Video Game Industry Crashes! Just like 84' except it's 04'

[quote name='epobirs']For my own purposes I can quite quickly recall a better sale than this. A few years ago Sears was blowing out games like it was the end of everything. PSX and N64 games for $10, Dreamcast games for $15. Many of these games were major titles still selling for full price at the big chains. For instance, FFVIII.
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This was after PS2 came out though...It's expected of retailers to clear the shelves for a next gen system. I see no reason for BB to go to $4.99 on these games other than they dont think they will sell fast enough otherwise and they need the cash. There isnt many titles coming this summer so why not just slow sell and then have a sale in couple months? This is what worries me...they might start doing more of these $4.99 sales during the summer which will deflate inventory value even more and raise gamer expectations of getting games cheap. Like many hear have said. They will not pay $50 for a game anymore and I have been seeing this in my store most of the year. Customers used to buy 2-3 games a month at $50 but no more....they expect them at $20 or less now.
 
I think theories about an outright crash are premature, though. There is a userbase of 150 million console users. That market isn't just going to disappear.
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I never said the market would disappear. As a matter of fact I think the market would get stronger by xmas in some ways but that the supply chain is breaking apart which could create some weird effects.
 
[quote name='defender'][quote name='epobirs']For my own purposes I can quite quickly recall a better sale than this. A few years ago Sears was blowing out games like it was the end of everything. PSX and N64 games for $10, Dreamcast games for $15. Many of these games were major titles still selling for full price at the big chains. For instance, FFVIII.
[/quote]

This was after PS2 came out though...It's expected of retailers to clear the shelves for a next gen system. I see no reason for BB to go to $4.99 on these games other than they dont think they will sell fast enough otherwise and they need the cash. [/quote]

THe ENTIRE reason Best Buy had the 4.99 sale was too clear out inventory of games that had been rotting on the shelf for nearly a year. Look at the list of games, and almost every game on there was nowhere near a hit seller, and just sat there on the shelf. Best Buy has a teeny tiny section for games, and alot of stores were complaining that they were running out of room for new games because of the stuff that just rotted on the shelf.

It was no panic sale, it was a "lets go ahead and get rid of this crap so we finally have room for titles that sell" sale.

If EB or Gamestop ever announced a huge 4.99 sale, THEN I'd be worried.
 
BB deals with products other than video games, so I don't think they need the cash. I think the point that BB isn't a game exclusive store should be considered when you look at their sale. My nearest BB dedicates less than 10% of the store to console games. I don't see it as a major thing to them. They have more computer games than all the consoles combined.

I would also suggest we look at the actual titles that have been marked down. Most are garbage, and many of them have been available at sub-$20 price points for a long time. I counted three dozen of the PS2 titles then stopped looking. There's a frenzy on this site, sure, but this CAG. People are happily buying Mary Kate&Ashley games, Haunted Mansion, and other crap that they would not normally buy, but it's a cheap game so those folks don't care. I see maybe four games at most that offer a serious savings (more than $15) vs any other major retailer.

If the point is that independent stores are suffering and are dying, then I can see that. But it's not just happening in the games business. The internet and globalization is making that happen in just about every market. Blame it on expanded boundaries of competition.
 
I would partially blame it on the economy right now. Back in the SNES and Genesis days, games are more expensive (high profile ones). But people still bought the games. I think that's because of their better financial life. Look at it now, gas prices are way up and it's giving a horrible time for commuters. i spent about 40 miles a day on the road and believe me, gas prices are killing me.

Most games that I played are Gameboy games. It's very rare that I am willing to pay $29.99 let alone $39.99 for a gameboy game. I think Gameboy games should be priced $14.99 (low profile puzzle games) to $24.99 (high profile games eg. Pokemon, FFTA).

Nintendo is going to "re-release" their NES collection for $19.99 a pop for GBA. I just think that it's outrageous. Their production cost should be very low that they should be able to sell each at $9.99 or $14.99.

So, IMHO, the market crash is possibly caused by:

1. Poor Economy
2. High Gas Prices
3. Greedy companies

Again, that's just my 2 cents
 
[quote name='btantra']Nintendo is going to "re-release" their NES collection for $19.99 a pop for GBA. I just think that it's outrageous. Their production cost should be very low that they should be able to sell each at $9.99 or $14.99. [/quote]

To hell with that, they should put all those games on one cartridge and sell it for $10.
 
