"80% of the Games Created are Crap!"

February 01, 2007

In a lot of ways, the videogame business is like any other -- you create a doohickey that people want, and you sell it to people. Or, you sell it to a retailer, who sells it to people. But in a lot of ways the business has its own quirks. For example, if you build a bench and try to sell it to someone, the bench is still a pretty good bench even if it sits in a store for a year. Not so with games -- last year's games lose a lot of their value. It always kills me to see an absolutely amazing game sitting on a bargain shelf a year later. Another quirk is videogame hardware, which is usually sold at a loss with the hope that companies can make money back on the games. (The exception this generation is the Nintendo Wii, which Nintendo can sell at a slight profit.)

Big retailers and chain stores like Wal*Mart sell so many games that they can get away with muscling publishers around in order to cut costs. But smaller retailers can't throw their weight around. In short, they're screwed. And one of them just got fed up.

Online retailer DVDEmpire made some headlines this week when the company announced that it was giving up the game sales business, blaming industry greed and unfair market practices. The company also pointed out that "80% of the games created are crap." (That's a direct quote!) You can read the full diatribe here. But in short, DVDEmpire is bailing out of the business because games are a hit-driven industry, and an online retailer can't take advantage of that if it gets games days after they're available at stores, can't support a return policy, and can never sell at a discount.

If you're a regular reader of my columns, you probably already know what I'm going to say. The answer is online distribution, baby! Online stores (like our own Direct2Drive -- yeah, that was a plug) where you download the games don't have to worry about shelf space or warehouses full of boxes, so they can offer a huge catalog, and price it appropriately. (Right now most publishers want to keep online prices the same as what you'd see at retail, but someday that may change.) As for console games, people are getting used to buying smaller games online with either the Xbox 360 or the Wii. Future generations of consoles will likely come with huge media storage centers built in so you can download full games just as easily, or even stream in content one episode at a time. I can smell the future from here.

And I don't believe that 80% of games are crap. It's more like 60/40, right? Okay, 70/30 on a bad year.

      -Fargo

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