January kicked my ass.
The GameStop saga will be one for the ages. Suffice it to say, I disregarded my own advice, especially perhaps the #1 Rule: if it’s good enough for a screenshot, it’s good enough to sell. Alas, I am still in the game (Stop), scalping premium on option trades instead of cashing out where I had originally planned to exit. Canceling that limit order – and taking the subsequent screenshot – is going to haunt me for a while. Which is good, because I need to be reminded from time to time what happens when you abandon your own exit strategy.
Stock aside, I still stand by my earlier post about GameStop the company. News out yesterday indicates that they’re creating* a Chief Technology Officer position and slotting in the former Amazon engineer lead for Amazon Web Services. They’re also bringing over the the Director of Customer Service at Chewy to be the Senior Vice President of Customer Care. Finally, they got a guy who was doing fulfillment at Amazon and Walmart to be Vice President of Fulfillment. None of which means anything to anyone here other than the fact that there’s now a chance that GameStop can pivot away from being Pawn Stars and towards being some combination of Micro Center and… something else. Maybe like a comic book store hosting Magic: the Gathering tournaments?
Or maybe they’ll fall on their face, Chuck E Cheese style.
In any case, don’t worry, this will be the last GameStop post I do this year. Next time we reconvene on the subject, perhaps we’ll be talking about how the company has gotten into the digital license reselling market, how it rents out VR/AR rooms by the hour (and the predictable downsides to that), or the partnership with Geek Squad in custom building PCs onsite.
Or perhaps I won’t mention it at all, seeing as how we’re 1 month into 2021 and I’m already exhausted.
*It’s telling that GameStop didn’t have a Chief Technology Officer position until just now. We all knew it was mismanaged, but that mismanaged?
The minute you hear that name, chances are you had some kind of visceral reaction. Was it happiness or elation? Probably not. I don’t actually know if there is a positive “visceral” reaction to anything.
For me in particular, GameStop is like OG Pawn Stars. It’s a place where you took your old games and got $7 in-store credit and watched them slap a $45 price tag when they placed it back up on the shelf. And the staff would shadow your footsteps trying to upsell you on subscriptions or preorders when you were really just killing time near the movie theater (remember those?) or before getting a haircut (remember those?). That pushy behavior makes a bit more sense when you realized the insane quota requirements management levied on the near-minimum wage workers. And who can forget the time when that same management asserted that its stores were “essential retail” and thus should remain open in the middle of a pandemic. Suffice it to say, this is not a chain with a particularly great reputation. Even amongst its target audience.
Why bring this up now? Well, there are two things going on. Technically three, but I’ll get to that.
The first is that the stock price has rocketed up in the last week. Back in March, GameStop stock was trading at $2.80. Nearly everyone, myself included, felt like it was really going to be the next Blockbuster: a former retail giant in its niche who chose hubris over innovation, and let the world pass it by. If you have been in a GameStop lately, you can see that they’re trying – nearly 50% of the store is now gaming merchandise, like Minecraft T-shirts and various tchotchkes that wouldn’t be out of place in a Hot Topic. Which, okay, good for them and whomever is out there buying those sort of things. But as both Microsoft and Sony release flagship consoles with digital-only editions at a lower price-point, surely the days of physical media and those who focus on selling it are numbered?
Remember when I said GameStop was at $2.80/share in March? Friday it closed down 11% to… $35.50. It was really at about $20 on Tuesday (1/12) before it rocketed up to a high of $41 mid-Thursday, and now here we are.
What happened? Last Monday, Ryan Cohen from Chewy.com fame and two of his executive buddies landed seats on the GameStop board of directors, after owning 13% of all the shares. What’s Chewy.com? It’s a place to order online pet food. Which… yeah. If you’re older than 35, that may remind you of Pets.com back in the heady 2000 internet-bubble days. The difference here is Ryan founded Chewy in 2011 and sold it to PetSmart in 2017 for $3.35 billion. It’s now worth $44+ billion. And all this was done despite Amazon being a thing. Apparently their relentless focus on customer service is what puts them over the top with most people.