[quote name='jerryenzyme'][quote name='meteors']Genesis games were NEVER above $50 if I remember correctly. Stupid Nintendo thought they could get away with charging $70 for some games (I remember FF2 was $70 and thta was insane) until they started to realize their competition was benefiting from those prices.[/quote]

Phantasy Star 2 and 3 debuted at $80 in most places, and Phantasy Star IV was $100. Virtua Racing was also $100. Most Genesis games were equal in price to any SNES game.[/quote]

Virtua Racing was NOT $100 and I know this because I bought it the day it came out. It was $50 just like every other game. After the Genesis version the 32X version came out later that year and the Genesis one was so cheap that I was angry I bought it just a few months earlier.

Genesis games were on the whole, cheaper than SNES games. I don't know about Phantasy Star games because I never played those but the Genesis had a much better selection of games on the cheap.
 
[quote name='pukemon']oh yeah. something else to note. look at xbox platinum hits. i don't remember if and what the criteria was to qualify as a platinum hit, but look at the platinum hits. how many of those games ARE HITS? more misses than hits if you ask me. sony's greatest hit line is much more enticing and the qualifications usually mean you're buying a game that sold well because it was made well.[/quote]

There's a reason for that - and it's Microsoft's fault. They use the Platinum Hit line to garner attention to games - not great games that qualify like Sony or Nintendo's priceline. This was clearly visible when the PH line was initially announced.

[quote name='KingDox']The BB sale may be a sign of bad things. Like a year before the DC died target sold 5 BIG titles for only 15 bucks a pop. NBA 2k1 (a 50 buck game) had been out only 3 months and they sold it for 15. Also Kmart wasn't selling enough DC games and stoped carrying the product all together. EB has thought about dumping their PC games. So maybe the industry is in a slump but it's a stealth slump that only the indy stores have started to notice. [/quote]

My EB actually just started carrying PC games (and quite a bit of them). Strangely, the Gamestop across the mall has reduced their PC section by 60-70%.
 
After reading all this, all I can say is, buy some damn games from Defender's store, and let's help stop this crash. I bought the mega-ultra pelican system switcher a couple days ago for $75 from him, that's a great frigging deal.
 
first of all let me say that i agree $50 is way too expensive for a new title, but history finds a way to repeat its self.

i was in the retail business 2 year ago, and i also purchased new titles that msrp'd $49.99 for $42, i remember i bought Metro Prime @ $43 a pop + shipping. that period was probably the apex of my business, and got out soon after. business wise, i think this would be correct way of dealing, from manufacture to wholesale to retail. keeps the bunch in business, but major retail chains would always have a way to break that. they'd rather bring in customers by losing profit on a specific title. but now as a hobbist i would rather jump on these deals and walk out of stores knowing that they lost money, delima delima...

i feel the econ matters + gas prices have little to do with the gaming industry. the media and large retail chains actually cheapened the industry. most ppl blame the internet, but think of it this way. bootlegging was going on during the famicom days, and i remember coughing up major dough for this floppy drive for the famicom. i bought bootleged floppys but at the same time, titles that were worth the money like Dragon Warrior, Final Fantasy i bought the cart, because i wanted to have the actual item, instead of the ugly floppy.

all of this process went through the local gaming stores, and it kept the stores in business. the mom n pop shops still stocked carts for their new customers (they only sold bootlegs to ppl they've knew for a while) and therefore keeping the cycle going. now customers have no sense of relationship with their dealers, because they can just dl the game, buy it online, or walk in to any game chain on the corner of their block, mind i add that employees change constantly in BB, GS, CC, EB, ect... no sense of connection.

maybe im getting to sentimental on this subject, but i would pay extra for a certain thing if i knew the owner(mom n pop shop) is putting it to good use, like paying the rent, feeding their kids. and for sure they would hook you up for it too. i hope Defender feels me on this one, do you not have long time customers that will come to browse, jus because you two became friends? nothing feeds an industry like customer relations.

our society have became so disconnected. its really no wonder the game industry would crash. most younger kids now look at games for gore, how mainstream it is, and if it fits to their "style". its no wonder matrix revo sold like porno, while viewtiful joe's sales looked like a report from a used car lot.

IMO the games will keep comming, i strongly believe most developers have a passion for games, and its their "leaders" that pushes on revenue and image. but if the games dont get meaning-full quick, ppl are just going to bootleg away. y do you think dragon force is worth so much today? just because its rare? also cause its a damn good game, i was hooked on it when it came out, and i bought it MSRP not knowing anything about it, just because my local game dealer said "trust me on this, son. its really worth the money, its no shaq-fu"
 
Meteors, you either got a great deal on Virtua Racing or you're memory is faulty. This game was indeed up around $90. Sega tried to emulate nintendo's 3D efforts with the FX chip used in Star Fox and other SNES games. Rather than have a custom part developed as Nintendo did through Argonaut they used an off the shelf part that had a lot of unneeded functionality and was quite expensive. Additionally they didn't see fit to make a large commitment and thus didn't get a very good price on the chip.

