The Business Side of Video (Space) Games EXCLUSIVELY ON IDLE THUMBS

[Dewar]

The problem is they received a batch of new games for all intents and purposes and sold them as used to line their pockets.

 

If that's true, then I'll agree that it's not ethical. However, we have nothing but heresay to indicate that it wasn't just Gamestop stockpiling used copies they bought back and then dumping them all at once, which I don't believe is an ethics violation.

 

I refuse to buy games from Gamestop that don't come shrinkwrapped, because they wouldn't accept the game as new if I were trying to sell it back to them in the same state. If they don't have a sealed one behind the counter, I go to Best Buy. Usually, I order from Amazon anyway, so the point is moot.

[I Saw Dasein]

I don't understand why it would be unethical to sell a new game as "used". The used-game purchaser ends up with a better product that he or she actually wanted: he or she gets a video game without any depreciation (the new game) instead of a video game that may have significant wear-and-tear or damage (used game). 

[Patrick R]

I think if it's sold as used, they are forcing Nintendo out of their rightful cut of the sale of a new game, right?

[I Saw Dasein]

But Nintendo isn't selling new copies of the game (which is why the price for used copies is so high), so I don't see how Nintendo loses out. 

[Twig]

I think if it's sold as used, they are forcing Nintendo out of their rightful cut of the sale of a new game, right?

If they are actually doing this, it's dumb garbage and there's no defending it. BUT. If they are actually doing it, Nintendo already got their cut once Gamestop bought the games to resell.

[tegan]

Either way I'll bet Nintendo is kicking themselves for repeatedly asserting that nobody in North America would want to play Xenoblade.

[Gormongous]

If that's true, then I'll agree that it's not ethical. However, we have nothing but heresay to indicate that it wasn't just Gamestop stockpiling used copies they bought back and then dumping them all at once, which I don't believe is an ethics violation.

 

The main evidence for the "printed new, sold used" argument is these photos:

 

 

The original run had the Wii logo cut inside the case, but the logo was changed to a Nintendo logo when the WiiU came out. All the new "used" copies of Xenoblade Chronicles have the Nintendo logo, implying that either Gamestop swapped all the used copies they'd been hording into new but otherwise identical cases, or that the copies themselves are new.

[I Saw Dasein]

Could you explain why it matters whether or not the copies are "new"? Would Gamestop have been obliged to sell the games at a lower price if they were new? It seems odd to me that Gamestop would sell new games as used, since presumably a new game is worth more than a used game. I guess I don't understand what incentive Gamestop would have to sell a new game as used. 

[Gormongous]

Could you explain why it matters whether or not the copies are "new"? Would Gamestop have been obliged to sell the games at a lower price if they were new? It seems odd to me that Gamestop would sell new games as used, since presumably a new game is worth more than a used game. I guess I don't understand what incentive Gamestop would have to sell a new game as used. 

 

It's threefold, I think. First, I'm not aware of the details regarding the deal between Nintendo and Gamestop, but a publisher usually gets a cut from new sales, not from used. Second, new games are expected to sell at no more than their MRSP, but used games can sell for any price. Third, Gamestop has stated that Xenoblade Chronicles was a limited run, but the existence of new copies makes it look like that was just artificial scarcity for a very popular game.

 

I'm sure there's even more going on than that, though. Anyone else have thoughts for what Gamestop's motives would be, if the copies of Xenoblade are new?

[feelthedarkness]

The only motive that makes sense is profit. I know the retail markup on games is low compared to everything else, like 20-30%, from wholesale. So if they can lock up exclusive distribution, they can open the copies they paid $40 for and sell them for $90 knowing they're the only game (haha) in town and unable to be under cut.

 

They also know that it's a niche, but passionate audience who are probably familiar with import costs and will pay the high price. 

 

Also, if they're opening their own new games they don't have to worry about other retailers paying more for used copies and selling them for less. 

[Dewar]

Could you explain why it matters whether or not the copies are "new"? Would Gamestop have been obliged to sell the games at a lower price if they were new? It seems odd to me that Gamestop would sell new games as used, since presumably a new game is worth more than a used game. I guess I don't understand what incentive Gamestop would have to sell a new game as used. 