In that regard, the speculation here is that Ryan can pull the same magic with GameStop. And I can see it. The current retail experience cannot possibly be worse, so any meaningful improvements would do wonders. Plus the online shopping experience… well, it’s not that bad, when there are things actually in stock. Can’t really blame GameStop for that specifically though; just try finding a non-scalped Switch anywhere for MSRP. Point being, there is room for improvement.
One the biggest advantages and reasons I care about this at all though, is the simple reality of resale. If not GameStop, then where? Craigslist, Facebook Marketplace, eBay? People do it, I guess, but I prefer to not have to rehearse hostage negotiations strategies before heading to a parking lot to acquire luxury goods. “OK, I’ll hold the envelope in my left hand and take the Vita in my right.” Places like eBay might be good for buying things – there are some customer-focused policies to cover situations where you open the box to find a literal brick inside – but from a seller-standpoint, it’s nerve-wracking. Those same customer-focused policies make it easy for buyers to scam you by claiming it broke in transit or claim you sent a brick. That gets us back to hostage negotiation wherein the correct move is to film yourself putting the console in a box, which probably wouldn’t hold up in court anyway. Maybe you can get UPS to vouch for you, or pack it themselves?
So, yeah. I like the possibility of rolling in somewhere with this unused PS3 and get $5 for it or whatever. The local Pawn Shop sure as shit won’t take it (I asked), and my only other option would be to throw it away via Good Will. Just kidding, I still hold out hope that one day I will turn it on.
Anyway, there’s all that. Back in 2019 I had some schadenfreude over GameStop’s then-collapsing stock price ($3-$5) but pointed out how I wish them to stick around for resale purposes. And at that time, I also mentioned resale of digital goods. Even if they somehow pulled digital resale off, it probably won’t be the bounty that it may have been back then: Steam and the Epic Store would directly compete (if forced), and the Game Pass reality we live in means less people are buying licenses to games to begin with. There is some speculation that GameStop could instead start leveraging themselves into being a physical meeting space for gamers, or start selling PC parts like a mini-Microcenter (one of the best retail stores for that, but only 25 in the whole US). That’s probably the better avenue to take, IMO, as they already have stores everywhere and I’d love to have a place to go to see if a mechanical keyboard is any good or to see the difference between a VA, TN, and IPS computer monitor in-person. Price-match Amazon in-store with something I can take home that minute? Now we’re talking.
We shall see where things go.
[Edit] In the interest of full disclosure, I’ve been selling puts on GameStop stock since November. Selling puts is not the same thing as buying puts – selling means I’ve been betting that its stock will go up and not back down. I am not recommending any financial advice here.
In years past, I always experienced surprise when coming out of a holiday season sans holiday loot. Maybe it is because I’m older, maybe it’s because I have exactly two hours of “free” time each day now (in which I also have to fit chores), or maybe things like Humble Bundle and sales in general have spoiled me, but… it’s easier than ever to let things slide right on by.
My decision point this past Black Cyber Fronday was two-fold: PS4 or Switch. The PS4 had a lot going for it… sorta. There are basically five games I want to play that are PS4 exclusive, and two of them haven’t released yet. Given how the console deals have actually gotten worse over the years, it stood to reason that I could just continue to wait. All the way into March, if necessary.
The Switch is not something I talk much about here, which makes some kind of sense considering I do not own the machine. Nor any Nintendo console since the GameCube and the DS, really. I don’t have anything in particular against Nintendo, I just don’t have friends coming over to play games anymore. I guess Mario Kart and Smash Brothers can still be fun solo, but having the possibility of 2P, 3P, and 4P joining the field is what sets the value over the top. Without that bonus, you have a console that costs the same as it did three years ago and ports of Wii U games that grab headlines when they hit 50% off.
Despite all that, I was very sorely tempted by the Switch Lite when it was going for $163. I don’t have commutes in which I could reliably play it, or really even any opportunity to play at all that would not also allow me to play PC games instead. Still… how else will I ever experience Zelda: Breath of the Wild?
