bondspy

- The Spaniard
Editor in Chief,

"Don't Shop GameStop!!!"
Power to the Consumer

www.dontshopgs.blogspot.com
www.myspace.com/gonzales007

bondspy

Your analysis is a little sketchy. First of all, you state that normally people would get $15 for trading a new game in right away. That's just not the case. For a game like Haze, they'd get more like $30-$35 the first week. As low as $25 if the game ends up getting crappy reviews and Gamestop expects to get a lot back quickly.

Secondly, there's no way all the people in your example are going to trade-in Haze for the full credit during the first week. Half would be generous.

Your example is also based on the first sale of the used copy and that's it. Gamestop's profit is based on selling the same copy through trade-in, purchase, trade-in, purchase over and over throughout the life of the game. The point of this promotion is to get used copies of Haze in immediately and allows Gamestop to not have to order as many new copies.

If 20 people pre-order Haze and they estimate 10 people will trade back in used copies within a week, that's that many less new copies they'll order. Then when people come in looking for the game they'll say
"Well, we don't have any new copies in stock but we do have these pristine, barely played used copies."

During the first couple of weeks a game is out it's usually extremely hard to find a used copy of a game, this helps to alleviate the problem and gets the game into the hands of people who are going to trade it back in at $25-$30 a couple weeks later.

It's all about compounding the profit. Gamestop wants to deal with selling new games as little as possible because there's next to no profit there. Your $50 wholesale price was generous. It's more like $52-$53 per game and then they have to pay to have the games shipped to the store. If they have to overnight a box of 8 copies of Condemned 2 to a store that sold out, that eats into the profit per copy even more.

I guarantee this is a test run for possibly making this a standard policy on games. Remember that Gamestop/EB used to allow you to return new games for a full refund within 7 days but they had to stop because they were sued for reselling those games as new. This is basically bringing that policy back (which people loved) only now, it helps them with their used business.

skullivan

When a mom and her kid brings back a used game because it was too hard or their child didn't like it, it's pretty much ok, but when the target "Male, Teen" demo graph brings back AAA title after 6 days or the 7th day of the used purchase and says he doesn't like it and gets another AAA, that's when an eyebrow is raised and if he comes back, the return is refused.

Remember, even though it is policy, Gamestop employees (and Managers, more so) hold the right to refuse any transaction for any reason...

Ken

platinum

The Playstation. No, seriously, as the second it became viable for people with a bit of a investment to copy PSone games, it spelled doom to the return policy. Back when I was working in 2001, we had people buy three-four brand new PSone games a week, then return them in 48 hours. One time when we opened the case to check, we found a burned copy, not the real game. The guy 'returning' them 'because he didn't like them' blushed and quickly pulled out the real disk and grabbed the burned copy and we had him kicked out and filed a complaint with the cops to keep him out. We later told the DM and he said it was happening all over the USA and HO was looking at taking measures against it.

You people have no one to blame for the death of a great policy but yourself.

Foxstar Sixtail

I wouldn't bet on it. ALL of Gamestop's trade-in prices are based on how quickly they think the game will sell. After the first two weeks of release, the odds of anyone buying a non-AAA title drops dramatically.

If tons of people are trading in Haze, that means it's horrible/short/bad reviews, and the odds of people buying ALL these freely traded-in copies is not good. Not to mention it's on PS3, and PS3 titles new OR used sold pretty poorly regardless (when I was there, all the way up until Halo 3's release).

They stand to lose $5 on all of these sales at the best, but they can easily lose more per copy if any remain by the time they drop in price.

-Either way, this is an awesome deal for anyone who wanted to try Haze, but didn't want to commit $60 to a game that may blow chunks. There's no way around it.

jynxycat

The main benefit of doing this is that they only need to order enough from the distributors to satisfy the pre-orders. Also, the terms stipulate that the customer gets the pre-tax price back in store credit. At 5% tax, the consumer pays $63 to GS, but gets back $60 in credit. That's effectively selling the game back for $57.14, or $2.86+tax for a 1-week rental.

Since Gamestop will be getting a ton of Haze back within the week, these used copies will have a great chance of being quickly sold for $55.

How does their costs and revenue look in this situation? Don't know how much it costs GS to buy Haze, so guessing $50.

Costs:
$50 initial investment
$60 (1-week refund)
-----
$110

Revenue:
$60 (new Haze)
$55 (used Haze)
-----
$115

Profit = $5

In the normal situation, the figures would be:
Cost $50
Revenue $60
Profit $10

Does it seem like they make half the profits doing this? Not exactly. This offer works on volume, and many will bite at the thought of a "free" 7-day trial. Remember that the more preorders they get, the less they need to buy from the distributors.

kftgr

MXs219

daschupa

Haniko

mrhoohex

mescalineeyes

"But you sell opened games as new all the time with your 'gut' copies! Those are OBVIOUSLY used."

