Zomg
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- Joined
- Oct 21, 2005
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The Escapist managed to hide a good article in with the MMORPG and girl gamer pap this week: A Marginal Business
So right now Gamestop is soaking up money from running the secondary (console) video game market on gigantic margins. The video game publishers exist by selling games at the $50(ish) price point for a quarter, then dropping down, but that secondary market obliterates the second level price point for games, and probably erodes demand for those initial $50 purchases significantly (I haven't bought a console game for more than $20 in years and years, for instance, having placed myself behind that curve). Gamestop is a relatively small outfit, but those big margins are attracting bigger retailers to the secondary market that will likely chop down on the margins in both directions (price and repurchase).
This reads like a death spiral for the big console publishers. Not to mention games, since fewer and fewer broad, overt, pandering blockbusters (to concentrate marketing) will have to be hyped to heaven to attract those $50 purchases when everyone knows they'll be able to buy at $15 and resell at $10 in nine months, which will in turn cannibalize and shrink the market.
As a side note, this makes me think that there will be a return to Infocom-type collectible feelies (like a minted copper coin "from" a game's fantasy world) in game cases, to try to push geeks to get and keep the $50 versions.
So right now Gamestop is soaking up money from running the secondary (console) video game market on gigantic margins. The video game publishers exist by selling games at the $50(ish) price point for a quarter, then dropping down, but that secondary market obliterates the second level price point for games, and probably erodes demand for those initial $50 purchases significantly (I haven't bought a console game for more than $20 in years and years, for instance, having placed myself behind that curve). Gamestop is a relatively small outfit, but those big margins are attracting bigger retailers to the secondary market that will likely chop down on the margins in both directions (price and repurchase).
This reads like a death spiral for the big console publishers. Not to mention games, since fewer and fewer broad, overt, pandering blockbusters (to concentrate marketing) will have to be hyped to heaven to attract those $50 purchases when everyone knows they'll be able to buy at $15 and resell at $10 in nine months, which will in turn cannibalize and shrink the market.
As a side note, this makes me think that there will be a return to Infocom-type collectible feelies (like a minted copper coin "from" a game's fantasy world) in game cases, to try to push geeks to get and keep the $50 versions.