Virtua Racing for the 32X was normally priced as no special added hardware was needed in the cart.

There were numerous Genesis games that exceeded the $50 price point and for the same reasons games did on the SNES. These were driven by the cost of large ROMs in small production runs. Large for that era, that is. This includes a lot of the more obscure titles such as KOEI's war games and others with a very limited US console audience. These types of games were common on computers but in Japan computer ownership was much lower and thus the market for those genres was greater on console there.

On the SNES games like Final Fantasy II were expenisive for good reason. The game used an 8 megabit ROM which was a premium item at the time, had higher than normal localization cost due to the amount of text, and a small production run due to the expectation of a very small US audience.

Street Fighter II was another of those pricey SNES carts but again it was pushing the edge for ROM capacity at the time and demand was such that it exceeded Nintendo's production allocation. (This used to be a major issue for third party publishers. If you had a major hit on your hands and you couldn't get Nintendo to allow you enough production you could lose your momentum before the next production run became available. Nintendo was very cautious both of overconfident publishers saturating stores with junk and of letting any one third party become too dominant.)
 
Although a "crash" is always a slight possiblity these reports don't indicate that is where we are headed.

Electronics Boutique Reports Record First Quarter Sales, Increasing 23%
Video Game Software Sales Grew 28%
Global Store Base Increased to 1,623
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=elbo&script=410&layout=0&item_id=574057

GameStop Corp. Sales Increase 16%; Video Game Software Increases 21%; GameStop Opens 103 New Stores in First Quarter
http://www.gamestop.com/investor-relations/

littlemonkey
 
This is a very well thought out topic, so I hope I don't sound repetitive.

I found an interesting article about the status of the industry and a prediction of a crash before 2005. I don't want to steal credit so I'll just quote a few things until I can find a link.
Compare Madden NFL 2001 to Madden 2004. You have to squint to tell the difference. Do you think innovations for Madden 2007 will be startling by comparison? I'll never forget the IGN Madden 2002 screenshot with a caption pointing out that it would be the first Madden to depict players' arm hair.
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Video games are not the new Hollywood. Hollywood is the new Hollywood. Films (well, good films) present their tales with masterful pacing and suspense and actors we love. Films are relying on an art form (drama) with a thousand years of popularity under its belt.

Games try to trump that with interactivity, letting you control the outcome. But the more control the gamer has, the more the pacing is ruined by brainless repetition (leaving the task to the gamer presents the possibility the gamer will fail 30 times in a row).

If they make the game tasks easier (as not to bring the game to a screeching halt), the gaming experience becomes much too short to justify the $50.00 pricetag. And the more interactivity is taken away in favor of pacing and pre-rendered cinemas, the more they stop being video games
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We Original Gamers, the hard core, bought every machine that came on the market for two decades. But for most of us OG's, the game consoles we own now will be the last we'll ever buy. There are millions of us, and it's just a matter of time.

If I'm right about this, the gaming industry is about to face its first real exodus of existing customers, a hard-core group they've relied upon for decades to snap up every new box on the shelf. And if the young kids don't see anything new and novel in this next round of machines...
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Edit Found link: http://www.pointlesswasteoftime.com/games/crash.html
 
[quote name='rocksolidaudio']After reading all this, all I can say is, buy some damn games from Defender's store, and let's help stop this crash. I bought the mega-ultra pelican system switcher a couple days ago for $75 from him, that's a great frigging deal.[/quote]


This is the smartest thing said so far in this thread!

http://www.videogamedeals.com/product_info.php/products_id/1439

Use freetoship to get free shipping on a rather heavy item.

In all seriousness though...I am really proud to be a CAGer and to know most of you. This debate has been awesome and one of the best threads I have seen at CAG where everyone has some good opinions that are actually relevent. We may not all be right but at least we are all cool about it.
 
I bought Virtua Racing for Genesis with the "special" VFX chip for $50 at my mall Babages (anybody remember THAT place? They usually had very high prices) the very first day it was released. Maybe they mistakenly priced it but that was that.

This is off topic at this point but I do believe, in my experience, Nintendo has historically always had higher software prices than their competitors on average, sometimes way too much so. Even now their $19.99 "Player's Choice" are often $29.99, something no other company does.
 
[quote name='defender']
This is the smartest thing said so far in this thread!

http://www.videogamedeals.com/product_info.php/products_id/1439

Use freetoship to get free shipping on a rather heavy item.