Then a thought occurred to me. “I know some Rent-A-Centers nearby. I wonder what they charge?”
Technically there is a non-bundle version with just the console for the low, low price of $19.99/week. Which might even be a “deal” compared with old-school Blockbuster prices back in the day. But holy shit, you guys, the fine print says that actually renting to own this bundle is $1,949.35 (65 total payments of $29.99). Meanwhile at GameStop, that bastion of charity, you can resell a PS4 1TB console for $150 store credit as of today. So, conceivably, buy a used one for $190 and even if you turn around and trade it in two weeks later, you’re getting at least as good of a deal.
Or, you know, continue doing nothing but playing the same games you were already playing for $0-$15/month. Sometimes analysis paralysis pays off.
Gotta love this news headline: GameStop’s stock in free fall ‘as business burns to the ground‘.
Couldn’t happen to a better company, am I right?
Still, I am a touch concerned. As the article notes, GameStop revenue is down as more and more gamers rely on digital purchases and streaming services than physical games. It’s been more than five years since I bought an actual physical game, myself. But it is vitally important to me that physical gaming continues to exist because otherwise we consumers lose the ability to resell our games.
While there have been attempts to make inroads in digital resell, the lack of recent headlines leads me to believe things have stalled. The most recent article I could find was from last year, wherein a new storefront (sigh) was going to be launched that could allow digital resell based on blockchain technology. Except, you know, the consumer’s own cut was going to be only 25%.
Which kinda makes GameStop look downright charitable in comparison, yeah?
In any case, if GameStop goes away, I am not entirely certain what fills the gap. There are a few off-market used game stores in my area, but none of them have any particular web presence or meaningful sales. Perhaps we will see more eBay storefronts open up, but where are they sourcing the games? My fear is that once GameStop goes under, there won’t be a big enough lobbying voice to dissuade game makers from pushing an all-digital future and thereby removing one of the last bastions of gaming Consumer Surplus.
Before I start, there is one fundamental truth that needs to be acknowledged: a used game sale is a new game sale at a lower price-point. No one is seeking out used games because they are used, they are sought because they are less expensive. Incidentally, this same principal applies if someone is able to re-sell a game they bought, as the ability to recoup part of the cost means the original purchase becomes less expensive.
Without further ado, let me examine each of TB’s arguments against used games:
1) Used Game Sales support shady/pushy retailers
Or, the GAME (in UK) and GameStop Are Bad argument.
It is absolutely true that retailers who specialize in used game sales push used games sales over new ones; the original sale is a recouping of an investment for the store, whereas each additional resell is nearly pure profit. I am not interested in defending the practices of GameStop (etc) though, primarily because it is irrelevant and red herring besides. No matter how much you swing the “games as licenses” argument, the fact remains that used game sales are legal in the United States and presumably elsewhere – GAME and GameStop would have been sued into the ground otherwise. The shadiness of any organization does not reflect on the product they provide. You can picket Wal-mart for all sorts of legitimate reasons, but that does not make cheap groceries immoral.
I have gone into a GameStop all of twice in my life, whereas I frequented a mom-and-pop used game shop next to the local theater for the better part of a decade. I went there because their used games were cheaper, and you received more store credit (or cash) than GameStop provided, all in a no-pressure sale environment. Ergo, any argument that uses the removal of used games as a vehicle to attack a retailer you don’t like is simply ridiculous. GameStop’s practices have nothing to do with the “question” of used games, as there are alternative stores which do not behave in similar fashion.
2) Used games do not depreciate
This honestly reminds me of the “you wouldn’t download a car” PSA. Even if we take this claim on face value… so what? Is the argument supposed to be that used game sales would have been fine if the AI started glitching out on its own five years from now?
To be charitable, I am going to assume instead that people are referring to how physical depreciation of goods naturally differentiates two otherwise identical products, potentially justifying the premium on the unused version. In which case, I’d argue that something similar already occurs even in purely digital products.
