Print 99 comment(s) - last by MrBlastman.. on May 12 at 11:37 AM

EA Sports, the hottest sports gamemaker around, is setting a new trend, saying you'll have to pay double to play your used games fully. You'll first have to buy the game at the store, and you'll then have to pay EA $10 to reactivate multiplayer services.  (Source: Daily Radar)
GameStop will be helping Electronic Arts implement its scheme

Electronic Arts is the king of the sports game market with hot upcoming titles including NCAA Football 11, NHL 11, Madden NFL 11, NBA 11, FIFA 11, and EA Sports MMA.  Now it has made a controversial decision concerning all of those titles -- it will lock players who buy used copies out of online multiplayer.

When it comes to sports games, a multiplayer mode is one of the chief draws.  And now that the internet allows playing with fans all over the world, online multiplayer provides massive amounts of fun.

Purchasers of a used game get locked out of that goodness.  "Online services, features and bonus content" will all be covered by a one time code, that won't work for the new purchaser.  EA describes, "You will be unable to play multiplayer online game modes or use your downloaded content in online game modes."

Used purchasers do gain access to a 7 day trial, but they will have to purchase a $10 pass if they want to continue to play online.

EA claims its all about offering its customers more, "This is an important inflection point in our business because it allows us to accelerate our commitment to enhance premium online services to the entire robust EA SPORTS online community."

Ultimately, the slick move is likely designed to help it rake in bigger profits, though.  Many purchasers will likely pay the $10 fee to renew their online access.

Retailer GameStop is partnering with EA to implement the plan.  States GameStop Corp. Chief Executive Officer, Dan DeMatteo, "GameStop is excited to partner with such a forward-thinking publisher as Electronic Arts.  This relationship allows us to capitalize on our investments to market and sell downloadable content online, as well as through our network of stores worldwide."

GameStop recent landed itself in a bit of trouble when it was caught selling used games which it claimed they were new.  Hopefully it doesn't try that again, this time around.

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RE: EA Sports...
By MrBlastman on 5/11/2010 2:44:19 PM , Rating: 2
I am using logic, think about it for a moment:

Company sells game at 30.00/copy
Nets 1,000,000 copies sold
10.00/profit a unit (19.00 fixed costs from development, 1.00 variable production costs due to economies of scale)

Net profit, 10,000,000.00

Company sells game at 45.00/copy
Nets 750,000 copies sold
24.50/profit a unit (19.00 fixed costs, 1.50 variable costs)

Net profit, 18,375,000.00

Company sells game at 65.00/copy
Nets 400,000 copies sold
42.50/profit a unit (19.00 fixed costs, 3.50 variable costs)

Net profit, 17,000,000.00

As you see above, the company is more profitable selling the game at 45.00/unit versus 65.00/unit. Now, I have simplified it to the EXTREME in that of course the 19.00 for development is assuming some form of profit to cover the basic development expenses, whereas normally this would be a floating base with a set, pre-defined sunk cost divided by copies sold, but, I'm just trying to make it digestible for the average DT reader.

At some point, you reach an optimal sales-to-profit ratio versus price, above it, you make less profit overall as well as below it. Finding that optimal point is where you want to be to maximize sales to the price sensitive consumer while taking into account your "guaranteed base" as those people who will buy regardless of the price. These gamers exist for basically every genre. It is the group that is sensitive to price versus other percieved substitute goods (i.e. other franchises that provide equivalent fun) that the game company spends quite a bit of its time chasing after. Of course, this is on the marketing front, as the development front should have addressed the built-in base from the start and these examples are assuming they did.

This is the point I'm trying to get at. The used market exists for an important reason:

People don't want to pay so much for games. They've figured out they can get the same content for less if they buy second-hand. If EA wants to increase their revenues and profits, they need to be focusing on their pricing model for the initial purchase to lure those non-fanboi's into forking over their money the first time around.

RE: EA Sports...
By SeeManRun on 5/11/2010 3:37:35 PM , Rating: 2
The way it will eventually go, and has for some, is total digital distribution, so there will be no used games. This is already the way it is for Xbox live Arcade games or Playstation network games. It will happen, and it is unfortunate in a lot of ways.

However, it could lead to new things, like a free weekend of a game that is fully functional, like Modern Warfare 2 was on Steam this weekend, or all sorts of easy ways to drop price.

Don't forget, EA can't necessarily drop the price on demand. Gamestop, or Best Buy would still have to sell all their copies they purchased for sale at 60 dollars before selling the 50 dollar games, not to mention those price guarantees many of them have.

RE: EA Sports...
By MrBlastman on 5/11/2010 4:55:18 PM , Rating: 2
EA can't necessarily drop the price on demand

You're right, they can't control the price of their games once they enter the wild in a dictator-like way.

They can control the supply of their games though via the price they charge to their retailers and via the MSRP. Of course, price-fixing is illegal and they can't dictate that the retailer has to sell it at any price, the MSRP goes a long way towards at least creating a ceiling (as EA will sell the software directly on their website at the MSRP, if a retailer charges more than the MSRP, customers will buy directly from EA instead).

The price they charge to their retailers on the initial release plus MSRP will go a long way. If they reduce their initial pricing from 60.00 to 50.00 going forward, all new games will debut at 50.00 (or less). The existing older titles in the wild will not automatically drop from 60.00 to 50.00, but, over time, as the old inventory is replaced via new inventory (and with games, it usually is LIFO versus FIFO).

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov
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