In all seriousness though...I am really proud to be a CAGer and to know most of you. This debate has been awesome and one of the best threads I have seen at CAG where everyone has some good opinions that are actually relevent. We may not all be right but at least we are all cool about it.[/quote]

I bought Super Puzzle Fighter from Videogamedeals.com and couldn't have been happier with the experience. If you can manage to find old goodies like that you'll have my business for SURE!
 
[quote name='meteors']This is off topic at this point but I do believe, in my experience, Nintendo has historically always had higher software prices than their competitors on average, sometimes way too much so. Even now their $19.99 "Player's Choice" are often $29.99, something no other company does.[/quote]

This is because no one else regulates software as heavily as Nintendo. It has always been that way. It doesn't help matters that Nintendo always goes with some whacko format for their games (cartridges instead of CDs, the mini-discs instead of DVDs).

As was said earlier in the thread, go check out Game Over. My nearest EB had an assload of this book not long ago, selling for $2. Great read and it will give you massive insight into how Nintendo became successful. Then contrast that story with the Big N's current direction.
 
The problem I have with the games industry now is the lack of unique and innovative games. I am tired of what seems to be the same game released over and over again. I really have seem to lost interest in games. Even after E3 this year there is only 1 game I am interested in and that's Donkey Konga.

I got a Japanese PS2 last Decemember and I regained an interest in games. I have been importing so many different types of games that will never be released in the US and these different types of games is making gaming enjoyable for me again.

Although like everyone else on this site, I don't like to pay much for a game, I will if the game deserves it. I spent $115 to play Pop N Music ($60 controller and $55 game) but it was worth it to me just because the game is so much fun. On EBay, I see people spending $100+ for Beatmania IIDX 4th Style and up to $150 for a Beatmania IIDX controller (some people are spending $400+ on the arcade style one). I think that says that if a game is good enough and is enjoyable, people will be willing to pay full price for it.

Unfortunately, I guess those type of games would never sell in the US because they are "different"

Then again, maybe that's what the game industry needs to get people more interested in games.
 
[quote name='meteors']I bought Virtua Racing for Genesis with the "special" VFX chip for $50 at my mall Babages (anybody remember THAT place? They usually had very high prices) the very first day it was released. Maybe they mistakenly priced it but that was that.[/quote]

I also remember Virtua Racing at $100 and Phantasy Star 2 at $80. I have no idea where you could have found this mystical Babbages, because I remember seeing that game for $100 all over the place, namely in the local Software Etc., Electronics Boutique, and Toys R Us.
I'd hope everyone remembers Babbages, since it's the same thing as what was once Software Etc. and is now Gamestop. And their pricing hasn't changed much.
 
[quote name='YoshiFan1']I think that says that if a game is good enough and is enjoyable, people will be willing to pay full price for it.[/quote]

I disagree. I love DDR, but I didn't buy it until I was able to get the game + two pads for $55. I loved Samba de Amigo, but wouldn't put out $100 per controller for the maracas. And I am excited for Donkey Konga/DK Jungle Beat, but I won't buy it unless the bongo comes packed with either of the games for $50-60. Some people buy this stuff for a lot of money, but I think they are few or far between.
 
Read between the lines:

Are there any losers in Deloitte's view of the next six years? As usual, it's the little guy who gets leaned on. "The steep technical requirements will drive smaller publishers out of the high-end market," the report says. "Overall, we expect development budgets for leading titles on next generation consoles and PCs to be an order of magnitude higher than for current platforms--well into the tens of millions."

That in itself would be a crash. Not to mention that losing the risktaking and innovation that usually comes from the smaller house, you'd get lots and lots of similar games... leading to market stagnation, which could lead to yet another crash.
 
"Overall, we expect development budgets for leading titles on next generation consoles and PCs to be an order of magnitude higher than for current platforms--well into the tens of millions."
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This guy's just plain wrong. There's no way the market could sustain an 'order of magnitude' increase in production costs. And why would this happen? will next gen hardware contain an 'order of magnitude' tech leap? No, it won't.

Todays video games are pretty much he same as they have always been since the beginning. The only real difference is the window dressing, i.e, graphical improvements and 3-d engines. Basic gameplay elements are the same as atari adventure, space invaders, and Donkey Kong. There have been no real 'leaps' of orders for 30 years. Perhaps I'm just on his case because he's using hyperbole to ilicit excitement for the industry, but I don't think he knows the difference between an arithmatic and a geometric progression.
 
