Gamestop CEO Dismisses EA's Free DLC Plan

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Gamestop CEO Dismisses EA's Free DLC Plan

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Gamestop CEO Dan DeMatteo doesn't think EA's "Project Ten Dollar" policy of giving free DLC to buyers of new games will matter much to the people who prefer to buy pre-owned copies.

In recent months, EA has made much ado about its new Project Five Dollar Footlong - er, sorry, that's "Project Ten Dollar," a policy that includes roughly $10 worth of DLC content free with new copies of the game. This content must be purchased separately for everyone else, as an incentive for consumers to buy games new and not used - a practice which only results in revenue for the retailer, and not the game's publisher.

However, while some retailers have warned that the Project Ten Dollar approach might hurt consumers, GameStop CEO Dan DeMatteo doesn't think that it will matter much to the people who buy used games - and in fact sees DLC as a way that publishers and used-games retailers can work together to benefit all parties involved.

"Through our years in the used business, we have learned that the second-hand user is a value-oriented consumer ... we don't believe that a $10 add-on piece of DLC is compelling to a used game buyer," DeMatteo told analysts in a conference call as reported by GamaSutra.

I'm not sure exactly what he's trying to say, though. His point seems to be that people who buy games second-hand are looking to get more bang for their buck - which makes perfect sense - but then goes on to say that the same people wouldn't want to get $10 worth of content for free. I may be misreading it, but that just comes off as confusing to me.

DeMatteo's other point, though, seems a lot more coherent at first: Publishers shouldn't be afraid of the used-game industry, because they can still cash in and profit off of pre-owned sales thanks to DLC, which can be promoted in the physical retail stores that sell the used games in the first place.

"We can market and execute DLC sales right in-store," explained DeMatteo. "There's a tremendous opportunity for us to encourage software developers and publishers to create DLC because we'll be able to market it. It's very difficult to discover, find... add-on content with the tools available [currently]."

So, he's saying that publishers can profit off of used game sales thanks to DLC. Which... is exactly what Project Ten Dollar is, minus the whole "bundling it free with the new copy of the game."

I'm really not seeing the difference here. Maybe I'm just missing something?

Permalink

Can someone explain this to me coherently, because I must be missing something here.

But... that's the point of... what?

Somebody smack this man! He is speaking nonsense! I'll get the fish!

Goddammit now I want a sub...
OT: As much as I like preowned games, I admit they do screw over the developers a little. The whole status of ideas and copyrighting them is still being debated to a degree.

Used game retail outlets are a cancer in the game industry. They are worse than pirates because they turn a potential buyer into a non-buyer. In theory they give more money to new game buyers to buy more new games but in reality the wankers behind the counter do everything in their power to get the game seller to spend they money on more used games.

It should be legal to punch any sales guy in the face who asks "Don't you like saving money?" when you refuse his pitch. Actually I think it should be legal to punch sales guys for any reason but that line is particularly infuriating.

I think what Ceoman Dan DeMatteo of the merchant-class heavy cruiser GameStop is saying is that used game buyers don't care about DLC anyway. Used game buyers are looking for value, and to them, ten dollar's worth of trinkets isn't very economical. In other words, DLC directed at diverting the used-game market won't work, because used game buyers will just keep on buying used games.

Also, Mr. Funk, please tell me you are sick and tired of those Subway commercials.

It's marketing speak designed to confuse you Funk! The real message here is "Please oh please oh please don't make us irrelevant" - everything else is a smokescreen.

Oh my God... This man clearly has NO idea what he's talking about, is he?

Let's take a Project Ten Dollar game. Mass Effect 2's a very infamous/famous example.

If the Cerberus network DLC is 15 dollars on Live, then subtract 15 dollars from 60 dollars. That's about 45 dollars right there. Now let's get this clear. YOU ARE PAYING 45 DOLLARS FOR THE ACTUAL GAME PLUS THE 15 DOLLAR DLC. If anything, they are selling you more content at a bit of a lower price. If you bought it used, or second hand, chances are you've been ripped off and as a result, you have absolutely no right to bitch WHATSOEVER.