 

Looking through MSRP information and FTC rulings, almost everything documented there has to do with selling items below the MSRP, not above. All I can say is that it seems dishonest to me to have a run of new games printed and then restrict the sale of those items. It's not illegal, but I'd say it isn't exactly ethical either. I'd be interested to know what the terms of the exclusivity agreement are. If Nintendo were to print up a million more copies, would Gamestop be able to hold them back? Can Gamestop continue to order more games printed in lots of a couple thousand until they don't sell at $90 anymore? Isn't Gamestop basically acting as a publisher in this whole thing? If so, is it a conflict of intrest to have them be both the publisher and retailer?

[Dewar]

I just thought of another way to look at it. I'm OK paying $90 for certain SNES games because it's not practical to print any more new copies (old technology and all.) I'm not OK with the supply of a game that can be reprinted being restricted. These days when disks can be printed on demand, there's no excuse to not print enough copies to go around. I'm not sure if that's Gamestop's, Nintendo's, or the developer's fault in this case, but it shouldn't happen.

[I Saw Dasein]

One possible theory would be that Gamestop is contractually obliged to pay Nintendo some portion of the sale of new games. This might be the case if Gamestop had some kind of consignment relationship with Nintendo. Nintendo delivers goods, Gamestop sells the goods on the part of Nintendo, then Gamestop gets part of the proceeds and Nintendo gets the rest. Unsold games are returned to the publisher. That's basically how books are sold, so it wouldn't surprise me if Gamestop had the same model. 

 

If that were the case, it might make sense for Gamestop to purchase the games from itself, then sell them used. Nintendo would still get its share of the proceeds (when the games are sold from Gamestop to itself), but then Gamestop could go on to sell the game at a markup. 

 

Or it may be that Gamestop originally had some unsold games from Xenoblade's original run, which it returned to Nintendo as remainders. One way or another, Gamestop managed to reacquire the remainders and sell them. I believe remainders are treated as "used" for the purposes of book sales (at the very least they are liquidated at deep discounts), so that theory also seems kind of plausible. 

[Zeusthecat]

It appears to me that what Gamestop is doing is unethical.

 

The current market value for that game has been completely driven by Gamestop including the prices that are seen on eBay which are only as high as they are because Gamestop drove the supply to begin with. I don't think there's any way to tell whether that was their intention all along but I don't think it is fair of them to justify the $90 price by saying that is what the market value is. In my opinion that would have only been a fair claim to make if they hadn't had a complete monopoly on sales of that game from the start.

 

Edit: Basically what Gormongous said.

[SecretAsianMan]

Gamestop defends their position

 

"Gamestop regularly receives feedback from our PowerUp members regarding old titles they would like us to bring back, such as vintage games like Xenoblade Chronicles. We were recently able to source a limited number of copies of this title to carry in our stores and online.

"In fact, we have sourced several more vintage titles that will be hitting stores in the coming months, including Metroid Prime Trilogy.

"As always, our pricing for these games is competitive and is based on current market value driven by supply and demand. PowerUp Pro members always receive a 10 percent discount and earn PUR points on pre-owned purchases."

[syntheticgerbil]

I love that "vintage" titles are now things released in the past few years.

 

Gamestop's defense is useless. They don't even address where the copies of Xenoblade came from or if they were in fact actually new games without shrinkwrap. Also I'd be curious where they suddenly stumbled upon these supplies of the Metroid Prime Trilogy that are no doubt going to sell for at least $80 and be new for all intents and purposes, because they sure as hell didn't just buy a bunch of unwrapped copies from big Nintendo fans all over the U.S..

 

I'm not sure what the legality here is with what a retailer can do with ripping open new games and reselling them as used, as some people in the article comments stated happens in Gamestop stores with corporate orders (usually for games that go for a lower price since they never sold well new). So of course no one here knows the exclusivity arrangement set up by Gamestop and Nintendo, but surely Gamestop purchased the complete stock of the game in advance (since they were the exclusive retailer) and held some back, otherwise buying new stock sitting in a warehouse and claiming they are used for the sake of inflating the price must be breaking some kind of trade law. Even without the legality, both situations are just absolutely sleazy.