Videogames are not released in a vacuum – they are always a product of their times. While the actual data bits do not decay, the value and meaning of them in the mind of a player certainly can. There are whole classes of videogames that I literally cannot bring myself to play anymore, because the graphics are too primitive, or the resolution too low, and so on. Innovation in mechanics or design can render older titles feeling stilted or slow, even though nothing in the original game itself has changed. Some games hold up better than others, of course, and many older games are arguably better than new titles. But on a certain base level, videogames do depreciate, if not literally then culturally.
If you do not find this counter-argument particularly compelling, that’s fine, but allow me to make two final observations. First, no one expects a game to remain $59.99 two, three, four years after release. If games do not depreciate in value, why do you think we see the companies themselves reduce the price? Second, how much do you think your unopened City of Heroes or Battlefield 2 box will go for these days?
3) Music and Film industries are less harmed by secondary sales
TB’s point here is a roundabout justification for how videogames are a special case when it comes to secondary sales, despite music and movies also being digital goods without depreciation. Buying used movies is less harmful to studios, he argues, because a particular film can make the bulk of its money in the theater, followed by Pay-Per-View, DVD sales, rentals, and finally syndication on TV networks. Similarly, music artists get the bulk of their profits from concert tickets, in addition to (small) payments from streaming services and finally the default CD sales. In other words, music and movies have multiple revenue streams whereas videogames have just the one.
To which I must ask: whose fault is that?
As a consumer, you are not responsible for a company’s business model. It is perfectly fine to want the developers to be paid for their work, or to wish the company continued success. But presuming some sort of moral imperative on the part of the consumer is not only impossible, it’s also intellectually dishonest. You and I have no control over how a game company is run, how much they pay their staff, what business terms they ink, or how they run their company. Nobody asked EA to spend $300+ million on SWTOR. Nobody told Curt Schilling to run 38 Studios into the ground. Literally nobody wanted THQ to make the tablet that bankrupted the studio.
What is worse though is the implicit moral superiority that is derived for buying “legit.” If game companies and their designers deserve to be paid, and we have some moral obligation to do so, doesn’t that mean they deserve ALL the money? I cannot even begin to imagine the mental gymnastics Total Biscuit had to perform when he denigrated used games and celebrated Steam sales in the same breath. When you buy a game for 75% off, that is you robbing the game company of 75% of the money they deserve. Not even deserve, really, considering by many metrics they are entitled to much, much more than the purchase price given the total amount of enjoyment derived.
That sounds absurd, and it is, but that is my point; you cannot make the moral imperative argument and only go halfway. A company either deserves $59.99 or they don’t. Alternatively, you are not responsible for their business models at all, and are fully justified in maximizing your consumer surplus, e.g. by waiting for sales, buying used, etc. It is noble to wish these designers success, at least when such nobility is followed-up with busting out your checkbook. Otherwise, it is so many empty words.
4) Once used games are removed, games will be cheaper
No, seriously, Total Biscuit actually said this, presumably with a straight face.
Why in god’s name would anyone rationally assume that the removal of competition (in the form of secondary sales) would force or even encourage game prices to decrease? Everyone keeps pointing to Steam with its effects on PC gaming, as if Steam weren’t the exception that proved the rule. Everyone acknowledges that used games on the PC haven’t existed for quite some time, but no one seems to follow-up that thought with what should have been an obvious question to ask: were there big discounts on PC games back before Steam?
Good lord, no! You were at the complete mercy of retailers who almost never marked anything down from MSRP. And why would they? You literally could not buy these games anywhere else. If you found a good deal, it was likely because nobody was buying that game and the store wanted to liquidate their stock. Outside of fire sales, there was/is always going to be resistance from retailers over discounting a game’s price because there is a minimum cost involved with pressing a DVD, shipping it across the country, unloading it in the back, and paying people to sort and shelve it.