They really just need to setup a return system for the games that don't sell. It especially makes sense when you look at the price of the physical media. I mean look at how many discs America Online sends out just hoping that just a small fraction will actually get used. They could just distribute the games, let the market dictate how many are sold, and the excess could be sent back to be redistributed or destroyed. Im sure the big companies are completely against this but eventually they might not have a choice.
 
I wrote something about it here, a while ago.

I just think new games are too expensive in this day and age. The vast majority of people either don't want or can't afford to spend $50 every couple of weeks on a new game. I don't know how much it costs to manufacture a game, but surely the companies realise that lower prices = more sales. They'd still probably make the same money at lower prices, even if they had to sell more copies to do it. There are too many choices, and not enough of them are of sufficient quality to justify $50 anyway. Maybe a crash is necessary, so that the industry can "reboot", take stock of itself and work things out for the benefit of everyone, not just themselves.
 
Maybe there will be a crash, maybe there won't. I've just never seen such a ridiculous sale like BB just had recently. Obviously there was something they saw in the market that motivated them to take such a loss.
 
OK, this is a rough example.

Say a company makes $15 profit on a game buy selling it at $50.

Now, they would make $5 profit by selling it at $40.

They would have to sell 3 times as many games at $40 to make the same amout they would by selling it at $50.
 
[quote name='BigNick']OK, this is a rough example.

Say a company makes $15 profit on a game buy selling it at $50.

Now, they would make $5 profit by selling it at $40.

They would have to sell 3 times as many games at $40 to make the same amout they would by selling it at $50.[/quote]

but i think the problem is there are so many games comming out, that many games are not selling at 50, or even at 40!
 
Everything has to do with the oversaturation of games hitting the market. I noticed in particular with the XBOX and the PS2 (mostly PS2), a flurry of "must have" games hit the market, but I'd say around 70 to 80 percent of those games are duds. There are numerous titles that come to mind that have been hyped fairly well that fall into this category, take your pick. These games turn into duds because:

1) Its a sequel being rushed out (Hitman Contracts, Devil May Cry 2)

2) Not enough replay value, and the buyer feels cheated (Most games)

3) Hyped to be the next "major innovation" (True Crime)

4) Emphasis on graphics

I noticed that during the so called console wars, Nintendo gets bashed for not producing enough games to satisfy their fans. In Nintendo's defense, I rarely second guessed myself after putting down serious cash on a Nintendo game. They make up for their lack of constant big game titles with some high quality stuff. When I got into the PS2 and XBOX, I quickly got burned on some "must have" titles and realized I needed to show more patience when buying.

On top of all this, the internet has been great to gamers smart enough to turn to it. Retail stores would love to sucker in people and fuck them with full prices, but buyers are getting smarter.

I'd like to see game prices drop to the 30 dollar range, but I'd be happy with 40 dollar games too. If the PC can produce cheap games, why can't the consoles?
 
Not to totally derail this thread, but maybe we could get CheapyD in on this "keep Defender in business" action?

I've seen CAG really come together as a community in a lot of things, from the regulars to the lurking n00bs like myself (even though I've been a registered user for a long time). Maybe for a week, we could set aside being "cheap asses" and focus on being a good neighbor to Defender, who's been a valuable member of this community (whether or not you've had beef with him).

This is what I propose: (1) Defender does a massive update of the site. I know this has been a common complaint from a lot of people who have wanted to order. I actually just go to his B&M or call in orders because of this. (2) For one week, the top story on CAG is an urging to go to Defenders website and purchase a game. Perhaps Cheapy can dig up some coupon for EBGames or Overstock to "reward" those who lend a hand.

Defender's B&M is one of the greatest places in the Village. I'd hate to see it die. Let's help it live!

I'm sorry I'm out of NYC for the summer, Defender, or else I'd be stopping by every week. I did, however, just buy a copy of Project Justice for the DC over the phone this morning. As the paychecks roll in, I'll be making more calls. Thankfully, the law firm life gives me a bit more spending cash. If MM1.0 is still open in the fall, you bet your ass I'm going to blow some loot there.

-- Howard
 
I have something sort of interesting to report that is related to this thread...While at EB this afternoon, there was a customer hanging around the counter talking to the employees. He definately knew them and came around the store a lot, was chatting them up about different games and such. Every so often he would ask what was the price of this or that game. He asked how much Onimusha (spelling?) 3 was preowned and was told 44.99. He bristled and said thanks, but I'll wait. One of the employees, the manager, who can be kind of a hardass at times but is a decent guy says "Of course you'll wait.... Everyone waits.... The game will be 39.99 new here or somewhere else probably by the end of the month." He wasn't angry or nasty but you could tell he wasn't thrilled about all the quick markdowns going on. I'm sure they're affecting his store's business as well as the Ma and Pa shops...
 