This man should just get his head out of his ass and realize that the advent of digitally distributed content and brick and mortar retail stores like Gamestop are going to have to co-exist in this market.

This man is clearly an idiot.

He deserves this:

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I see how it makes sense, but its not very direct. Buying a 'new' used game that is still near its starting value makes little sense unless you just really want to save a few bucks, and care less about the DLC. They lose out in this case, but its because they chose to be cheap. Some people may go and buy said DLC a bit later, then giving some profit to EA, but I imagine many will still remain cheap.

I think the message here is actually "a 10$ piece of add-on content is not an object of value to the average game buyer"

Vsitors to sites like this one are aware of DLC markets, how it's being used in the industry, and that there is more content available to gamers than is accesible on the disc alone, we are hardcore gamers. The average game consumer doesn't know this - and even if they are aware of it in some capacity, they probably don't know which games it applies to and probably aren't thinking about it at the point of sale.

So when a game retailer says "I have a used copy for $5 less" the buyer isn't calculating the "59.99-$5=54.99+10$ for DLC=64.99 - hey! that's not a deal!" they're just seeing it as an immediate cost savings. And project $10 DLC really doesn't matter, by and large for used sales - and such a program is patently bad for consumers.

On the flip side, if the consuming public does catch on, I'll place bets that used retailers simply start widening the price difference on used games, and reducing trade values accordingly.

You can get dragon age new for $60, or you can buy it used for $45. The catch being that instead of trading for 35, it now trades for 25.

Gamestop thereby mitigates the concern over losing value in the form of DLC by reducing the cost to compensate. And because they've sunk the trade value, they've maintained their margin on the used product as well.

Again, this program is patently bad for consumers, but now it is bad for consumers AND has failed to effectively incentivize new sales.

GS maintains the status quo, EA now probably loses evn MORE game sales due to the further reduced price point of used drawing consumers who are less interested in the DLC content, and the consumer pays for the whole ordeal on the back end in lost resale value.

Project $10 is a neat idea, but I gave it a few months before GS starts building workarounds into the system - assuming $10 is successful enough to even warrant it.

Either way, it's certainly not helping consumers any.

Edit: ...or my spelling, apparently.

-m

Matt_LRR doesn't just play an industry analyst on ENN

Matt_LRR:
I think the message here is actually "a 10$ piece of add-on content is not an object of value to the average game buyer"

Visitors to sites like this one are aware of DLC markets, how it's being used in the industry, and that there is more content available to gamers than is accessible on the disc alone, we are hardcore gamers. The average game consumer doesn't know this - and even if they are aware of it in some capacity, they probably don't know which games it applies to and probably aren't thinking about it at the point of sale.

So when a game retailer says "I have a used copy for $5 less" the buyer isn't calculating the "59.99-$5=54.99+10$ for DLC=64.99 - hey! that's not a deal!" they're just seeing it as an immediate cost savings. And project $10 DLC really doesn't matter, by and large for used sales - and such a program is patently bad for consumers.

On the flip side, if the consuming public does catch on, I'll place bets that used retailers simply start widening the price difference on used games, and reducing trade values accordingly.

You can get dragon age new for $60, or you can buy it used for $45. The catch being that instead of trading for 35, it now trades for 25.

Gamestop thereby mitigates the concern over losing value in the form of DLC by reducing the cost to compensate. And because they've sunk the trade value, they've maintained their margin on the used product as well.

Again, this program is patently bad for consumers, but now it is bad for consumers AND has failed to effectively give an incentive new sales.

GS maintains the status quo, EA now probably loses even MORE game sales due to the further reduced price point of used drawing consumers who are less interested in the DLC content, and the consumer pays for the whole ordeal on the back end in lost resale value.

Project $10 is a neat idea, but I gave it a few months before GS starts building workarounds into the system - assuming $10 is successful enough to even warrant it.

Either way, it's certainly not helping consumers any.

