For the last ten years or so, up until the beginning of this year, I worked in retail. Specifically I worked selling and renting Films and Videogames. In that time I have seen consoles come and go. When I started the main console was Sony’s original PlayStation, which was format of choice for the rental market as CD’s were an easier format to deal with than the clunky cartridges of the Nintendo machines. The follow up to the PlayStation, the PS2 (PlayStation 2) was out and slowly building up sales and would become probably the best selling games console on the market. Microsoft, who most readers will know better as makers of PC operating systems of varying quality, eyed up the money Sony was making in the home console market and eventually launched the original Xbox. While this console was released on the market far too late to steal Sony’s thunder it sold well enough to give Microsoft an inroad into the home console market and also helped establish on-line gaming for consoles with its, at the time, ground-breaking Xbox Live service. When technology had moved along enough it was soon time for both companies to release their new state of the art consoles and Microsoft’s new machine, the XB360 launched first, outsold Sony’s PS3 to become the number one games console on the market.
There are many reasons why the XB360 outperformed the PS3. Xbox Live was certainly one of them. As far as the online side of things went Sony were stuck playing catch up to the head start Microsoft gained from using their previous second place machine as a testing ground to establish a working, easy to use system for people to play their games against each other online. It certainly didn’t hurt that Sony’s machine was hugely expensive when compared to the new Xbox and that the new BLU-RAY disc format was still relatively unfinished (rushed to market as a response to HDDVD) and while it offered a much better quality standard for films, its slower loading times caused numerous headaches when playing games. In some of my early PS3 games it’s not uncommon for games to completely freeze. Eventually Sony managed to pull things around somewhat. By storing a portion of the game to hard drive the loading issue was resolved. Sony cut the price of the machine, won the format war against HDDVD when porn adopted Blu-ray as the format of choice and Microsoft’s cheaper console revealed itself to have and alarmingly high failure rate with the now-infamous ‘Red ring of Death’
Sony also managed to get its online service up and running, they offered it free and until they were horribly compromised by hackers the PlayStation Network service seemed to be picking up a lot of momentum.
So as I write this, the formats are pretty much deadlocked. Microsoft probably ‘won’ this generation format wars, but given its initial success it looks very much like they almost snatched defeat from the jaws of victory.
Later this year both Sony and Microsoft have new consoles coming out. You probably already know this because of the unholy shit storm Microsoft’s launch caused. It’s been pretty hard to miss, even turning up in papers not known for their regular coverage of the games industry. There are a few reasons gamers are building up a head of steam over this issue. Some territories are not getting the console, those that are, are being told they must check in online once every twenty-four hours in order to be able to play games. Aside from essentially treating their consumer base like parolees and dictating their behaviour after they have paid nearly five hundred pounds for the machine, Microsoft seems ignorant to the fact that even in its main territory, America, not everyone has access to the web just yet and even those that do have poor levels of service that will hinder use of the new console.
Bare in mind here that at one point there was even the suggestion that the Xbox one, referred to as the Xbone, would have to be online at all times. Fortunately it looks like this won’t be the case.
The main ‘bone’ of contention surrounding the console is its policy on used games. Some people, mainly publishers though a few fans have made the case as well, argue used games and used games sales are bad for the industry. While a great deal of other people are of the opinion that once they have paid £40 for a game that it’s theirs to dispose of as they wish.
Basically those who oppose used games feel that the second hand market for games is draining money from publishers and damaging game production. For every used game sold, it is argued, the developers and publishers see no money, and if people decide to save money and buy second hand then the more prevalent this choice is with consumers then the games industry can only suffer. The budget for games, especially the biggest releases (referred to as AAA games) is going up dramatically. Dead space 3 for example was so expensive it was claimed by publishers that it needed to sell five million copies. Consequently despite it topping sales charts the game was seen as a flop. I have also seen it argued that running a server for the online side of the game is expensive and used players going online are taking up server space they haven’t paid for.
As someone who has worked in games retail I have dealt with second hand games for a number of years, and honestly most of the last paragraph is pretty much bull s**t. As long as I have been into games there has always been a second hand market for them. This is true with just about any consumer product. What is rarely mentioned by critics of used games is the actual profit margin games stores actually make on new stock. If you walk into any GAME or GAMESTATION you come across in the high street and look at any new games for sale the price point tends to be around £39.99 – £44.99. You may be surprised to find out exactly how little of this is actual profit.
The Registered Retail price of a new game is actually around £59.99; however it’s rare to see anyone actually charging that for a game. Retailers have to compete with each other, the Supermarkets are often willing to sell the latest games as loss-leaders and Amazon has very few overheads so the competition can offer the games cheaper than the high street an often afford to. Used games offer profit margins that new games can’t, with trade in new games are probably more a hook to persuade customers to come in and part with their older games in order to be able to afford the latest title, the used games are then sold on and make the store the profit it missed out on with the new game.
In my time in retail I was in charge of our games section. When a new game was due for release we would spend the weeks/months before launch promoting the hell out of the game. I would set up big displays advertising the game, and coach staff to push pre-orders to guarantee sales. It was in our interest to sell as many new games as possible day of launch. This would ensure trade-ins of older games and perhaps a few impulse purchases of peripherals or snacks that would also help generate some profit. Big titles sell well, they always have. The problem is when a game is budgeted far too high the publishers seem to have some unrealistic sales expectations. Electronic arts want five million sales on Dead space 3? Well good luck with that. It didn’t happen. The game sold well and had it been developed better with a more reasonable budget it would have made a lot of money, as it stands though it was considered a flop. Retailers want new games to be successful, they also want these used games in order to actually make real money and keep their businesses going. Without retail publishers would have to distribute their games solely by digital download, a great method of delivering games but one which would eventually force prices down and cause publishers more grief.
At time of writing Microsoft seem to have done a U-turn on a lot of the unpopular features of their new console. Sony, their main rival held a launch for the PS4 right after Microsoft’s and ended up stealing the show. It’s worth remembering though, that Sony has not delivered the console yet either and in this industry talk is cheap. It wasn’t too hard for them to simply gauge the reaction to Microsoft’s launch and simply say ‘well were not doing any of that!’ Sony has the patent on a technology that helps consoles block used games, and it could easily back track quietly a few months down the line. Microsoft’s U-turn could equally be about gaining back momentum that Sony stole so it’s hard to make definitive statements until the machines are on the market.