Thursday, February 14, 2008

Gamestop needs an Intervention



Gamestop continues to engage in self injury and I think we, its friends, should all get together and stage an intervention.

According to the Wikipedia:

Self-injury (SI) or self-harm (SH) is deliberate injury inflicted by a person upon his or her own body without suicidal intent.

This pretty much sums up their used game behavior. They don't want to kill themselves, but they can't stop harming themselves through the sale of used games. Their self injury manifests through the Tourrette's like statement that slips from the lips of every counter person during every game purchase. "Would you like to buy a used version of that game?" As a consumer, you always picked used. It is a DVD for god's sake, it's not like it will be broken or worn out. Moreover, it is guaranteed to work and costs anywhere from 10% to 50% less than the identical, albeit virgin, item sitting on the shelf. No one gets hurt and the consumer benefits. Right? Wrong.

The game publisher gets paid for the initial sale of the game. The payment allows the publisher to recoup the cost of the game, maybe pay the developer and the IP holder if they are so inclined, and invest profits in the product. The more games they sell, the more to invest in future games. If a game comes back in trade and is resold, Gamestop enjoys a higher margin on the resale, but they take 100% of the revenue away from the publisher. Gamestop grows, while industry revenue shrinks. While Gamestop may appear to be one of the top retailers, in fact, they are a gatekeeper which is turning consumers away at the gate.

I would not have a problem if Gamestop were primarily a resale shop. However, Gamestop leverages the production and marketing investments of the publishers to harm the publishers. Each top tier release carries a marketing budget which is roughly equal to the production budget of the game. The marketing budget drives consumers to stores like Gamestop to buy the game. Here is the issue. After the publisher paid to put the person in the store, the counter bot says "Don't give money to the publisher who invested in this game and drove you to the store, give it to me so I can keep it all and not pay them. I'll give you this copy of the game which I have already sold three times and taken back in trade." I the short term, Gamestop's profits increase. In the long term everyone, including Gamestop is hurt because game development stagnates

We can fix this. As consumers, don't support used game sales. You are paying almost the same amount of money, to the wrong guy. Gamestop is not an awful lot better than someone filesharing music. As publishers, stop selling to Gamestop until they stop selling used games. When was the last time you walked up to check out at one of the top 3 movie retailers and they asked if you wanted to buy the used dvd? You haven't. Hollywood won't allow it. How about restricting access to the full game to the first person who actually buys it? We can do that.

C'mon people our distribution channel is so riddled with holes, it cannot even be called a channel. It is more like a distribution sieve. Let's start fixing it.




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