I fail to see how dwadle is radically different from the GameStop model. They only make 12% on a used game sale, so what? They are just cheaper than GameStop. They have the same incentive advertising the purchase of used games over new games as GameStop does. I don't think they are in a position to point fingers at their competitors as is done in the article.
It is nice that you get real cash instead of store credit. On the other hand, as a seller you are competing with other sellers so you don't get instant credit like at GameStop.
It's a choice everyone interested should be able to make for themselves. The remarks towards GameStop are uncalled for though. They should compete on a service/product level and not pull out some twisted ethical argument how they are better for the gaming industry.
No, if a new game sells on Dawdle for $60, we make $7.20. If a used game sells on Dawdle for $55, we make $6.60.
Technically, we'd favor new games because our commission dollars are higher. But our margins are not. We're like the real estate broker; we make money by finding market-clearing prices. Higher prices are naturally better, but we can't control that. Our goal is to reduce friction.
Lastly, there absolutely is an ethical argument here. The publishers send traffic to GameStop, then GameStop sales reps push used games. That's what gets Dave Perry and all the other publishers who are willing to speak out so angry.
Dawdle is a good thing for gaming culture because it stocks classic games that are valuable to people who seek to broaden their horizons with a wider variety of titles. GameStop merely pushes the "hot" games. GameStop doesn't even sell games that don't get preordered at their stores. GameStop is utterly devoid of any real cultural value to gamers.
Which is sad because it didn't always feel this way. GameStop still employs gamers, so it is easy to miss this. The racks they keep for the previous generation consoles isn't as prominant anymore.
Funcoland had a great feel to it. They always had several TV's with games on them. I think I played Super Mario RPG first there. It was weird compared to what I expected, but that was a great game.
Moreover, its a ridiculous comparison even if you leave aside the "More Profits Are Evil" hidden agenda.
Gamestop is retail. They need higher margins to pay for retail rents. Dawdle is online. It should be cheaper. This is called positioning. It doesnt make one side better or worse ethically, and to shine Gamestop in that light is absurd.
I could find the same item in Boutique stores, on Amazon, or at target for many things -- but I would expect different prices at these stores based on my level of convenience, their operating model, etc.
Moreover, to say that any second-hand market is 'bad' for the new-item market is a big who cares to me. Its not my problem as a consumer that the economics of the retail game trade make more sense for me than they do for game publishers -- its their problem to adapt around it.
I'm not trying to sound rude, but this whole article is written like a kid having a tantrum. The fact that Dawdle is more economical should be enough of a point, they dont need to get into how 'bad' gamestop is for the world. Not only does it confuse the issue about addressing superior model (according to them), it also leads the reader to discount the whole article becuase of inane bias.
Sorry, but this is ridiculous. Somebody bought a used game for 40$ on Dawdle (or Dawlde bought it for 40$ and resold it for > 40$), and that is not showing up in the second chart. If that was included in the second chart, it would look exactly like the first chart.
Edit: to clarify, the second chart only shows purchases of new games, whereas in reality some used games must have been purchased to provide the new 40$ in purchasing power.
But not necessarily by the person doing the purchasing. That's part of his point that isn't being made clearly. In Gamestop's model, they issue you a store credit so you have to go back to Gamestop. Once there, they pressure you into "saving $5" by purchasing a used copy of another game (through low buyback amounts, Edge cards, etc.).
In Dawdle's model, you get a higher buyback amount and aren't forced to shop at Dawdle. This user can then go buy the next latest title and repeat the cycle. Dawdle is trying to show how their model is better for both consumers and producers.
Why wouldn't you be able to sell your Gamestop Game somewhere else? I suspect what is happening is that Gamestop guarantees to buy your game for a certain price, which would be great (as in being a real plus compared to ebay). For another beneficial thing about used games is this: maybe 60$ is too much for me for a game, but I know I can sell it for 20$, so it really costs me only 40$. Therefore used games are good for the industry - without used games I might not buy any games at all. With the guaranteed buyback price of GameStop, I know in advance how much a game costs me. Some people might prefer that to putting in the work to sell on ebay/Dawdle for an uncertain price.
As for the original case, it makes no difference who buys the used game, what people seem to care about is the amount of money spent for buying new games. And that is the same for GameStop and for Dawdle.
Right - you're making our point. When GS buys a used game for $20, they re-sell it for $40 (49% margins). That means the value of the used product is $40. If you can sell it for $40 on Dawdle, a new game only really costs you $20.
