Konami, Bethesda slam cut price games

[Zeus]

Bosses at the likes of Bethesda and Konami have expressed their concern over the cut price games being offered by supermarkets in the UK. According to them the low prices are 'un-necessary' but we're sure the consumers will disagree.

<blockquote>Konami UK  boss Peter Stone told MCV: “It appears that FIFA has been used as a spearhead in a fresh market-share battle between the supermarkets, and this can only lead to similar retaliation with other key titles. It is our understanding that retail sets these prices, and they are unnecessary and worrying.”

Bethesda CEO  Sean Brennan added: “Clearly no publisher likes its brand to be devalued like this. I suspect it only moves market share around rather than generates additional sales. The alternative is something like the French model where the state dictates minimum retail pricing in video games.”</blockquote>

News Source: <A href="http://www.mcvuk.com/news/36062/Games-trade-slams-price-cutting" target="_Blank">MCVUK</a>

[faceless]

the only thing that's worrying is that france has laws against this.

wtf? how can the govt dictate a price for videogames?

[bonsc]

Why are they arsed don't they get there money anyway or doesn't it work that way

[legendofphil]

the only thing that's worrying is that france has laws against this.

wtf? how can the govt dictate a price for videogames?

Quite easily, its a "law" against anti-competive activities.

How would you like it if you opened a shop selling something £15 over the wholesale costs to pay your overheads and make a small profit, but then the supermarket down the street undercut you by an amount that you can't match because of your overheads?

Under valuing a product is a problem, if everyone expects the price to drop (though why should it) and supermarkets force this, then retailers will demand that the wholesale price is dropped. This will mean that less money is paid back to the development costs and more games won't make back their money causing less games to be made in the future.

[faceless]

Quite easily, its a "law" against anti-competive activities.

How would you like it if you opened a shop selling something £15 over the wholesale costs to pay your overheads and make a small profit, but then the supermarket down the street undercut you by an amount that you can't match because of your overheads?

Under valuing a product is a problem, if everyone expects the price to drop (though why should it) and supermarkets force this, then retailers will demand that the wholesale price is dropped. This will mean that less money is paid back to the development costs and more games won't make back their money causing less games to be made in the future.

i really have no idea what the hell you're talking about man. if i open a shop selling something, and someone else undercuts me, that's competitive pricing. either i need to work on a way to bring down my overhead or work on a way to add value to the deal or maybe make my store a more pleasant and knowledgeable place to justify the price difference. if the supermarket and i keep prices at a certain level, that's what's anti-competitive. sounds like price fixing to me, and the govt is involved in too it...

[ronaldospet]

meh , if this is in resonse to fifa in uk supermarkets then it doesn't matter as i would never pay rrp for fifa especially this years bugged up version.

but dont worrybethesda you make GOOD games you have nothing to worry about as i would buy yours for full price anyway :) as you actually deserve it unlike rEAmake every year

[EL_CAD]

the only thing that's worrying is that france has laws against this.

wtf? how can the govt dictate a price for videogames?

Here in Maryland they did the same thing with gas. When prices were really high, a few gas stations were a lot cheaper, and the state made them sell at a market price.

[legendofphil]

i really have no idea what the hell you're talking about man. if i open a shop selling something, and someone else undercuts me, that's competitive pricing. either i need to work on a way to bring down my overhead or work on a way to add value to the deal or maybe make my store a more pleasant and knowledgeable place to justify the price difference. if the supermarket and i keep prices at a certain level, that's what's anti-competitive. sounds like price fixing to me, and the govt is involved in too it...

How is it competitive if you can't lower your prices to at least match it?

[faceless]

How is it competitive if you can't lower your prices to at least match it?
how is it competitive when there's no competition due to price fixing and collusion?

[legendofphil]

how is it competitive when there's no competition due to price fixing and collusion?

This is the same as price fixing though, it's pushing everyone else out because they can't afford to compete.

It has been happening for years to other types of retailers like butchers, bakers and local corner shops. When you have a limited product range you can't afford to lower your prices to match a supermarket, they make up the difference with other products.