[quote name='defender'][quote name='epobirs']For my own purposes I can quite quickly recall a better sale than this. A few years ago Sears was blowing out games like it was the end of everything. PSX and N64 games for $10, Dreamcast games for $15. Many of these games were major titles still selling for full price at the big chains. For instance, FFVIII.
[/quote]

This was after PS2 came out though...It's expected of retailers to clear the shelves for a next gen system. I see no reason for BB to go to $4.99 on these games other than they dont think they will sell fast enough otherwise and they need the cash. There isnt many titles coming this summer so why not just slow sell and then have a sale in couple months? This is what worries me...they might start doing more of these $4.99 sales during the summer which will deflate inventory value even more and raise gamer expectations of getting games cheap. Like many hear have said. They will not pay $50 for a game anymore and I have been seeing this in my store most of the year. Customers used to buy 2-3 games a month at $50 but no more....they expect them at $20 or less now.[/quote]

No, this was well before the PS2 release with Dreamcast only halfway through its short life. I'm not kidding when I say this was a major eBay coup for me. Almost all of the games involved were still at list price in major outlets or discounted no more than 20%. All of the systems involved were still current with no successor's release date announced.

It's pretty clear to me that BB is motivated here by ASP. (Average Selling Price) Big stores that deal with consumers by the herd are very concerned about this issue. They like everything to be close to the same price so that consumers aren't encouraged to hold out for the big markdowns. This is one of the reason 'Greatest Hits' type products have separate packaging. The lower price tier is more acceptable if it is easily recognized as a separate product. You may have notice that some store will have blowouts of games that are about to be reissued with 'Greatest Hits' packaging just to get rid of those old packages. The 'GH' version will have a higher price and not create a disruption of the pricing structure with its distinctive appearance.

So why the $4.99 blowout? Because they can. It gets all the undesirable product out of the store in a very brief period. Regular consumers outnumber us CAG types by a huge factor. A brief swarm of CAG locusts is a minor annoyance to be rid of that product. Chains like BB have standing armies whose sole purpose is to write down as much as possible from the chain's taxes. With that army's efforts involved it is likely that someone added up the numbers and some sales over time stats and showed it was better to take a big hit fast than to have all that low priced stock malingering in their bins.

This is the advantage of being a big company that tracks revenues with 9 and 10 digit numbers. Life isn't fair.
 
[quote name='BigNick']OK, this is a rough example.

Say a company makes $15 profit on a game buy selling it at $50.

Now, they would make $5 profit by selling it at $40.

They would have to sell 3 times as many games at $40 to make the same amout they would by selling it at $50.[/quote]

There is precedent for massively growing a market through lower prices.

A long, long time ago, possibly before many reading this were born or old enough to notice, sales of movies on videocassettes was very different. Prices for newly released movies were typically $70-$80. A small number of consumers bought favorite movies but the price structure assured that nearly all the home video business would revolve around rental outlets. This suited Hollywood just fine since media rentals is what they understood when it came to revenue.

Then Paramount got ready to release 'Raiders of the Lost Ark' on tape. One smart executive noticed that a big reason for this film's huge box office was the number of people paying to see it multiple times. It wasn't the first movie that could make that claim but it was the first case where this particular guy could raise a point. He asked whether this wouldn't be a huge seller direct to consumers if it had a mass market price. He convinced the head of the home video division that they should go for a big direct sales push at $24.95.

Most of the rest of the industry thought this was insane. You'd have to sell at least four times as man units to make up for the reduce margins and added costs for marketing and volume distribution.

They did it and 'Raiders' was in less than two months the #1 bestselling VHS movie. They beat the break even point by a factor of four and soon had the single most profitable home video release the industry had yet seen. Selling movies direct to consumers has increasingly become the primary growth center of the film industry ever since.

There is no reason the game industry cannot do this, too.
 
I've been thinking this would happen too. They're simply coming out with too many games to keep up with. Its really getting ridiDculous, I like variety as much as the next guy but Defender's right, things are only going to start falling apart from here.
 
Epobirs,

I'm not sure I get the connection between the "market price" of your post with the game industry. One difference is that movie sales prices (now and then) rarely fluctuate, meaning that although you can often find a first-week price break, most movies won't deviate $5 from their price. Games are now deviating 50% or more in a matter of months, if not weeks. That's the difference.

If you are suggesting that Publishers/Retailers lower the price of games to reach the "mass market", you are probably missing the point, considering that the only part of the industry that is hurting is retail, and that the publishers who put out quality titles are doing fine.