That means your $100 in purchasing power gets you five new games: the publishers, developers, and retailers only benefit when you buy new product. We're trying to show them how used games can work in their favor if you cut out the GameStop middleman.
Edit: as for the uncertain price, we're working on it. With our StandingOffers, we might be able to find people willing to guarantee you $30 or $35 up front.
You should think about the magic net gain. You can not just buy games for 40$, there must be buyers of used games. These don't show up in your equations. There is only so much money people will spend for games, you can not create more.
I am not saying that Dawdle might not be a better deal for the end consumer. Certainly lower margins means cheaper games means more games sold. But I don't think GameStop are crooks, they simply have an alternative business model. They might be more expensive, but in exchange they offer a different service (guaranteed prices, no hassle with online selling of your game). I don't know GameStop or Dawdle, btw.
I agree, the silly red box that talks about Gamestop being "incented" to push used games is meaningless. In fact you could easily argue the effect is the exact opposite of what is argued:
Because Dawdle does not give "credit" it requires the sale of a used game to continue the "money multiplier" process. The purchasing power to buy these used games has to come from somewhere but in the chart as shown that is never addressed, it is just a magic net add to the system.
Gamestop, by providing the credit up front at least takes the risk of having to eat some of that investment and thereby possibly subsidizing the sales of new games from reduced profit on sales of used games.
Ah, I suppose this is why we should have done a little more exposition on the note rather than just target GDC attendees who already use the same terms - nothing is sekret on the intarwebs.
GameStop's margins on used products are 49%. They're 20.9% on new software and 6.5% on new hardware. [1] They make more money - revenue is meaningless, margin is profit - selling a used title at $55 than they do selling a new title at $60. That's why they're incented/incentivized to push used games at the expense of new games: that's the part of their model that pisses off the publishers/developers/retailers.
I don't follow the "magic net add"; the idea is that you start with $100 in cash and you move to the right over time.
magic net add is: to give somebody $40 for used game you must take it from somebody. For example by selling a new or used game to somebody.
This is not shown in lower chart, but is shown in upper chart. So in upper chart money are circling in closed environment(GameStop even takes some money out of it), while in lower chart there is some money coming from outside.
That is why these charts are meaningless.
You said your company has incentive to sell new games, because margin is bigger. OK, but if that is case, why at all you buy used games? Are you not planning to sell them?
Exactly, Dawdle cant forever buy used games for $40 and do nothing with them, they'd bankrupt. This is not real money multiplier (like in bank), because "new" money is not created "from air" but taken from other place.
So, for each used game bought by Dawdle either:
a) Dawdle lose $40
b) Dawdle sells this game to someone (in which case this is exactly the same situation like in case of GameStop)
For Dawdle to survive amount of cash lost by unsold used games must be smaller than amount of cash earned by selling new and used games (only count margins there, not full prices).
I guess you're complaining that the first chart shows a used game purchased at the end of the sequence, but the second chart doesn't. If the second chart also ended with a purchase of a used game then the charts would be more similar. Also, the consumer would still be left with $20.
...but this is marketing so...
I don't see GameStop as taking a risk by giving you $20 store credit, as someone on this thread suggested, they're just ripping you off because, iirc, you can't get the same in cash, so your only choice is to buy from them.
No I am complaining that Dawdle is creating money out of thin air. Somebody must be buying those used games for 40$, and they don't show up in the equation.
As for ripping off, who is forcing you to buy at GameStop? I don't get it (I am not associated with GameStop and I don't know them either).
Right, and if the person in the second chart had finished by buying a used game they would be part of this equation. The difference being that they would be net up $15 and an extra game to play. To me it is clearly implied that there are used games being bought by other users of Dawdle.
As for GameStop being a rip off, I realize I have a choice and I never trade games to them because I feel the prices aren't fair. I prefer to keep my games and I don't play as much anymore anyway. I don't mean that Game Stop are unethical crooks, just that I believe they don't present a good value to me or my friends.
It seems to me to add up, in the second chart a used game would have to be bought twice, because there are two infusions of 40$ through "selling a used game on Dwadle".
Naturally, if you manage to sell your games for a better price, you are left with more money to spend. I don't see anything inherently interesting in that, just two stores with different margins and different kinds of services. Why is one considered bad and the other isn't?
