Monday, November 9, 2009

Selling For The Loss

I read a most bizarre story just now. As just about everyone should know, tomorrow is the second coming of Call of Duty: Modern Warfare, and all sorts of sales records are saying their last goodbyes before they are cruelly shattered (oddly enough, I'm not planning to buy a copy until some time in 2010, too many other things to play).

However, in the UK, there is a bit of drama because certain supermarkets are planning on selling the game below cost price, which is causing havoc with smaller retailers and threatening to destabilise the used market (which I don't really care about, as I'm not in favour of used games sales anyway). I don't really see the logic in doing this. I'm not stupid; I know about loss-leading, and I also understand how volume retailers can make money by having a negative cash cycle rather than through the size of their mark-up, but a game seems like a strange thing for a general retailer do this with. A modern game now costs so much that it would to justify a trip solely to pick up a copy - people might go into the store, pick up a game for less than cost, and leave without even considering buying anything else. This would be a particular risk for the so-called "core gamer" market, which must surely make up the largest part of MW2's inevitably massive sales. Perhaps these retailers will be short-stocking (at least relatively) the title to prevent too great a loss on it, in an attempt to get more consumers into the store than who would be able to buy it at the special price, consumers who probably would feel the need to buy something else to avoid making a trip out for nothing.

Unfortunately, this is not a "problem" we have to contend with in South Africa, as pretty much all brick and mortar stores are happy to charge the full RRP for games, with only online retailers like willing to provide a meaningful discount to RRP, and even then they don't provide any further discounting, even when games have been out for a long time.


  1. I want to comment on your stated position on used game sales.

    You are against used game sales because the designers only profit from the first sale? Well that is like being against house sales because the architect only profits from the first sale. Every product from cars, boats, books, phones and TVs have second-hand sales. What makes a video game any different? It's not like the game is being pirated or in any way stolen. It is a legitimate transaction between two parties. It is only the game designers that don't like that. They want the public to buy new games all the time, and to pay full launch date price for them too dammit. I bet car producers would prefer if the public only bought new cars also. Wake up and smell the coffee, I say.

  2. Used game sales aren't all bad, as they allow people to sell their games to buy more games, some of which will probably be new, so they do keep more circulating in the industry, which is good for everyone concerned. However, I'd still rather not support them. Besides, used games aren't even that much cheaper than new ones, I can usually buy a new version of any game that has been out long enough to have it readily available on the used market for pretty much the same price. The used copy is just giving the games retailer a fat profit margin at the expense of the publisher.

    It is fallacious to compare the video game market with the house or car market, though, they are structurally very different. It is worth noting that if I could afford a car or two every month, I would probably buy them new to support the manufacturers of vehicles I like.

  3. Negative cash cycle ... thanks I know the concept, but never knew what the official term was for it.

    As for used games, I must admit that I prefer new ones soley for the "new game smell", the pleasure of opening the wrapping, a nice clean manual and the knowledge that when I register the game I'm not going to have any irritating "this game is already registered to a different user" type of messages.

    Plus the risk of tiny scratches that make a DVD unreadable and therefore useless or slow to read are just too high with used games, especially considering what you're paying. Here in Japan they're about 50% of the original cost, and that's just not a big enough difference to justify the potential hassels and the risk of a non-functional game (either from damage or registration requirements).