Don't ask me for a solution, I'm just saying I don't see the comparison with your post, though it was an interesting read.
 
Perhaps if you noted the earlier post quoted at the beginning of my post and saw what was being discussed there...

I shouldn't think it's that difficult a concept. The home video industry chose to bring down the SRP (Suggested Retail Price) of their products in belief that the increased sales would result in greater net revenue despite the lower margin per unit.

This isn't about pulling Defender's business back from the brink, it's about growing the industry as a whole. (Defender's problems have more to do with how the big chains chose to eliminate unwanted inventory than the health of the industry.) When Paramount decided to introduce sellthrough pricing it wasn't because home video was a struggling business. Things were going very well in that business but it was but a fraction of the size it achieved just a few years after mass market pricing became the rule.

As for fluctuation in movie pricing, I have to disagree. I just came from my local Best Buy. In addition to all the $18-$22 DVDs of recent releases there were racks of DVDs down to as little as $5.99 for movies that theatrical success just two or three years ago. When you consider that the longevity of film properties can be measured in decades that is a very quick drop to about 20% of the original SRP (24.95) typical for new DVD releases. And surely you've seen in the course of shopping that the retail price of a typical DVD movie can easily vary by at least $5 within the space of a single shopping center. The Borders book chain, for instance, often has absurdly high prices for widely available titles compared to a place like Target that might be only a short walk away. Somehow Borders does enough business at these price to merit continuing.

The fact is that the home video market is well adapted to maximizing the reach of their product. For the bulk of their releases volume is the main way to maximize revenue. They'll have some deluxe premium items here and there but 90% of their stuff will live on for years at less than 50% of their original SRP but remain viable products. The prices for typical releases start low and go down from there. The number of consumers who can be easily tempted to blow $20 on a whim is quite a bit greater than those will casually spend $50. When the average price is closer to the majority's 'bought on a whim' level the sellthrough numbers can be expected to grow and the installed base of the platform as well.

Most casual gamers (or the people who fund their purchases) aren't CAG adepts who are patient and willing to wait for a bargain to arise. Their perception of game prices is at the $40-$50 level that we avoid. This prevents a lot of growth to the installed base of the platform since most folks are bright enough to realize that the game will be what keeps draining their wallet long after the hardware is purchased. This retards growth of the installed base which in turn causes a continued belief by publishers that they can only hope to turn a profit on that limited base by keeping price high for new releases. It's a self-fulfilling prophecy that restricts the growth of the industry.

How many who are accustomed to buying used games for $20 would buy new instead if game prices were in line with DVD video prices?

30 million PS2 units in North America may seem like a lot by why can't it grow to double that size if price resistance is reduced? Once you got the box in the consumer house your chance of selling them software for that box is greatly improved.

Companies still reliant on mask ROMs would not be thrilled to see this change since their media cost for their portable systems would greatly higher than optical discs. Nintendo, to name names, would be in a difficult position since there is a perception that portable games should be less expensive than console games.
 
You make some good points but i dont think its really possible to release a big budget game at the price of a a new DVD movie. DVDs would be more expensive if they had to pay a licensing cost for each disc like console developers do. I think $30 to $35 would be a good price.
 
[quote name='Puzznic']You make some good points but i dont think its really possible to release a big budget game at the price of a a new DVD movie. DVDs would be more expensive if they had to pay a licensing cost for each disc like console developers do. I think $30 to $35 would be a good price.[/quote]

I think if you owned stock in a development company you would disagree.
 
I was told yesterday by the store manager that best buy is not carrying nintendo products anymore. He was calling to get a price match. This could help explain the $4.99 prices somewhat. If they do stop carrying nintendo they are not as smart as I thought. I guess if you aren't moving the stock than this is what you have to do.
 
[quote name='THE DARK KNIGHT']I was told yesterday by the store manager that best buy is not carrying nintendo products anymore. He was calling to get a price match. This could help explain the $4.99 prices somewhat. If they do stop carrying nintendo they are not as smart as I thought. I guess if you aren't moving the stock than this is what you have to do.[/quote]

What they sold for $5 was crap and wasn't going anywhere. As for the Nintendo issue that is regrettable but a product of Nintendo's failure to aggressively have 3rd party developers rather than recycling their old, tired franchises for their 4th system.
 
[quote name='BigNick']OK, this is a rough example.

Say a company makes $15 profit on a game buy selling it at $50.

Now, they would make $5 profit by selling it at $40.