Edit: ...or my spelling, apparently.

-m

Matt_LRR doesn't just play an industry analyst on ENN

Fixed it for yeah.

It wasn't that bad, just a couple of errors.
____________________________________________

This man is Crazy.

It looks like a win win to me. Devs get money from the DLC, and used guys don't get thrown out of business, and yet he's complaining about it.

Sorry for the anger but that guy is a fucking idiot. He said nothing "It's bad because mumble mumble mumble!"

I've got 2 games that feature the "project 10 dollar" and it's been awesome. Hey new Mass Effect 2 DLC! Really? I get it for FREE" New Bad Company 2 content? FREE. I've been happily buying these games new (I know I got 'em on PC but shut up I'm trying to make a point here) because I know I'd want the content and not want to really pay for it. Now if I didn't care about it I could go and buy it used and just skip it. It's offering gamers an incentive support the company (opposed to buying it used where they get none) which is fine by me.

Oh please. DLCs are the new marketing issue here. Game publishers remove contents that should have been in the original game just to make players/consumers buy them, earning them an extra buck.

And why are selling used games much more "sinister" to the public eye? Here is the big issue of consumerism - in material and immaterial goods. Games/Programs/Applications and other immaterial goods are considered taboo to resell, because the producers of these products want to earn more without putting in more effort. Just think, a new weapons/stage/char face for $10!!! when you can buy a whole new game for $30-50! And these DLCs are made using technologies available already, not being developed (as in making a new game) so it should have cost less than that!

As for Gamestop reselling, please note that I am talking about selling the whole product completely - including cd-keys and all, not simply making a copy (which the pirates do). People are getting hoodwinked about their rights. If you buy a book, you can resell it in a used books bookstore. As long as you don't make a copy of the book, it is COMPLETELY LEGAL. Now, in the gaming industry, why is it bad to resell a game? You are also giving up your rights to that product completely. Please do not confuse yourselves with game developers marketing speeches. Matt DeMatteo was completely right. Those who buy used games are not interested in spending more bucks just to get some DLC. They are more interested in buying a product here and now, with the current funds available to them. DLC indeed...

If you want to spend money on games that you expect to be good, and then was disappointed because of the lack of quality (which seems to be the trend nowadays, just look at the recently released games in 2008-2010, only few games are true gems...) what would you do? Just leave it in your closet to rot? Or you could use Gamestop to sell them, at least you could have some of your money back (and someone else who maybe will like that game could buy it at a lower price). What the game developers are missing is that Gamestop creates more consumers...those who cannot afford games can buy them at Gamestop. And those who CAN afford games, will sell those games they didn't like and get those revenues to buy ADDITIONAL games. In addition, gamestop promotes games. When a great game created in ancient times (i.e. too long ago, that the game developers stopped publishing it), and you cannot buy them anywhere, you go to Gamestop, and most likely you will find it there. This way, players will be reminded that this company made a classic game and maybe, just maybe, their new game is just as good, or even better. This is one of the major reason that Amazon, e-Bay, etc. is thriving! They also sell used games, but they also generate free advertisements!

Snotnarok:
Sorry for the anger but that guy is a fucking idiot. He said nothing "It's bad because mumble mumble mumble!"

I've got 2 games that feature the "project 10 dollar" and it's been awesome. Hey new Mass Effect 2 DLC! Really? I get it for FREE" New Bad Company 2 content? FREE. I've been happily buying these games new (I know I got 'em on PC but shut up I'm trying to make a point here) because I know I'd want the content and not want to really pay for it. Now if I didn't care about it I could go and buy it used and just skip it. It's offering gamers an incentive support the company (opposed to buying it used where they get none) which is fine by me.

Yup, you got it for FREE. When you should have gotten it for FREE, when the game shipped. Seriously, most of you people think that these DLCs are so good, the developers do it just to get additional revenues from players. Ingenious huh. These DLCs are content the developers cut from the main game and then resell it to players to get additional revenue. Ingenious huh.