 

Yeah I get the capitalist manifesto a lot of people are citing where Gamestop can buy whatever stock they want and do what they want, free market man yeah man, but the precedent being set here is not good for the market or developers (at least boxed developers). Individual resellers already pull this bullshit (although they have an obligation to leave the shrinkwrap on), but when a major retailer does it on a large scale it means they could potentially fuck with any promising game that has a low print run and inflate the price ahead of time by making a chunk of the stock purposefully unavailable. This is a very easy thing to do, resellers do it all the time and typically you can just target any JRPG or fringe Japanese game published by Atlus or Xseed and see some returns later. Fans of these types of games already know this and generally secure copies on day 1. On top of that, we are living in the world of limited collector's edition bullshit right now, this will not be hard to do.

 

I wonder if Nintendo has anything to say about this now, as the Metroid Prime Trilogy comment almost seemed like a taunt.

These days when disks can be printed on demand, there's no excuse to not print enough copies to go around. I'm not sure if that's Gamestop's, Nintendo's, or the developer's fault in this case, but it shouldn't happen.

So this is Nintendo's fault because they don't have an on demand DVD-R printing service like Amazon or Warner Bros. set up? Are there any boxed publishers who somehow print the disc and box materials on demand that we have all missed? Even if discs are easier to print than constructing a plastic cartridge, you have to take in to account the printsetting for the inlay and manuals as well as making sure you are not authoring your discs on cheapo plastic like Amazon, since these are games and they will spin way more than a DVD movie ever will.

[tegan]

It's kind of weird that they would do Metroid Prime, since it seems like they messed up the Xenoblade box, and Metroid Prime only came in a steelbook.

 

 

Gotta' say, I'm suddenly pretty pleased with myself for buying the Wii Metroid Prime release on impulse back when I barely knew what Metroid was.

[syntheticgerbil]

I luckily was able to find it when Best Buy marked it down for $20 on a sale for one week. I had to drive to four different stores in Houston though. I'll probably never sell it.

[I Saw Dasein]

I'm not sure what the legality here is with what a retailer can do with ripping open new games and reselling them as used, as some people in the article comments stated happens in Gamestop stores with corporate orders (usually for games that go for a lower price since they never sold well new). So of course no one here knows the exclusivity arrangement set up by Gamestop and Nintendo, but surely Gamestop purchased the complete stock of the game in advance (since they were the exclusive retailer) and held some back, otherwise buying new stock sitting in a warehouse and claiming they are used for the sake of inflating the price must be breaking some kind of trade law. Even without the legality, both situations are just absolutely sleazy.

 

Yeah I get the capitalist manifesto a lot of people are citing where Gamestop can buy whatever stock they want and do what they want, free market man yeah man, but the precedent being set here is not good for the market or developers (at least boxed developers). Individual resellers already pull this bullshit (although they have an obligation to leave the shrinkwrap on), but when a major retailer does it on a large scale it means they could potentially fuck with any promising game that has a low print run and inflate the price ahead of time by making a chunk of the stock purposefully unavailable. This is a very easy thing to do, resellers do it all the time and typically you can just target any JRPG or fringe Japanese game published by Atlus or Xseed and see some returns later. Fans of these types of games already know this and generally secure copies on day 1. On top of that, we are living in the world of limited collector's edition bullshit right now, this will not be hard to do.

If Game Stop started holding back substantial numbers of copies in the hopes that the copies will inflate, basically Gamestop would be taking on a huge amount of risk. Most games don't appreciate in the way that Xenoblade has; most games drop substantially in price after release. So I think it's very doubtful that Gamestop will deliberately hold back copies of games in order to gamble on the fact that they might appreciate. 

I really don't see how this is bad for consumers. A week ago if you wanted a copy of Xenoblades, you had to buy online from an individual retailer, with all the risk and inconvenience that entails. You would have spent around 90$. Today you can still buy online from those retailers, but you can also buy from Gamestop if you prefer, at around the same price: $90. Of course, if you think $90 is too much for a game, that's fine, you don't have to buy it. So no consumer is actually hurt, and some consumers are better off (those consumers who would prefer to purchase from Gamestop rather than EBay). 

 

I also don't see how it's bad for developers: developers presumably got exactly the same cut they would have gotten from a MSRP sale. So how exactly have developers been hurt?

 

The only way this looks bad for consumers is if you assume that retailers have an obligation to sell all of the stock of a game at MSRP. I don't think retailers have that obligation, subject to the terms of their contract with Nintendo. 

 

e: For the record, I'm not a "rah rah capitalism" guy in general, but when it comes to markets for luxury consumer goods I do think a free market is pretty sensible. 