I've heard negative reactions from game developers before and think they should pay more for popular used games, so I'm not surprised by this. On the Dawdle blog there is this post which links to a Penny Arcade comic which shows this seems to be an on-going thing.
http://blog.dawdle.com/2009/03/why-penny-arcade-is-wrong-abo...
I found this post from Dave Perry which I think sums up why the developer feel slighted by Game Stop. I sympathise with them. If Perry is right they'll begin pushing things like Steam and sharing profits directly with MS and Sony for downloads. I prefer hard copies though.
I must admit that I don't understand the issue. Why is it OK if users sell games, but not OK if shops sell used games (as dperry writes). I don't get it.
I can only tell it from my perspective, that is, why I am wary of Gamestop whenever I hear a developer complain. There are two reasons.
1. As I said. I feel Gamestop should make a better offer for poplular used games that they resell, or sell them for less than they do. I have seen very popular games go for a measly $5 less. But, of course I can't do anything more than choose not to trade with them.
2. I feel a certain loyalty to developer that make games that I like. I want them to make as much of the money I spend as possible. The same as I want my favorite music artist to make as much money as possible and only want there lable to make what is absolutely necessary. The team creating the game is where everything of value comes from and if GameStop is, as Perry suggests, doing everything they can to keep used games being sold at a higher rate than new games while the developers "pay to put standees and posters everywhere" then I reason they are damaging the bottom line for the developers.
If I haven't been able to express my point of view adequately in this post then I need more practice writing and it is probably to subtle an issue to matter. Competition and technology will eventually sort things out.
It looks like you all are partnered with Best Buy. Other than that a good article.
Have you considered selling new games directly? I know from another post you plan on expanding to other markets so I can see a future where you advertise more expensive products to be drop shipped from the manufacturer's warehouse straight to the consumer.
...wait, maybe I should build a business on that idea.
If you want to build a business on that idea, we'll be happy to help you out. We know a couple of the distribution companies that drop ship and we'll give you a fee discount to get more new games on the site. :)
[BTW, we're not partnered with Best Buy at all. It's just that blue is a default color in PowerPoint. :) ]
Actually it was the choice of Best Buy, the choice of blue, and the use of Best Buy (and Amazon) as alternative places to purchase games when I was checking out your site.
Regarding you post, I would like to look into this. Would you email me the names of those distribution companies and how can I contact you? (I glanced at your site, but didn't see your email.)
benjamin . serrato (at g mail com)
Sometimes I wonder how good I should expect the webcrawlers are.
Using "Best Buy" as shorthand for "big retail chain which sells games, but, no no, I'm not talking about GameStop here, no, ugh, I'm talking about everyone EXCEPT gamestop in this bit -- you know, the stores like Best Buy and that sort of thing," works just fine.
I love Dawdle and wish you guys the best of luck! I came out of a failed video game startup last year, I know how difficult it can be being a new guy on the streets of a massive industry. It's definitely one heck of a challenge but I'm confident you guys will succeed.
I wish I was going to GDC this year, went in '08 and it was a blast.
I think the biggest difference between Dawdle and Gamestop is that people do more buying at Gamestop. I can't really see a functional difference. Even the quick math doesn't add up given the two charts. 1:1 New:Used, vs 3:2 New:Used. Maybe I'm missing something important.
Whether or not the company selling used games makes money off of it or pushes it is very small I would think. If someone wants a used game, they'll get a used game. In fact, at Dawdle, since the example shows games as selling for cheaper, I can see that maybe it would allow people to save a little more money for new games... or it would allow people to just buy more games.
What's interesting is that we're trying to get all the small independent stores to sell on Dawdle. They're a different beast - many of them don't even sell new games. They're typically in a strip mall next to a Wal-Mart that does. So people go into the indie store, sell their games, and walk to the Wal-Mart to buy new games. Only the people who can't afford new games anyway or are looking for older stuff that Wal-Mart doesn't stock end up buying at the used game store, so the publishers/developers/retailers actually don't "lose sales", which is their main concern.
If people are going to go to the Walmart to buy new games anyway, why wouldn't the indie store them as well? Even if the prices are a little higher, wouldn't the convenience of not having to go somewhere else make up for it?
They've told us it doesn't make up for it. The stores just walk down to the Wal-Mart themselves to pick up a couple copies of Halo 3 or whatever rather than actually working with a games distributor like Jack of All Games or whoever. They just can't compete on new games; that's why they do used, retro, and host tournaments and so forth.