Besides other game developers GIVE these DLCs for free! Look at Stardock's Galactic Civilizations - they do not copy protect their games, but they offer a huge amount of DLCs on their site for players who REGISTER their copies. This way, they earn player support and they also give huge amounts of DLC for FREE...not to sell it again just to skin players...

well gamestop is doing all its can to stop "project ten dollar" before it takes off.

Mario Lanza:
Oh please. DLCs are the new marketing issue here. Game publishers remove contents that should have been in the original game just to make players/consumers buy them, earning them an extra buck.

Bull.

Pucky.

95% of the time, this is patently false and saying it honestly just demonstrates a gross failure to understand how software is actually made. Take off your tinfoil hat, please.

John Funk:
Maybe I'm just missing something?

Maybe your not greedy and ignorant enough to understand? ;-)

Woohoo! Keep saying stuff mr CEO. It justs makes me more glad that your store isn't in the UK!

Calumon: ummm... Jack?

No... no... That's not possible.

Calumon: Search your Local City Jack. Together, Gamestop and HMV will rule the Game sellers like father and son!

NOOOOOOOOOOO!!!

Calumon: okay I read it. Now can we play?

The problem with this chap's reasoning is that, in general, GameStop is charging so much that with $10 in effect you are actually going to end up paying more if you decide on the DLC at some point. The Cerberus Net in ME2 costs you $15 if you don't buy a new copy, but good old GameStop sells the game for only $5 less used than it is new. It's pretty simple math and the more companies that do things like this, the more it will become public knowledge that GameStop is ripping you off if you buy a used game there.

Now, if he were talking about a different store that actually charges reasonable prices for it's used games he would have a strong point. The people who are most interested in DLC, especially day 1 perk style DLC, are generally going to be buying the game new. Someone who is a bargain hunter won't be buying the game at (or maybe even near) launch and really is just looking for the most game for their money. They would be perfectly willing to pay, say, $40 instead of $60 even if it meant they weren't getting the perk DLC for free.

Now here is a gentleman who thinks he has the squeeze on all used game sales and therefore thinks his opinion matters. I fart in his general direction.

John Funk:
...So, he's saying that publishers can profit off of used game sales thanks to DLC. Which... is exactly what Project Ten Dollar is, minus the whole "bundling it free with the new copy of the game."

I'm really not seeing the difference here. Maybe I'm just missing something?

You aren't John. Let me basically illustrate what this wag just said:
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What sucks for his customers is he is going to use this plan as an excuse to pay less for used games sold to his stores, and then charge more for selling them. Makes me rather happy to not be dealing in consoles right now.

As a gamer who dabbles near exclusively in the used market, I'll reiterate what the others have said.

Would I rather buy the latest-greatest for $60 and get $10 of free content tacked on? Or would I rather buy that game used in 3-6-12 months for $20 or $30 dollars? If I like it so much that I have to have the DLC, and it's $10, then I'll pay the $10 and still have saved money. But most likely, the DLC is something I'll pass on in favor of another used game I've been dying to play.

In other words, I agree: as a value-oriented consumer, no, your free $10 content will not entice me to buy your game new.

John Funk:
"We can market and execute DLC sales right in-store," explained DeMatteo. "There's a tremendous opportunity for us to encourage software developers and publishers to create DLC because we'll be able to market it. It's very difficult to discover, find... add-on content with the tools available [currently]."

Maybe I've been playing too much of the Splintercell demo, but I just imagined an EA exec reading that as "marking and executing".
Yeah, I've been playing it too much.

If buying the second-hand game and DLC is cheaper than buying the game new, people will do it.
At least the DLC will still rake in money for the devs, though.

That said, I still prefer having a copy of the game that doesn't smell like cigarettes and is free of some other person's fingerprints.

Onyx Oblivion:
This man is clearly an idiot.

He deserves this:

image

Ok first off, I loved that movie and now onto what I originally wanted to say.

