Goodbye discs….

When I originally saw the announcement that Wal-Mart and Best Buy were going to try the used game market I knew it wouldn’t work.  Of course saying this now doesn’t mean much since they both announced yesterday the termination of their used game program.  Toys-R-Us is still promoting that you can trade-in games with them but knowing some of the workers at our local store tells me they won’t be doing it much longer either.

With the news that the big boys were not going to continue to try and jump into that market against GameStop I have been reading many posts from “experts” about sweet GameStop is because they have a corner on the used market.  I can’t help but laugh because I sure as hell am glad we didn’t go full force into disc retail last year like we planned.

@eBash we wanted to basically fill up our stores to the brim with games, used and new, and use our influence and location to sell tons of retail.  After visiting Coy Christmas at his awesome store, Brag Game Rights in Duluth, MN, we wanted to start relying heavily on retail to continue to grow our business.  We thought retail could double our monthly sales easily and help us grow our stores to $1 million a year in sales.

However like everything else today our plans were drastically effected by the economic downturn in 2009 and we had to use our cash to keep our stores going and only did about 15% of our inventory that we originally planned.  Our sales are complimentary to our main business but the retail disc market has TERRIBLE margins.  For example Gamestop pays about $47 for a new Xbox 360 or PS3 game that retails for $59.99.  At our small quantities we can get them for about $50 wholesale on average for the same games.

So now as I look to the future I still believe that retail will play a HUGE part in our game center industry but it will not be with the discs themselves.  I am not sure why the console experts think their community is different than PC… just ask PC folks how the disc market is today compared to download sales?  Xbox 360 already is pushing the crap out of their downloadable full games that are a few years old.  Want another example?  How about the new PSP Go?  100% download only.

You don’t believe that downloading games on the console is closer than the “experts” like to think?  Take a look at the DLC (Down Load Content) coming out for games like GTA IV, CoD W@W and other big titles like Gears 2 and Halo 3.  Game publishers know that they can drop a $20 DLC pack and make a much bigger return on their costs than producing an entire game that is distributed on discs.  Last year Microsoft admitted to basically blowing it by making Halo 3: ODST a full disc game instead of a DLC pack.

It makes me sad to think about the change because my brother works at Sony DADC here in town which produces all of the PS3 discs for the US.  I even worked at the same plant as an engineering intern for 3 years putting myself through college.   That will be a huge blow to our local economy here because thousands of people with great paying jobs will be out of work.

My prediction?  All games will be download only by the end of the year 2012, not 2015 like the “experts” are predicting.

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