[syntheticgerbil]

If Game Stop started holding back substantial numbers of copies in the hopes that the copies will inflate, basically Gamestop would be taking on a huge amount of risk. Most games don't appreciate in the way that Xenoblade has; most games drop substantially in price after release. So I think it's very doubtful that Gamestop will deliberately hold back copies of games in order to gamble on the fact that they might appreciate.

I guess that's where you and I differ. If you look at the any media market enough and are privy to the amount in the print run vs. popularity you can start making educated guesses. Definitely would not put a dent in their profit margin to say purchase a thousand or so copies of Xenoblade last year and make over triple of what they would have received (assuming the $12 cut of the first new copy is true). Some former employees on that Joystiq article claim that this has already been happening for years, citing a stock of Pikmin 2 selling new as used. Pikmin 2 has been commanding ridiculous prices in the United States up until the Wii rerelease.

 

I really don't see how this is bad for consumers. A week ago if you wanted a copy of Xenoblades, you had to buy online from an individual retailer, with all the risk and inconvenience that entails. You would have spent around 90$. Today you can still buy online from those retailers, but you can also buy from Gamestop if you prefer, at around the same price: $90. Of course, if you think $90 is too much for a game, that's fine, you don't have to buy it. So no consumer is actually hurt, and some consumers are better off (those consumers who would prefer to purchase from Gamestop rather than EBay).

Because the price would have been inflated a bit higher (even if only $3) because they were sitting on a bunch of new copies to sell for a higher price later as the exclusive seller. Consumers miss out on a game that didn't have to be AS out of print and therefore people miss out on your product and initial sales figures drop.

 

e: For the record, I'm not a "rah rah capitalism" guy in general, but when it comes to markets for luxury consumer goods I do think a free market is pretty sensible. 

People do make a livelihood on games you know, even if they are not milk, bread, or eggs. It's not as easy as you think it is.

[I Saw Dasein]

I guess that's where you and I differ. If you look at the any media market enough and are privy to the amount in the print run vs. popularity you can start making educated guesses. Definitely would not put a dent in their profit margin to say purchase a thousand or so copies of Xenoblade last year and make over triple of what they would have received (assuming the $12 cut of the first new copy is true). Some former employees on that Joystiq article claim that this has already been happening for years, citing a stock of Pikmin 2 selling new as used. Pikmin 2 has been commanding ridiculous prices in the United States up until the Wii rerelease.

 

Because the price would have been inflated a bit higher (even if only $3) because they were sitting on a bunch of new copies to sell for a higher price later as the exclusive seller. Consumers miss out on a game that didn't have to be AS out of print and therefore people miss out on your product and initial sales figures drop.

 

People do make a livelihood on games you know, even if they are not milk, bread, or eggs. It's not as easy as you think it is.

Well, if it's easy to make educated guesses on which titles will sell out, then why don't publishers just print more copies? If Gamestop can reliably determine that there is excess demand for a game, then so could Nintendo. The fact is that purchasing a whole bunch of a good with the hope that the good will increase in value is speculation, and speculation is risky. And if it's the case that a game is likely to sell out and increase in price, that indicates that the original price ($49.99) was set too low in the first place. $49.99 isn't the "right" price for every game: some are worth that much, some are worth more, and some are worth less. 

 

I do agree that people make a livelihood on games and I have a lot of sympathy for those people, but in this case I don't see how those people are hurt. Nintendo sold every single one of the copies of Xenoblade that it published, as far as I can tell. The fact that some of those copies are being resold doesn't hurt Nintendo, since Nintendo apparently has no interest in selling additional copies of the game in the first place. 

[Gormongous]

Nintendo sold every single one of the copies of Xenoblade that it published, as far as I can tell. The fact that some of those copies are being resold doesn't hurt Nintendo, since Nintendo apparently has no interest in selling additional copies of the game in the first place. 

 

This is a separate and baffling thing. Is it just something that Japanese companies are prone to do? Bandai Entertainment did the same with the Jin-Roh and Ghost in the Shell: Innocence movies. It's like they think scarcity-driven pricing of used copies is unrelated to the possible success of a second run.

[feelthedarkness]

That has definitely been the case with some bands!

 

It has been historically very difficult to get Japanese punks to reissue classic records. Stuff that achieved a sort of legend status based on 1,000 original copies 20+ years ago. Most of these have been bootlegged a few times and the bands get really angry about it, but also refuse to let labels do legit reissues. "You had to be there" is usually the answer. 