They would have to sell 3 times as many games at $40 to make the same amout they would by selling it at $50.[/quote]

It's simpler than you make out. Who is this company? The developer? The publisher? The retailer? All of them get a cut. Say for simplicities sake that they each get a $16.50 cut of a $50 game. If the price is reduced to $40, then they all get $13.30. The reduction is 20%, as you'd expect, so they need only sell 1.25x the number of games, not 3x like you say.

That's why you see some games come out at $40 -- they're hoping to lure more people in at a price lower than most other games.

So if the price were lowered to $25, they would need to sell 2x as many to make the same profit This would work on me. I'd buy $25 games like there was no tomorrow as soon as they were released. As it is, I usually wait until they come down to $29, but I usually change my mind or forget about them or get distracted by a newer game before they reach that price and don't pick them up. So who's losing out here?

Okay, so maybe $25 is a little low. $29 or $34 might have nearly the same effect on me. It just going to take some publisher to have the guts to try it out before we know if it'll work or not. Set a lower price, and make it clear that the price will not drop for a year or more, and then see how many buyers come in.
 
[quote name='BigHow']Not to totally derail this thread, but maybe we could get CheapyD in on this "keep Defender in business" action?

I've seen CAG really come together as a community in a lot of things, from the regulars to the lurking n00bs like myself (even though I've been a registered user for a long time). Maybe for a week, we could set aside being "cheap asses" and focus on being a good neighbor to Defender, who's been a valuable member of this community (whether or not you've had beef with him).

This is what I propose: (1) Defender does a massive update of the site. I know this has been a common complaint from a lot of people who have wanted to order. I actually just go to his B&M or call in orders because of this. (2) For one week, the top story on CAG is an urging to go to Defenders website and purchase a game. Perhaps Cheapy can dig up some coupon for EBGames or Overstock to "reward" those who lend a hand.

Defender's B&M is one of the greatest places in the Village. I'd hate to see it die. Let's help it live!

I'm sorry I'm out of NYC for the summer, Defender, or else I'd be stopping by every week. I did, however, just buy a copy of Project Justice for the DC over the phone this morning. As the paychecks roll in, I'll be making more calls. Thankfully, the law firm life gives me a bit more spending cash. If MM1.0 is still open in the fall, you bet your ass I'm going to blow some loot there.

-- Howard[/quote]

This is a fine idea and all, and I would happy to participate, but I don't think this will "save" defender in the long run. It will improve his situation for now, but in a few weeks he'll be back in the same boat. :cry:
 
[quote name='manofpeace20']I'd like to see game prices drop to the 30 dollar range, but I'd be happy with 40 dollar games too. If the PC can produce cheap games, why can't the consoles?[/quote]

However you fucking spell it, Licensing. (close enough...)

Ubi does not have to pay $'s per game on pc, but they have to pay MS,Sony, and Nintendo for each game they put out. That makes a big difference. The thing is though, by being 2nd party, or by doing exclusive deals, that # goes down.
 
[quote name='chickenhawk'][quote name='BigHow']Not to totally derail this thread, but maybe we could get CheapyD in on this "keep Defender in business" action?

(edited for length)

-- Howard[/quote]

This is a fine idea and all, and I would happy to participate, but I don't think this will "save" defender in the long run. It will improve his situation for now, but in a few weeks he'll be back in the same boat. :cry:[/quote]

I totally agree that it's not a long term solution. But it might to keep Defender afloat long enough to reorganize his business. I think the most important element is keeping his lease, which a sudden cash infusion might support.

Or, at the very least, it'd be some capital to put towards his new project.

-- Howard
 
I doubt it would be 'capital'. More than likely it would be a payment or 2 toward the rent or mortgage on the property or a payoff of the credit line that was used to buy the games in the first place. If you're a typical business owner, that is.

I think I understand Defenders argument now. The sheer multitude of games on the market and entering the market have inflated the supply to the point where prices must drop to move the inventory. This deflated overall price creates an impression in the market of a devalued commodity. The market then expects lower priced items in the same category. When they arent priced accordingly, demand drops even more, inventories inflate, prices drop again, and the cycle perpetuates itself.

You could be right Defender, a serious drop could be just around the corner. Unfortunately it will only serve to weed out the low men on the pole, i.e. small vendors and developers. It'll be a depression, but not an outright crash fro everyone.

If 30-50 titles (a guess) are brought to market per month and there is only so much room to display them all, much less carry an inventory, it is near impossible to pick the right ones that will move fast enough to earn a decent profit. It's like a crap shoot every time you place an order. You think you pick a good game like Rebel Strike, order 100 copies, and the next month the price drops $20 everywhere else because it's not moving fast enough and you've only sold 25 copies. Your only choice is to sell the rest below cost and cut your losses.

I don't envy you.
 
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