Here’s an article I wrote in 2010, in the very early days of the site. Apparently I was authoring up a storm, but not posting them. No, I don’t know why.
I am frequently surprised when video game publishers complain about used game sales. I worked on the front line of used game sales at “EB Games” from 2002 to 2006, and what I saw strongly suggests that the game publishers benefit from it more than they realise. Here are my unaltered throughs on the subject from November 2010 (complete with no real introduction, to speak of):
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The margin (percentage of the shelf price that is not your cost of goods sold) on game consoles has been essentially non-existant since the days of the NES.
The margin on new games is also incredibly small, something like 15-20% (in retail, it’s not usually even worth getting out of bed for margins like that, because you haven’t paid your rent, power, staff, insurance, etc. yet and you’re already making virtually nothing prior to those expenses).
The only thing that’s even halfway decent margins are accessories, and even then it’s usually on the third-party accessories (Mad Catz, etc.) where the margin is even close to something that you could theoretically cover all your expenses and still possibly have a small profit at the end of the day.
The only reason department stores sell games is because of the traffic it brings in. To them it’s akin to a loss leader, something they have to have, but they hope to sell you game accessories and also things unrelated to gaming. Dedicated game stores don’t have that second luxury (high margin stuff in all the departments surrounding the video games area). If you’ve ever bought toothpaste (or whatever) when you bought a game at a department store, then you know why they have to have a gaming department even if they make very little on the games.
Every single store I’ve seen that focuses on games, and games alone, has survived on one (or both) of two things: used game sales and/or (more…)