Curmudgeon Gamer
Curmudgeoning all games equally.
05 February 2007
Next-Gen's take on retail policies
Colin Campbell has published a Next-Gen.biz commentary on DVD Empire's departure from online game retail. In addition to writing a whole two pages without using the term price point*, here are a few other bits I thought interesting.

First up:
All large retail accounts and distributors are offered price protection of varying degrees of 'generosity' on products. As publishers 'mark down' a game, refunds are passed down the channel according to a game's strength at retail. Even small retailers should be able to negotiate some protection with their distributors on prices that come down.

[snip]

The best way to avoid this problem is to not stock bad games, which generally drop in price faster than good games, or to manage stock in such a way that it becomes less of an issue.
I'm not comfortable with a retailer -- large or small -- deciding a priori which are the good games and which are not. For example, most people would hate Tecmo's Deception, but I thought it was devilishly charming and inventive. I was willing to look past the chunky graphics and terrible translation to the entertaining mechanics. It sold enough to get a sequel, but if some high level decisions are made to undersell niche games, then we're one step closer to prime time TV homogenization than we were before.

Colin has previously argued for this kind of pricing:
This site has long argued for more fluidity in the market for games, based on their popularity. Clearly, some games are worth a good deal more than others; a fact that becomes clear very soon after a game is released. Games that sell well ought to remain at a higher price for as long as possible, while games that review badly and track poorly via online search mechanics, ought to be released at a lower price. The relative shares of these price fluctuations ought to be borne by different sectors of the market appropriately.
As I understand it, make prices proportional with demand. If millions want Halo 3, then it should command a high price. Applied to, say, the PlayStation 3 this would have permitted Sony to reap the rewards that went to eBay scalpers.

While I'm uncomfortable with the idea, I cannot give a solid reason -- other than my own wallet -- to argue against it. Anyone else have that vague sense of unease?

This seems to miss something:
The 'long tail' has never been so much of an issue with games, which are super hit-driven, and rely heavily on new technology and the latest look.
It's true that the leading edge of the industry is currently driven this way, but the long tail is becoming more important with every Wii virtual console release, every PSOne game on the PlayStation Network, and every classic game retrofitted for Xbox Live Arcade. Retailers will move the used game horizon forward faster as the back catalogs get shifted to download services. And if we move to a completely online distribution system, the tail will grow longer as older media can stock the virtual shelves as long as the publisher wants to provide a means to purchase. Just look at GameTap -- as long as it can make money, it has no reason to remove any titles from its catalog, whether they're niche or not.

The "Finally Finally" section at the end of the column does address this as a future issue. When all three major consoles have these kinds of download services, I think you can consider it a current issue, not a future one.

Which brings me to:
Consumers do not browse games stores as they might some other form of media.
I don't think this is true of services like GameTap. I think it's entirely possible, in fact probable, that most people who use GameTap will buy in for a few games they know and hang around to try games they know a little about or have never seen before. I'm no GameTap fan, but that's precisely the kind of thing I enjoyed about having older games stocking the Rhino shelves.

On the topic of used games:
There is something unpleasant about these creations being sold on again and again without any reward going to the makers but the pros of this practise may well outweigh the cons.
I find nothing unpleasant about used bookstores, garage sales, or thrift stores (aside from the occasional funky aroma). Selling used games is the same idea. As it is, this industry is always pushing gamers to upgrade from, dispose of, or drop older products. It is that attitude that I find unpleasant, not that consumers live up to the expectations set for them.

* On the other hand, the podcast a couple of weeks back did use the term "price point" eighteen times in about 10 minutes. Yes, I counted.

Labels: ,

--Matt Matthews at 12:06
Comment [ 8 ]

Comments on this post:

"I think it's entirely possible, in fact probable, that most people who use GameTap will buy in for a few games they know and hang around to try games they know a little about or have never seen before."

This is exactly why I bought into GameTap. It has already paid for itself based on the games that I've played (or will play), and I've gotten to play a lot of older games that would be impossible for me to play without buying new hardware, or acquiring them from the gray areas of the internet.

The drawback that I don't actually own the games is nearly irrelevant when a small fee allows me to both keep them, and get news ones on a regular basis.

By Blogger Duncan, at 05 February, 2007 13:54  

Sure, I think that the problem with the statement that gives you that sense of unease is that the top selling titles are frequently ones that are not only of high quality, but like consoles, those that travel relatively quickly down the price chain.

In other words, Halo sold a million copies because it was a great game. It sold the other 4 million in part because it was 20 bucks or was packed in with a console.