Project ten dollar makes a fuckton of sense, especially in the opening weeks of sales. At that point you will see preowned copies of the game with a few quid down in price, saving you a small amount of money. EA get none of that money, so they came up with this idea of free stuff for new copies.

It makes perfect sense to everyone, but people who say are CEOs at gamestop will realise they no longer get that $36, which for them is a new tidy profit.

bobisimo:
As a gamer who dabbles near exclusively in the used market, I'll reiterate what the others have said.

Would I rather buy the latest-greatest for $60 and get $10 of free content tacked on? Or would I rather buy that game used in 3-6-12 months for $20 or $30 dollars? If I like it so much that I have to have the DLC, and it's $10, then I'll pay the $10 and still have saved money. But most likely, the DLC is something I'll pass on in favor of another used game I've been dying to play.

In other words, I agree: as a value-oriented consumer, no, your free $10 content will not entice me to buy your game new.

Just...that you are far off the point of this...
This is not about people bying games months later from the sales bin. The talk is about the (in)famous reselling measures of almost new copies for 5 or 10 dollars less than brand new.

ramox:
This is not about people bying games months later from the sales bin. The talk is about the (in)famous reselling measures of almost new copies for 5 or 10 dollars less than brand new.

I hear ya. And to be honest, I went back and re-read his comment a couple times before typing up my post.

But that led me to believe he's referring to the used market in its entirety -- not specifically one aspect, such as GameStop knocking $5 off a 2-week old game. If he was talking specifically about that, I'd be right there with everyone else saying I'd rather have the value of the free DLC. But he's implying "the used market, of which we at GameStop are one part of" and "through our years in the used business, this is what we've seen of the spending habits of value-minded consumers".

That's why I made the comment that I agree with his point; free DLC is not enough to entice me to buy new. I blow through games and discard them. I play a lot of stuff. So I try to be at least a little reasonable with my spending. If I can buy three games for $60 or one game for $60, I need more than free DLC to convince me to go with the solitary title.

oppp7:
Goddammit now I want a sub...
OT: As much as I like preowned games, I admit they do screw over the developers a little. The whole status of ideas and copyrighting them is still being debated to a degree.

It's a dangerous issue as well on a lot of levels. It goes beyond things like games, into things like medicine and entire areas of technology. A good part of the problems with China in paticular revolve around patent violations and knock offs.

-

That said, in regards to this issue I think that the game industry is cumulatively being a group of greedy twits. To them the used game industry isn't just an issue because of the belief that they are somehow losing money (ie if the used games weren't availible people would buy from them for more money), but because it helps keep brick and mortar stores going. While once allies, right now you see game companies wanting to fight physical game retailers on some levels, because they want to go totally digital. They envision a situation where all games whether they are PC games or console games will be downloaded from the creators directly, giving them both close control over their work, and also removing the entire issue of distribution, packaging, and other things, those savings which can be turned into pure profit if they keep game prices the way they are now.

As I understand what is being said, Gamestop seems to be implying that the "$10 of free content" is no more an issue than it is with any other game that comes with a code based promotion OR has DLC in the system already. Especially seeing as so far the extra content has mostly been gravy as opposed to anything integral to the games.

Let me explain.

The difference is, Gamestop sells it and makes money.

bobisimo:

ramox:
This is not about people bying games months later from the sales bin. The talk is about the (in)famous reselling measures of almost new copies for 5 or 10 dollars less than brand new.

I hear ya. And to be honest, I went back and re-read his comment a couple times before typing up my post.

But that led me to believe he's referring to the used market in its entirety -- not specifically one aspect, such as GameStop knocking $5 off a 2-week old game. If he was talking specifically about that, I'd be right there with everyone else saying I'd rather have the value of the free DLC. But he's implying "the used market, of which we at GameStop are one part of" and "through our years in the used business, this is what we've seen of the spending habits of value-minded consumers".

That's why I made the comment that I agree with his point; free DLC is not enough to entice me to buy new. I blow through games and discard them. I play a lot of stuff. So I try to be at least a little reasonable with my spending. If I can buy three games for $60 or one game for $60, I need more than free DLC to convince me to go with the solitary title.