You go in for FIFA (for example) and walk out with the game and your weekly shop, which you might not have done there or at that time.

[grapeape]

Maybe its just me but I see artificially limiting prices to basically bail out a business that cant compete on its own is rather anti-consumer. We had a similar situation in my hometown, there was a mom and pop type grocery store that had been here for years...then a supermarket moved in offering 3-4x the selection and 10-20% lower prices the small grocery store started trying to get people to protest and boycot the new store...funny no one ever showed up that wasnt a relative or friend of the old store...people like saving money. Might have been different if the smaller store hadnt been gouging people for years when they were the only game in town.

[ThreeDog]

This is the same as price fixing though, it's pushing everyone else out because they can't afford to compete.

It has been happening for years to other types of retailers like butchers, bakers and local corner shops. When you have a limited product range you can't afford to lower your prices to match a supermarket, they make up the difference with other products.

You go in for FIFA (for example) and walk out with the game and your weekly shop, which you might not have done there or at that time.

In this case its pushing people to compete, Publishers are trying to force price hikes on us when stores already charge a good £10-15 more per game, they milk the RRP when they probably sell the most games in the country look at GAMEs profits alone last year, you can't tell me the publisher/distro chain isn't providing special deals for them too.

Considering we have a monopolised highstreet market for example dixons group or even GAME selling under multiple brands if the supermarkets didn't jump in we'd be stuck. I don't see how they can care when konami has hurt itself intentionally and bethesda releases less than one game a year.

The publisher still makes the same amount of money maybe more since these chains are not buying a million copies (assumption) and the developer is probably still paid the same by the publisher i really dont see a problem here.

[legendofphil]

In this case its pushing people to compete, Publishers are trying to force price hikes on us when stores already charge a good £10-15 more per game, they milk the RRP when they probably sell the most games in the country look at GAMEs profits alone last year, you can't tell me the publisher/distro chain isn't providing special deals for them too.


GAME profits? You mean the £1,491m they took in 2008 or the £75.2m actual profit they made?
Unless a retailer can buy straight from the publisher they won't get a discount but over an Indie for example they will save on shipping costs, because per unit its cheaper to ship a few hundred thoasand than it is to ship a few hundred. We don't pay the RRP, the RRP on an Xbox 360 or PS3 game is £49.99 we usually pay £39.99. This usually means about £15 is going to GAME, which is then used to pay for staff, electricity, shipping, store rentals, etc. Based on the figures I quoted at the start out of £15 they only make 75p profit.


Considering we have a monopolised highstreet market for example dixons group or even GAME selling under multiple brands if the supermarkets didn't jump in we'd be stuck. I don't see how they can care when konami has hurt itself intentionally and bethesda releases less than one game a year.

So GAME and Gamestation have the same parent group, it doesn't mean anything if they are run seperately. Orange and T-Mobile parent groups are going to merge, they will still have their seperate tarrifs after that and will be different networks still.
Bethesda has/or will publish 3 games this year and 3 that are known next year. They aren't a big publisher.
I don't know what you mean about Konami hurting itself.


The publisher still makes the same amount of money maybe more since these chains are not buying a million copies (assumption) and the developer is probably still paid the same by the publisher i really dont see a problem here.

Here is the thing, if consumers now demand a £25 price point on new games (half the RRP) then retailers will demand to make a profit otherwise what is the point. Which in turn pushes down the wholesale price and the publisher takes in less money. A developer will have been paid by this point but they might not get another contract if the publisher doesn't make the money back or they might have to let people go.

[Lexo]

i'm surprised no one has used the term. predatory pricing....the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors


But. who knows. its not like there's enough developers and the cost of making a video game is high, and the chances of making a good one are very risky.

[KingPepper]

meh , if this is in resonse to fifa in uk supermarkets then it doesn't matter as i would never pay rrp for fifa especially this years bugged up version.

but dont worrybethesda you make GOOD games you have nothing to worry about as i would buy yours for full price anyway :) as you actually deserve it unlike rEAmake every year

Now that is clever, "rEAmake" never thought of that, i will have to remember that, nice one. ;)

[Cue]

i'm surprised no one has used the term. predatory pricing....the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors


But. who knows. its not like there's enough developers and the cost of making a video game is high, and the chances of making a good one are very risky.

