Used Video Games Are Good For The Industry (It's Just GameStop That's Bad)

http://www.dawdle.com/used-games-are-good/

by fallentimes • 17 years ago

34 37 17 years ago

sachinag7• 17 years ago

Well, this is targeted at GDC attendees (we're flyering out there: http://twitter.com/Christopurr/status/1395013503), but would love the thoughts of the HN crew now that it's front paged.

fallentimes• 17 years ago

Other than Gamestop and you guys, what competition is there?

sachinag7• 17 years ago

eBay, Amazon Marketplace, and Half. [Fee comparison: http://www.dawdle.com/selling/index.php/fees/ The Google Spreadsheet isn't locked, so please don't abuse it. :) ]

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.

voidpointer• 17 years ago

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.

jcromartie• 17 years ago

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.

Radix8• 17 years ago

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.

sachinag7• 17 years ago

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.

As to your second point, you can get instant sales when there are Sell It Now buttons for items that have StandingOffers. (Example: http://www.dawdle.com/product.php/wavebird-wireless-controll...)

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.

Brushfire• 17 years ago

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.

Tichy6• 17 years ago

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.

Dilpil• 17 years ago

Yes. The chart struck me as highly suspect, that is why.

ajuc3• 17 years ago

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).

bena• 17 years ago

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.

ajuc3• 17 years ago

Still - either Dawdle bankrupt, or somebody is going to buy that used game from them (at least high percent of that used games).

PS. I wish them all the best, but these charts and description using words like money multiplier is just Wrong (tm) :)

Tichy6• 17 years ago

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.

tcskeptic• 17 years ago

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.

sachinag7• 17 years ago

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.

[1] http://idea.sec.gov/Archives/edgar/data/1326380/000095013408...

Radix8• 17 years ago

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.

Tichy6• 17 years ago

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).

pxlpshr• 17 years ago

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.

Radix8• 17 years ago

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.

sachinag7• 17 years ago

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. :) ]

Radix8• 17 years ago

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.

mrcharles• 17 years ago

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 am I missing that makes this different?

jedediah• 17 years ago

So in the original image, a gamer would buy a used game from GameStop instead of a new game from Best Buy.

If a used game will suffice, why would the same gamer not just buy a $40 game from Dawdle instead of the $60 game from Best Buy?

jay_kyburz• 17 years ago

I'm sorry, as far as I'm aware, developers see no money from the sale of a second hand game.

If you are not going to reward a developer for their hard work, or contribute to their next game, why would you pay anything at all?

Used Video Games Are Good For The Industry (It's Just GameStop That's Bad)

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