Sunday, November 11, 2007

Would You Like to Pre-order Fries with that?

There's been a bit of recent internet discussion on the merits (or lack thereof) of something video game stores call "the pre-order". For those of you that don’t know what this is, I'll describe it.

You decide that you want to buy a video game, but it’s not out yet (we'll get to how you figured this out later). Video game stores and some of the bigger retailers will let you "pre-order" the game, meaning you give them some amount of money (typically five dollars, although stores will happily accept more), and then when the game actually becomes available, you can go to the store, pay the difference, and take your game.

Why, you ask, would you want to bother to do this? A very good question. Some stores will tell you, without missing a beat, that if you do not do this, when the game actually does arrive, you might not be able to buy a copy. Most, if not all copies on-hand will be reserved for those who pre-ordered the game.

Well, that's ridiculous, you say. If you mainly stock stuff that people have already pre-ordered, what exactly is the point of having a store, rather than some sort of "pre-order pickup warehouse"?

The typical video game store response would be: "Look, are you going to pre-order, or not?"

I've always believed that the concept of the pre-order is bad for the consumer, all around. Even if we disregard the edge cases in which stores sometimes do not even have the game available for people that pre-order, it is still a bad deal for the customer.

For starters, you're giving the store your hard-earned money (that they are now free to use in whatever manner they desire) for the promise of being able to buy a product later. This is weird to me. I can’t think of any other entertainment product that I would buy in this fashion. Do I have to pre-order books, or movies?

Also, it means that it's up to me to track when games are coming out. It means I now need to pay attention to stuff like "release dates" and plan out my entertainment purchases in advance, using lousy websites to do so. Again, I have never had to do this with other entertainment products. At worst, I realize that a movie is coming out next week, and consider making plans to see week.

The reason stores do this, I've been told, is because it's the perfect way to make sure they stock the store with only games they know will sell. Their goal is to avoid having anything sitting on the shelves for more than a couple days. If 20 people pre-order Game X, they know they should probably order approximately 20 copies of Game X.

This, while efficient for the store, has an unseen downside for the customer. What it means is that you will rarely find anything other than mainstream games in a game store. The obscure games no one knows about, so no one pre-orders them, so the store doesn't stock them.

This last point is very strange to me. In the 1990s, I remember walking into stores like Software ETC, or Egghead Software (remember these?) and being able to browse the games on display. Games had to have flashy box art (or even oddly shaped boxes) and copious descriptions and screenshots on the packaging to compete. On several occasions, I would find something I had never heard of before, that looked intriguing, that I would buy. You can’t really do this anymore, outside of some Mom & Pop shops, or online.

Game stores practice this ultra-efficient process because game stores have to actually buy the games they hope to sell, or so I was told by a producer I worked with at a game studio. Assuming he wasn't pulling my leg, the process goes something like this. The store orders N copies of Game X from the publisher. The publisher charges them some set amount per game. The store receives the games, and prices them at that set amount, plus whatever they hope to make in profit. If the game sits on the shelf and never sells, the store is out whatever amount they paid for it. They can sell it back to the publisher, but always at a loss. Many games, unfortunately, do not age well. A copy of Madden Football 2001, if it doesn't sell some time in 2001, is probably never going to sell at all. Games are also expensive, averaging $50 or more. A ten percent loss on 100 copies of a $50 game is $500, which is roughly the yearly salary of the teenager working the counter at the store (I kid, I kid).

This process may, in fact, differ from how other entertainment products are sold, and as such, it is in the store's best interest to only stock that which they know they can sell. It is partly through this sort of strategic stocking, and partly through various other factors (some which are even more dubious), that places like Gamestop can post a sevenfold increase in earnings this past year.

In the end, stores are just doing what they have to do to stay profitable. It is a business, after all. However, due to the way things work, the customer experience at such stores has definitely become worse, and the industry has become a tougher place for new game publishers and developers. In their race to be profitable, game stores may be alienating the very customers and developers that made their existence possible in the first place.

1 comment:

Dan said...

Ok, let's try that again...

For no reason in particular, I'd like to note that GameStop was recently added to the S&P 500:

Madness, I tell you.