Incidentally, this is another reason why I don’t think future console games will be cheaper: there will still be hard copies sold. Do you think retailers would let Microsoft sell Halo 6 for $40 online and $59.99 in stores? Of course, there is a pseudo-analog that exists right now between PC vs digital download games, with things wildly alternating for no apparent reason. For example, it’s somehow $20 cheaper Amazon to ship me DVD of Bioshock Infinite than it is to download a copy of it. Or maybe that does make sense, insofar as what I explained earlier about retailers trying to liquidate stock.
If you legitimately believe Xbox One games are going to be cheaper, let me ask you two things. First, what kind of deals have you seen on XBLA titles? Similar in size, scope, and frequency to Steam sales? Microsoft has already dabbled in digital games for which no secondary sales exist, so their pricing behavior now may reflect any potential behavior in the future. Second, what kind of deals have you seen on Origin in the last, I dunno, two years? There have been a few recently, but very rarely more than 50%, and they are not nearly on a scale as Steam. That is a publisher who has as near a 100% profit margin on every digital sale as possible, and even they are not willing to compete on price with retailers who sell game codes on EA’s own platform!
The point here is that Steam is the exception that proves the rule. I bought Tomb Raider on the PC for $20 a mere three months – three months – after its $49.99 release. Granted, it was via Green Man Gaming, but it activated on Steam. Do you honestly believe that the only difference between our present console MSRP reality and a hypothetical all-digital future is the mere possibility of resell? That companies would be fine with a $30 markdown for a limited time a few months after release? Maybe. Maybe we don’t see similar sales because GameStop (etc) would buy a few pallets of discs at $20/each to sell at $40 after the sale is over. Then again, I could have done that exact same thing via GMG and just sold the activation codes. Actually… that’s not a bad idea…
Simply put, this argument requires a striking amount of faith in game publishers to work. Consumers are being asked to cede an enormous amount of implicit value, not just in resell value, but also in control over how they play these games (tied to accounts, phone home every 24 hours, no borrowing, etc). We are asked to cede these values all in the hopes that companies like Microsoft will not simply keep charging $59.99 out of… well, out of the goodness of their hearts. That is not enough for me. There is certainly every economic incentive to keep things running business-as-usual, after all.
5) Used games cost the companies money in terms of support/servers.
It is true that game companies “must” provide support to even non-paying (i.e. used game) customers in a way that movie and music companies do not. However, there are two things wrong with the argument TB is presenting. First, it sort of assumes that the game was not worth playing for very long in the first place. Total Biscuit’s example was how a company would need to provide support to a gamer for two months, and then a new player who bought the copy from the first guy for another two months, and a third person, and so on. The difference between that scenario and one guy who plays continuously for 6+ months is… what?
Total Biscuit’s second point about non-payers in multiplayer (presumably driving up bandwidth costs or whatever) caused me to facepalm IRL. Maybe he has never heard about why the Free-2-Play model works, or more importantly how it works? Someone playing the latest Call of Duty secondhand is providing content to “legitimate” players in a way that a no-longer-playing gamer by definition is not. I mean, that’s the premise of the argument, right? That the first dude sold his game, and is now an empty seat in a lobby somewhere. You do not even need to have the full F2P development plan set up to appreciate the fact that an extra body is making your multiplayer experience that much more worthwhile when it otherwise could/would have been nobody.
As I pointed out in the beginning, let me point out again: used game sales are new game sales at a lower price point. Nothing is stopping companies from lowering the prices for their games and otherwise being more competitive with used games. You might think that used game prices would simply adjust to compensate, and maybe they would, but that is an argument against selling at anything less than full MSRP, ever. Which is clearly ridiculous.
In any case, time marches on. Even though I see this forceful transition into all-digital games as a net-negative for gamers (and it is), I am obviously not against digital platforms themselves. I am just a bit miffed that the transition is being accelerated by Microsoft (etc) before the question on the transferability of licenses is fully settled, at least in US law. Believe me, the day will come when we shall be able to buy a Steam game (license) and then sell it to someone else after we are done.
At which point I’m sure the suits will pine for the days when it was at least possible for someone to lose their disc.
Edit: Removed incorrect “et tal” usage. Thanks, Tobold.