Very good point but I don't believe in the distinction between predatory pricing and competition. It's the blue shell of the business world you are just artificially stopping a dominating business. I personally believe laws set by government should not be in any way a restraint of trade but it seems a restraint of trade is only a restraint of trade if not set by the government.

[Cue]

Here is the thing, if consumers now demand a £25 price point on new games (half the RRP) then retailers will demand to make a profit otherwise what is the point. Which in turn pushes down the wholesale price and the publisher takes in less money. A developer will have been paid by this point but they might not get another contract if the publisher doesn't make the money back or they might have to let people go.

legendofphil you raise some good points and it seems you are knowledgeable in the field as a retailer. perhaps I do not understand something here but consumers can demand a £25 price point all they want this does not make it the market value. Doesn't the publisher set the wholesale price at which a retailer should sell the item and so makes their cut anyway? The publisher still gets their money when the supermarket decides to make little profit from the sale if the supermarket can maintain this low price indefinitely then it becomes the price of games only that the retailer has a very low or non existent markup value.

What you suggested seems like resale price maintenance which sort of prevents the price of anything going down at the resale level.
Wouldn't any sort of law against this supermarket also effect any freebie marketing. Surely if I give away free usb sticks if you visit my shop I have effectively made the consumer demand free usb sticks and now usb sticks have a retail price of £0 and usb stick manufacturers should be getting nothing since I as a retailer made nothing directly on the usb sticks.
What about newspapers surely we should pass a law to prevent free newspapers and the internet since that makes people not buy papers and sets their value to £0 so journalists should be getting nothing.
The way I thought it works is that the publishers make their money anyway it's just how they're making it which changes.

The supermarket now makes its profits from leaders to pay the publishers.
The newspaper now makes its profit from advertisement to pay it's journalists.

[legendofphil]

Wouldn't any sort of law against this supermarket also effect any freebie marketing. Surely if I give away free usb sticks if you visit my shop I have effectively made the consumer demand free usb sticks and now usb sticks have a retail price of £0 and usb stick manufacturers should be getting nothing since I as a retailer made nothing directly on the usb sticks.
What about newspapers surely we should pass a law to prevent free newspapers and the internet since that makes people not buy papers and sets their value to £0 so journalists should be getting nothing.
The way I thought it works is that the publishers make their money anyway it's just how they're making it which changes.

It would entirely depend on the circumstances under which these free USB sticks are offered. If you constantly offered these for free with no strings attached it would give a market price of £0 but if you had a condition upon it like, "Free with every purchase over £20" or "free with every purchase for a week" the consumer is expecting this every time they walk in the shop.

The problem with this is it isn't a one off, this week there was another story and another game offered at a discounted price. This time its Operation Flashpoint: Dragon Rising from Codemasters and at Asda its £27, but you know that Tesco and Morrisons will follow because they are able to do so, by offsetting the loss or lack of profit with everything else they sell in store or by trying to push more people through the doors getting them to buy when and where they might not usually.

EDIT: I would just like to say I am not a retailer and I have no interest in being in retail but I do have a bested interest in seeing games make their money back and publishers having healthy resources to play with. I would love to see the prices go down but a decrease in price isn't necessarily going to mean an increase in sales proportional to the price drop. FIFA sales won't be up much on the previous years sales over the long run but inital sales will be.

[Cue]

It would entirely depend on the circumstances under which these free USB sticks are offered. If you constantly offered these for free with no strings attached it would give a market price of £0 but if you had a condition upon it like, "Free with every purchase over £20" or "free with every purchase for a week" the consumer is expecting this every time they walk in the shop.

The problem with this is it isn't a one off, this week there was another story and another game offered at a discounted price. This time its Operation Flashpoint: Dragon Rising from Codemasters and at Asda its £27, but you know that Tesco and Morrisons will follow because they are able to do so, by offsetting the loss or lack of profit with everything else they sell in store or by trying to push more people through the doors getting them to buy when and where they might not usually.
You see that is what I don't get if free papers offset the price with advertising to make it free and they do do it permanently then surely they have done the exact same.