While i agree with you about the used-game market thing in general i still think this whole issue is about said "almost new games" thing first and foremost.
Let's be honest, i'm pretty sure publishers couldn't care less about what happens to their games months past release. Once the prices are down to half the original prices (new and used) there is no profit anymore anyway.
So where i'm getting to is, all this is about is the "get it while it's hot window". This is the time both publishers and retailers like Gamestop make most of their profits (hence all the preorder bullshit we get lately).
So, while i agree that it wont impact the used game sector in general i am pretty sure it will hurt Mr. COE a lot when it comes to freshly released stuff, and that's where he makes a huge part of his profit...till now at least.

If I'm not mistaken, his main point is, "Please buy from us!!!" Who needs to be coherent when you can make cash?

Honestly, though, I buy new games specifically for the purpose of helping the developers (and for OCD-related issues), so this won't really change my purchasing much. It's a nice offer, but I doubt that many people will be swayed one way or another by it.

"GameStop CEO Dan DeMatteo doesn't think that it will matter much to the people who buy used games - and in fact sees DLC as a way that publishers and used-games retailers can work together to benefit all parties involved."

Thats nice .... they can work together all they want. I'll be somewhere else, buying someone elses games.

Project Ten Dollar is the result of EA realizing that there is nothing they can do to stop used games sales, and trying to make the best of their situation.

I think the point he was trying to gently make without offending customers is people buying used games are looking for cheaper games and don't mind losing a small sliver of content that a publisher overestimates at $10 of worth, which it is worth only by the logic of $10 theater popcorn. They're being cheap, they're willing to give up the optional DLC to do so, they're on a budget.

Publishers aren't removing 1/6 of the $60 game for that supposed $10 value. They're removing something they would make customers PAY $10 for, which compared to the game's overall content as a ratio is probably worth $1-2 at most.

There's a difference there in value of the content.. One is the value to the customer (negligible) and the other is the value to the publisher (excessive).

Condensed: customers are not going to give a crap about what a publisher feels they can get away with removing and charging $10 for when they're just looking to save money buying games and little else.

Mario Lanza:

Snotnarok:
Sorry for the anger but that guy is a fucking idiot. He said nothing "It's bad because mumble mumble mumble!"

I've got 2 games that feature the "project 10 dollar" and it's been awesome. Hey new Mass Effect 2 DLC! Really? I get it for FREE" New Bad Company 2 content? FREE. I've been happily buying these games new (I know I got 'em on PC but shut up I'm trying to make a point here) because I know I'd want the content and not want to really pay for it. Now if I didn't care about it I could go and buy it used and just skip it. It's offering gamers an incentive support the company (opposed to buying it used where they get none) which is fine by me.

Yup, you got it for FREE. When you should have gotten it for FREE, when the game shipped. Seriously, most of you people think that these DLCs are so good, the developers do it just to get additional revenues from players. Ingenious huh. These DLCs are content the developers cut from the main game and then resell it to players to get additional revenue. Ingenious huh.

Besides other game developers GIVE these DLCs for free! Look at Stardock's Galactic Civilizations - they do not copy protect their games, but they offer a huge amount of DLCs on their site for players who REGISTER their copies. This way, they earn player support and they also give huge amounts of DLC for FREE...not to sell it again just to skin players...

Yes but some DLC is actually made after the game, not ALL DLC is just greedy bullshit. Look at the making of God of War, they took out a lot of things that had they had time they could have put into the game. So some things get cut because the publisher wants the game out. WHile I agree that some DLC is bullshit on toast (RE5 vs mode DLC, Katamari DLC) where it has the bloody DLC on the disc, there are DLC packs out there where they do put work into it.

ForgottenPr0digy:
well gamestop is doing all its can to stop "project ten dollar" before it takes off.

True. Because if it does it dosnt want to lose its second hand market or else, financially...its going to go down the toilet.

It wants people to still but them second hand stuff as it is where profits are turned for them

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