No, they're not. They sit in a drawer, unplayed, until sold. We seal the case, and sell it. Guess what: 99% of our customers don't care, as long as the game is new and has no marks. We let every customer know, (at least where I'm at), that it's the last copy, brand new, but open display. Their answer, "It's fine, as long as it hasn't been played"

Should the game have marks and scratches, then yes, we will probably hear your plea and may discount it if you're polite about it. Hell, we might do it for you before you even see the disc.

Anyway, this is a pretty nice deal, though I'm just afraid if the game is short as hell and not memorable enough to keep, GameStop's going to have one awfully big load of used Haze that will never sell after the initial month. God knows I don't have the wall space for that...

TheJinManCan

I'd guess this could be a test-case in the US to see if they can expand the policy store-wide.

Returns policies:
[www.ebgames.com.au]
[www.game.com.au]

tenpo

And the other thing is that this game is a perfect test-bed for this kind of deal : Relatively hyped game exclusively for a system with the lowest install base. Even if they find that theyre losing money on the deal it wont be that much. And if they make money on it, expect similar treatment with bigger releases.

mullinsmcd

Seeing as GameStop and any other retailer makes about... what, 3 or 4 bucks a pop per new game sold, they're taking very little risk. They hope to balloon the PS3 used section, I'm sure, with a hopeful AAA title and just bring in the masses to sell more PS3s or just more PS3 used product.

At least, that's how I see it in my head.

And of course you're only going to get store credit back for your game. Why the fuck would you bitch in the first place. Two games for the price of one!

People are never happy. Ever. Change GameStop to "Your Local Mom and Pop Games Place" and then "praise the lawd, such generosity!" F'eh.

TheJinManCan

"oh no, i supported gamestop, i'm a terrible person"

now, if you were the person who created gamestop, i'm sure you'd be pretty happy with the money your making. and trust me, most people don't really care that they're not getting 80% of what they paid for it back.

Whoaitstomas

bluerondo

zeush8su

I give GS $60, get Haze
I return Haze, they give me $60 in credit
I buy X game for $60
They put Haze up for resell at $55

Now the final outcome is I have game X for $60 and Gamestop is out game X and now sells Haze for $55, 5 dollars less then they could have.

Here is another question, why wouldn't I just buy game X to begin with?

Xer0Ph0kus

Then again, I'd like to see Gamestop go under, so feel free to adopt this strategy for all your games.

Doomstink

[ebgames.ca]

There's your proof. Second, the fine print says Canada only, it says nothing about the US.

xbandaidx

Deekman

Basically, good luck finding 8 games in the $8-10 range.

Bluecell

Consumer-"Seems like a nice policy, I'd rather take cash but store credit is ok!"

Kotaku Reader- "OMFG NOW GS IS GONNA BE MAKING 2 CENTS INTEREST ON THE STORE CREDIT!! THERE ARE APPROX 2384 STORES IN CANADA, IF 20 PEOPLE DID THIS, THEY'D MAKE 3923498 MILLION DOLLARS. FUCKING GAMESTOP."

And it's odd how many of you tore apart the dates of when it must be bought, and date it must be returned by etc.

You've obviously never heard of a REBATE? Which I'm pretty sure follows the exact same thing. You must buy the item between a certain time period, then send in the form by a certain time period.

Of course the companies want you to forget to do it, it's more money for them. When best buy offers you things with 200 dollar rebates, it's AWESOME! YIPEE!! Gamestop/EB does it, FUCKING ASSHOLES JUST HOPING WE'LL FORGET.

scottyboy218

Warik

Ah, I think I see what I'm missing. Even though they're giving out store credit, they still have that original $1,200. So they've essentially made $2,300 on these 20 copies of Haze, with the caveat that they've got $1,200 of store credit floating out there. If all of those people use their store credit on new games, GameStop probably loses a bit of net profit. Those 20 news games would be another $1,000, making their total investment $2,000 for the $2,300 they took in on the Haze deal.

But that's worst-case scenario. There's some pretty good upside on the deal. Say each of those 20 people with store credit buys a different used game for $55. Not only are those 20 each losing out on $5 of store credit, GameStop probably paid maybe $400 for those 20 copies of the used game. That would mean on a total investment of $1,400, they would have made $2,300.

But that's best-case scenario. It's an interesting deal, and I'm sure GameStop has all sorts of relevant data on how people use in-store credit to back up this sort of idea. So it seems like a good deal for them, but not overwhelmingly so. And it seems like a pretty solid deal for the consumer. Interesting.