They have gained a new revenue stream with which to pay their journalists their trade or profession has not decreased in value their source of income has just changed.

if the supermarket can maintain its low prices by leader item sales and in the process drive out other retailers who charge the consumer more it would be the exact same as a free paper maintaining its free price by advertisement and in the process driving out other papers who charge the consumer more.
It doesn't even become a monopoly since nothing stops another paper with advertisement popping up or other supermarkets competing in price with loss leaders. we have just changed our resale channel it would be like trying to prevent digital distribution by law because HMVs bricks and mortar music sales will be hit hard we. We would protect the bricks and mortar shop by restraining the download service just as we would be protecting the game retailers by restraining the supermarkets . As grapeape said: it's a bailout, IMO we would just be artificially controlling how a particular market runs.



EDIT: I would just like to say I am not a retailer and I have no interest in being in retail but I do have a bested interest in seeing games make their money back and publishers having healthy resources to play with. I would love to see the prices go down but a decrease in price isn't necessarily going to mean an increase in sales proportional to the price drop. FIFA sales won't be up much on the previous years sales over the long run but inital sales will be.
My bad I think because you hypothetically said we in one post, that and the fact that you have very good knowledge in the field made me assume you worked in retail, sorry about that.
I disagree I think there is no reason for them not to get their money back. maybe not a proportional increase but definitely noticeable. if the supermarket maintains the price and offsets it continuously with leader items it would mean more people can afford it and so more people will buy it while the publishers gain more money with the same wholesale price but increased units. If they can't maintain the price then I don't see how it is different to any sales promotion where the publisher again gets the same money (in fact slightly more from the small increase in sales) anyway.

[ThreeDog]

Here is the thing, if consumers now demand a £25 price point on new games (half the RRP) then retailers will demand to make a profit otherwise what is the point. Which in turn pushes down the wholesale price and the publisher takes in less money. A developer will have been paid by this point but they might not get another contract if the publisher doesn't make the money back or they might have to let people go.

You do have some good/interesting points maybe you see this from the industry side rather than the consumer. As far as it goes though GAME and gamestation may be ran as separate entities but the fact is the moment GAME took over their online prices and store prices both rose.

Also i get the point of paying staff but how does this work online? can you really say GAMEs online prices are fair too? Other sites obtain discounts quicker on their items some new releases are instantly dropped (sure some games still are £40) does it really make sense game is charging £40 for a game from a year ago when amazon is charging £15.

Hows this for you Metal Gear Solid 4: Guns of the Patriots new £40 vs Metal Gear Solid 4: Guns of the Patriots Platinum £20 same site that's £20 for a different cover meanwhile with a amazon/play compare you won't be paying over £25 perhaps you'll see my point?

Wasn't it only a while back some publishers complained that companies were making deals on games with distribution chains rather than the publisher to buy their games in bulk for cheaper? I believe game was one of them.
At the end of the day everyone is in it for the money but if these deals are making people feel uneasy then we're on the right track.

I don't see why the consumer cannot demand a lower selling point, Sony has dropped the PS2 RRP in the past and the PSP has even hit £25 and under with GT appearing at £20. More games sold at lower price possibly means more sales depending on the math of that they could actually increase profit instead of ripping us off.

My final point is that many of these publishers fund games so advanced that they cost the earth and then don't make the money back before they end up severely discounted yet they still go on to make sequels, infact there's one in this very thread topic :p

[msanchez]

I'm sorry for the small mom&pop stores, but I also agree with the sentiment that if they can't find ways to attract customers than it's probably their own fault. Like grape said, they sometimes rip off customers for years when they had a monopoly, so why should the consumer cater to them after that?

Still this sounds like a battle between 2 rather big companies, so there's no handicaps necessary here I think. Also unless I missed it, is there an explanation to why this is bothering publishers? or the explanation that this would eventually become the actual price point of games? if so, I agree with Cue I believe it was, that as much as we would want, consumers don't set these prices.