By keeping a game like Halo3 priced high after that initial sell-out of the first shipment of 3 million or so, you're harming the consumers at the low end of the market, and you're also harming your own console's future because you're not seeding the low end with titles.

Having a "platinum hits" line of games that are twenty bucks or pack-ins, goes along with price cuts on consoles to drive console sales. When there's a larger console install base, future titles stand a better chance of success in their initial high price period.

Also, since high profile, top selling games tend to spawn sequels, having that prior version available for 20 bucks helps lure in gamers who might otherwise decide that the series isn't something they want to just jump right into the middle of. Otherwise, you may easily be damning yourself into selling fewer and fewer copies of each successive iteration.

Not to mention that in every type of media except books and major label CDs, the price of your catalogue items is less than that of your current retail offerings. That's one of the reasons, IMHO, that those two industries are hurting. Prices aren't going down to levels that are acceptable to the mass mass market anymore.

By Blogger Jeremy, at 05 February, 2007 17:07  

And just for the record, I frequently find Colin's commentary online and in the podcast to be completely nuts. I don't know if he actually believes this sort of tripe, or if he thinks that he's advocating a position that doesn't get enough play, but it always strikes me as only serving one audience -- large corporations.

By Blogger Jeremy, at 05 February, 2007 17:09  

Jeremy said: Sure, I think that the problem with the statement that gives you that sense of unease is that the top selling titles are frequently ones that are not only of high quality, but like consoles, those that travel relatively quickly down the price chain.
I'm not entirely sure I buy this. Games like GTA, MGS, Halo, and others sat at $50 for ages. Heck, it was news when GTA:VCS for PSP dropped to $30 a few months after release instead -- GTA:LCS sat at $50 for far, far longer. Sure, they eventually hit the Greatest Hits line, but without doing some research I'd guess that the highest tier games stay at a high price longer. In a sense, they're already doing what Colin is asking for by staying high longer.

Then Jeremy said:
[Colin's commentary] always strikes me as only serving one audience -- large corporations.
Well, it's in the .biz TLD for a reason. He and I disagree on some issues and I believe most of them are because I take the consumer point of view and he takes the business point of view. That's his focus.

By Blogger jvm, at 05 February, 2007 18:37  

I guess everyone washes someone's balls.

By Blogger Jeremy, at 05 February, 2007 18:58  

Games have *always* had a *huge* long tail component; you're just looking at it through the "hardcore" lens.

Remember, the number one video game of all time is computer solitaire. Popcap, Yahoo Games, and other casual games make up the long tail - and collectively do represent a market that's a lot bigger than the market for Halo 3 or any other hit you can name (save perhaps The Sims)

By Anonymous Eric, at 05 February, 2007 20:05  

I'm not comfortable with a retailer -- large or small -- deciding a priori which are the good games and which are not.

This already happens. That is why it can be exceedingly difficult to find niche games in stores even at launch.

And why EB/Gamespot/etc have pushed for so long to get people to pre-order, particularly in regards to niche games. They want to have as few as possible left on the shelf, even if it means ordering only one copy which an employee will then buy.

Some stores are just better at it than others. Which is why a Wal-Mart will often have 20+ copies of a Mario game sitting on the shelves weeks after launch.

The end result forces some to go to online shopping, which also happens to be easier for the stores.

Games that sell well ought to remain at a higher price for as long as possible, while games that review badly and track poorly via online search mechanics, ought to be released at a lower price.

Reviews would first of all need more meaning.

Such a pricing scheme might also finish off niche games. Niche games may do poorly in reviews, but the number of people willing to pay $20 a copy might be only fractionally higher than the core audience willing to pay $40-$50. It makes little sense for a developer to cripple their income in such a system.

The other side of niche are games that get critical acclaim, but do get a boost from a lower price point. Pricing them based on a run of stellar scores would price them right out of their target audience, crippling their initial sales and hurting them for the long run. (Prices would drop over time, but people would move on or buy used by then.)

Besides, there is fluidity in pricing, though it sometimes is greater than other. PS1 and PS2 games would launch new at $10, $20, $30, $40 or $50 based on a variety of factors, none worse than what the article suggested.

By Anonymous Baines, at 06 February, 2007 13:37  

Another factor is PC game pricing. Which, at retail, is extremely fluid. Games drop from full retail within weeks, not months, and hit the bargain bin shortly thereafter unless they're World of Warcraft.

That's part of the reason stores have largely stopped stocking PC games.

By Blogger Jeremy, at 06 February, 2007 15:56  

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