Bishmon

Spartan1308

C-Stick

JUBEI21

Let's start with a normal situation and look at 20 copies a hypothetical Game G. GameStop buys those 20 from the publisher for $50. They've spent $1,000 on those games. Now they sell all 20 of those as new at $60 apiece. They make a total of $1,200, only netting a profit of $200. But they also make back the money they spent on the games originally. This is key.

So let's say that five of those 20 people who buy Game G sell them back to GameStop right away for $15. That's a $75 cost for GameStop. Let's say they resell those used games for $55 apiece. That's a total of $275, or a net profit of $200 after subtracting the $75 it cost them to buy back those games. This is the big benefit of typical used games for them. They made the same profit on a $75 investment in used games as they did on a $1,000 investment in new games.

So now we look at the big picture of Game G. GameStop invested $1,000 in 20 copies of the game, and turned that $1,000 into a total of $1,400 after those games went through the typical new and used process.

But now let's look at this Haze situation, and let's look at it as if they're offering cash back. They buy 20 copies of Haze at $50 apiece for a total of $1,000, just like they did with Game G.

20 people buy those copies at $60 apiece, just like with Game G, for a total of $1,200, or a net profit of $200.

But let's say within a week, all 20 people bring those games back for their cash back. GameStop gives them their $1,200 back, leaving them with 20 used copies of Haze and so far zero money made on them.

So now they sell them at $55 apiece used. 20 people buy them for a total of $1,100. Whereas normally this is great for GameStop, in this case, GameStop has $50 invested in each of these particular games. These used games have yet to recoup that initial investment because they effectively skipped the new game process.

So whereas now they've made $1,100 on these games they've invested $1,000 on, they could have made $1,200 just selling them normally. They cut their profit in half on these particular copies they bought from a publisher.

Why would they do that? Well, in the actual deal, they're giving store credit instead of cash back. They apparently see a way that that store credit will eventually generate more profit than what they're giving up on these copies of Haze, probably through interest and people failing to use some or all of it, because the problem seems to get worse for GameStop if those 20 people simply use their store credit on new games that GameStop has a lot more money invested in.

I'm certainly no economist, so I might be missing something, but it seems this situation is more gray-area than would appear at first glance.

Bishmon

Anemone

Ahh, back when Gamestop was good - and us employees actually knew what we were talking about.

The Dude

cametall

So you pay $60+tax for a game they pay about 35-40 for then u take it back get $59 credit, how many used game can u get with that?

If you ask me they should do this with all their titles.

I will still be picking the game up anyway.
Play it till Resistance 2 comes out then Killzone 2 when it comes out in 2009. hahahah

Violater

C'mon Mark, don't let them fool you like this. Here's what happens.

I am a gamer. I don't know about this Haze game - but you know, there are other games coming out this year I want, and if I can effectively play though this in a week to no loss, I might as well. I buy Haze, return it a week later, and Gamestop has lost nothing. Gamestop pays nearly the full $60.00 dollars we do per game, since there is next to no markup for new games at retail.

6 days past. I get bored with Haze and I remember to return the game. They get it back. A week later you buy it for 55 dollars used (Hey, might as well save yourself 5 bucks,) and hopefully you even trade in a few games yourself towards that purchase. They're able to mark up the games you trade in by at least 100%, more likely 200% - 300%.

What they're counting on isn't that I'll forget to return it; they're counting on me returning it and coming back months later to use that credit to buy another game, which I'll eventually also trade in. And they're counting on you to buy a used copy of Haze for $55 dollars.

Another quick note: EB/Gamestop generates used game trade in values based on how many games they have in inventory and how high demand is (This is why, for instance, Suikoden II was still fetching about 30 dollars for trade when I worekd there a few years back.) This means that 8 days after Haze comes out, have fun trading it in and getting about as much as you would for Madden 2007.

WreckTheLaw

chenry

Pombar

WarlordPayne

Kounji

Spoony Bard

Since it's in-store credit, I'll pass. I won't shop GameStop/EB Games unless I absolutely have to. Never was a fan of their craptastic trade-in offers.

Tyber_Zann

-Arlo

Arloknox

Returns on open new products is a horrible business practice and expecting people to do it is just plain retarded. GS used to do it anyway until people like you guys sued them for trying to resell the games. Well, what the hell were they supposed to do?

You can't have your cake AND eat it, too.

Enough with the hating, guys. Just don't fucking go there if you hate it so much. I fail to see how they are disrupting your lives otherwise.

-Arlo

Arloknox

1. A pre-order. Their stores are rated by how many per-orders they get.

2. A new gamesold. Some profit but not the reason they are there.

3. Used copies of a week old game that they can re-sell for 4 times the margin lost for taking back as a "return".

Wow...

Gamers get:

1 To pay $60 to "rent" a game and when they return it they HAVE to use that "rental fee" to purchase another title, possibly used that will make GStop even more $.

2. ....

