might spend more money. "Well, since I drove all the way over here, I might as well pick up a couple used games while I'm here."
There will always be some percentage of people that will buy games at retail, but I like digital distribution and hope the few examples of "retail" games being available via download (Warhawk, GTA 5 Prologue, etc.) are indicators of what it will be like in the not-too-distant future. I'm more prone to purchase a game if it's far less expensive and readily available to download. No preordering, no driving to the store, and usually conveniently accessible from a menu. I think I play XBLA game more than any 360 disc game I own. Of course, digital distribution means I can't buy a game used--but if the price of games was notably cheaper in general, I'd be fine with that! (Although, going back to examples like Warhawk, that's not really the case... yet).
Anyway, great article, Brandon! ^_^
Mister Raroo | June 2, 2008 3:58 PM
Profit sharing on used games. The end. Why isn't ESA doing anything about.... oh.....
Kenny Liu | June 2, 2008 4:42 PM
as space requirements for games get larger, it starts to lose its glimmer in my eye.
take metal gear solid 4, for example. they're maxing out a blu ray disk. first of all, that's obviously going to take up a huge amount of room on any hard drive that's feasibly cheap enough to include in a console. it's an extreme example for now, sure, but as games get larger, it's a reality we have to face.
the bandwidth cost would be tremendous, as well, and is sure to piss off many, many internet providers; especially in America where we essentially refuse to upgrade the internet infrastructure.
and what of people who have to redownload some 30-odd gigabyte game? it costs the provider bandwidth (much less cheap than say, redownloading any given XBLA game), pisses off the providers once again, and leaves your console downloading for likely in excess of 3 days on most broadband connections.
streaming movies is one thing. major game releases have far more hurdles to overcome in comparison.
i also like being able to let friends borrow games, much like movies and books. the death of physical media will be a sad, sad day for those of us who like to give, say, a movie to a girl to guarantee a second date.
kevin c. | June 2, 2008 8:59 PM
Since when has a developer been afraid of Gamestop? Their numbers have never shown any percentage of market control like Best Buy and Walmart, and from personal experience dealing with the company, Gamestop is constantly fighting with EA and Nintendo, just to name two developers/publishers, to try and get their games in the Gamestop stores for either a fair rate (fair in Gamestop's eyes) or in decent quantities, with results being poor, at best.
This fighting is due to the arrogance of Gamestop higher management and the publishers realizing Gamestop doesn't have the pull they claim. In the publishers' eyes, too, selling used games doesn't help things, even though used game sales numbers versus new sales numbers are quite lopsided, which Gamestop never addresses in its shareholder meetings.
Donald | June 3, 2008 6:28 AM
Digital distribution will only get larger, and while it may be more problematic for new games that can be very large, it is a great means to continually sell the backlist year after year. Even gamestops stop carrying used titles of older generations. These games still have a market.
I think many industries struggle with balancing the retail stores need to make money with their own. Does a game like Chaos Wars do better or worse when it is store exclusive?
Hank | June 3, 2008 11:36 AM