[syntheticgerbil]

Well, if it's easy to make educated guesses on which titles will sell out, then why don't publishers just print more copies? If Gamestop can reliably determine that there is excess demand for a game, then so could Nintendo.

Going on to say it's the publisher's job to continuously print copies is not part of what this controversy is about. It's a problem, but doesn't really apply here, because like it or not, limited printings of every kind of media good exists, no matter what. The fact that a retailer is potentially holding back stock of a limited good, assuming Nintendo isn't in cahoots here reprinting stuff for them (Where exactly are these Metroid Prime Trilogies coming from?), then they are taking advantage of the market. When big international corporate chains start pulling that shit, things get out of hand fast and I don't think it should shift blame to the publisher.

 

And if it's the case that a game is likely to sell out and increase in price, that indicates that the original price ($49.99) was set too low in the first place. $49.99 isn't the "right" price for every game: some are worth that much, some are worth more, and some are worth less.

What? Why would you price a game based on the the later resale price? Part of the issue I think you're missing is had Gamestop put out all of the stock they had in the first place (assuming there is no underhanded reprinting going on), more people would have been able to buy it at $50 new.

 

I do agree that people make a livelihood on games and I have a lot of sympathy for those people, but in this case I don't see how those people are hurt. Nintendo sold every single one of the copies of Xenoblade that it published, as far as I can tell. The fact that some of those copies are being resold doesn't hurt Nintendo, since Nintendo apparently has no interest in selling additional copies of the game in the first place. 

This is in response to you thinking greed should have free reign on the production of luxury goods, not necessarily this case. There are probably minor ramifications here for the case of Xenoblade but I'm not an economist so I wouldn't know.

[I Saw Dasein]

Going on to say it's the publisher's job to continuously print copies is not part of what this controversy is about.

I'm not saying that publishers have an obligation to continuously print copies. As I understood it (and I paraphrase), you argued that Gamestop is capable of "picking winners" among limited release video games. You hypothesized that Gamestop realized that Nintendo published too few Xenogears games, and that demand for those games would drive up the price. You further argued that this practice would tend to lead to retailers "picking winners" more often and then drive up prices for consumers. I don't think that's likely, because I don't think Gamestop or retailers are good at "picking winners". Moreover, if it was indeed possible for companies like Gamestop to "pick winners" and figure out which games have been under-produced, it should also be possible for Nintendo to do the same and actually produce enough copies of the game.

In short, Gamestop is demonstrating that there is excess demand for games like Xenogears. If Gamestop can figure that out, then so can Nintendo. If Nintendo still refuses to produce enough copies to go around, you should really be blaming Nintendo rather than Gamestop.

The fact that a retailer is potentially holding back stock of a limited good, assuming Nintendo isn't in cahoots here reprinting stuff for them (Where exactly are these Metroid Prime Trilogies coming from?), then they are taking advantage of the market. When big international corporate chains start pulling that shit, things get out of hand fast and I don't think it should shift blame to the publisher.

Again, I don't see how Gamestop is taking advantage of the market (except to the extent that it is charging current market price for the game). Retailers are allowed to "hold back stock" if they want to do that (although I mentioned above, doing that carries a lot of risk). It is perfectly legitimate for a business to hold on to a good with the expectation or hope that the good will increase in value. That being said, it doesn't seem very likely that Gamestop "held onto stock" in this case, because of the thing with the cases suggesting the copies are newly published (or at least newly packaged).

What? Why would you price a game based on the the later resale price? Part of the issue I think you're missing is had Gamestop put out all of the stock they had in the first place (assuming there is no underhanded reprinting going on), more people would have been able to buy it at $50 new.

If there are a thousand copies of a game priced at $50 dollars each, and 10,000 people want to purchase that game at $50, then the game has been under-priced. The vendor could have charged more and still sold every copy. From the perspective of the publisher and the retailer, you want to charge the highest amount that still allows you to sell every copy.

Assuming that Gamestop did have a stockpile of games, it's true that it could have put those games out and more people could have bought them at $50. I mean, Gamestop could also have chosen to sell the games at $45 (or $30, or $10) instead of $50, and that too would be good for consumers. It's also true of all goods in that retailers could always charge less than market price. But why would we expect retailers to do that?