Gamestop already has the policy in place for used games where you can play it for a week and return it for any reason for credit (with reciept), but how can they legally do this with NEW games. Last time I checked there were copyright laws in place to prevent returning NEW software and getting something else in return. You should only be able to swap it for the same title if yours is defective. They are basicaly circumventing that law by giving the full retail price back in trade credit.

Amazing... They found yet another way to line their pockets AND screw over the gaming industry at the same time. This is bad for gaming. Every copy that is traded back in and resold is taking money away from the people who poured thier lives into making it.

This is sad day.

Mr.SithNinja

meltyman

Armagetiton

Bluecell

TheIrishNinja

That seems to be a lot of hoops to jump through.

There's 2 other deals in the same flyer.

The title says Trade in 8 games and recieve the following PSP bundle of your choice FREE. The other is for the DS and says "5 games" instead.

In the fine print for that one, it mentions each game must be worth at least $8 trade in.
So you might think: "8 games at $8 each = $64. What a great deal for a $200 bundle."

I called the local EB because I had a funny feeling it wouldn't be that simple (though finding 8 games for $8 each that you don't want isn't exactly simple.)
My question was this: If I trade in two games worth $12 each ($24 total) does that count as 3 games worth $8? No. Each game counts as one game, no matter how much the trade-in value. Not so great anymore.

The best deal on that flyer was a TRADE 3 GET IT FREE WEEKEND where if you preorder any new release (GTA IV is pictured) and trade in 3 games, you get the new release free. The same $8 rule applies, but finding 3 games as opposed to 5 or 8 is easier. Unfortnuately, it was only available March 7-9.

Bluecell

7ucky

popadophalis

They should do this with every game. Then the ripoff used game prices aren't as bad.

arstal

wisconsinista

Gadgetron

Tale

fearing

fearing

Gray665

I mean the deal isn't bad for power players who will roll through Haze in one week, or even for people planning on dropping $60 on something at GameStop soon but don't think this is some deal FOR gamers.

I mean I like preplayed games as much as the next guy but this deal cuts even harder into Ubisoft and Free Radical's profits on the game. Fast forward digital distribution.

RudeAnimat0r

Himiko

This game can turn out to be ridiculously awesome in multiplayer with the two sides that play so differently - or it could be a shit bomb.

But even then, the game just looks good in my collection. Alrighty?

Candlejack

remember it well. They stopped sometime around 2001-2002 I think. Even more amazing is they did it with PC games as well.

Cell9song

Make informed decisions, think before you buy a game for 60$ if you think you are going to want to get rid of it in a week.

Jypsy

Cell9song

ShaggE

And they gave cash back.

Does anyone remember this?

Spoony Bard

Morphine16

Zaxxon Q Blaque

Anyhow, too bad EA isn't distributing this. If so, they could just say "That's cool, do what you want. Hope you don't mind getting GTA4 on May 1st rather than April 29th."

Assuming EA buys T2.

Anyhow, maybe Ubisoft can hold back some Wii titles for a couple of days to show their displeasure. This can't be good for them.

BigWeather

Derigor

Wolfers

Thassodar

Good point.

dead_red_eyes

Something tells me you may not have a business degree.

Canadian Impostor

djsyndrome

There are already Haze fanboys?

Canadian Impostor

Perhaps a certain company *cough*SONY*cough* is helping to support this EB initiative in order to help meet those goals?

Most Wanted

........which unfortunately seem to be a rare breed nowadays, at least on the PS3. Really pisses me off. Not even the first party titles get one (often).

So I fully agree with you :)

Candlejack

KYLE_ELYK

oh well. no big deal. i may rent it.

Akmed

One week and return it so that they can sell the game used to another player at a small discount for 100% profit that the game developer does not see.Example,lets say day one Haze sells 100 copies and these people all bring the game back in a week. The next set of 100 players buy the used game and the developers of Haze just lost 100 sales.

jackal888

Hamsnibit

LLamaStar

"Hey kids, why waste your money on this piece of shit when you can play it for a week then buy a real game"

Manny

I will probably buy haze now knowing that I can return it if I do not like it.

xibis

Although I f*cking hated the delays. Thank god it seems to finally arrive this month.

Candlejack

TheIrishNinja

Gadgetron

The idea that they're doing isn't crazy. Either way they get money. And even if you do bring it back and get another game with the IN STORE credit then they put Haze up for $55 - used.

mpmaley

liquid_kore

Currybullen

But I guess it does help people who get incredibly angry after buying their pre-ordered shitty game. *cough*assassinsglitch*cough*

ServiceMaster

Kevyn

Seiven

Modus_Operandi

Darksider71

HurricaneDave

Slint

Thassodar

Pure genius.

Ghede

HurricaneDave

SycoKiller

sander_dutch

ArmyofJuan

Pezdispenser

mywhitenoise

NCSUgamer