The Pre-Order War
I like to consider myself pro consumer. The more I write these columns the more I feel it is my duty to point out what I see that could possibly end up being a net negative for the gaming community. That said most of what I’ve written this week is probably known to most of you by now. If it isn’t consider this my PSA for the month.
Preorder sales are big business for video games. Much like the theatrical release of a movie those first few weeks of sales can either make or break a game's success. Your typical brick and mortar retail store is dependent on the foot traffic those upcoming new releases create. While an individual game has little markup the additional items in the store are where the real money is made. Those strategy guides and pop culture tie-ins of licensed merchandise are what pay the rent.
Amazon launched its latest salvo over the bow of retail video game stores, and to a lesser degree Steam, at the beginning of this year. Amazon announced that anyone with their Prime Membership, $99 USD annual, will receive as an added benefit 20% off the MSRP of video games if they pre-order. They will also receive free release day delivery. At this point you might be thinking to yourself, “that’s a great deal,” and yes, it absolutely can be. But it might not be all that it’s cracked up to be. Amazon also extends that 20% off to new releases for a few weeks but you obviously miss out on release day shipping. You will receive two day priority shipping instead.
You remember your local bookstore? I say remember because most of them have gone out of business. Amazon did them in too. This is the age of the internet and it has brought with it a great many of things including leaner and meaner business models. Models that brick and mortar stores have struggled to keep up with. Certainly some physical stores have survived, while a great many have failed, because they manage to have a devoted consumer base or some other competitive advantage but it typically isn’t price. This very same thing could easily happen to your favorite local video game store. Even if that happens to be GameStop. GameStop is also getting out of the retail only business and moving into the publishing business as well. They’ve inked a deal to help with Insomniac Games Inc. upcoming Song of the Deep. If you get a minute stop by a GameStop and see how many ads you see for Song of the Deep in the store. Hint: It’s a lot.
So back to Amazon. Amazon is treating these physical games as loss leaders. They are selling them to the consumer at a loss in order to get us to buy other things from Amazon that have an even higher margin. (Interesting side note: this discount does not extend to digital copies of the game). Most businesses can’t afford to do this. Amazon has a lot of confidence from its investors and has been given a long leash by its shareholders. They can lose some money in this war in effort to grow their market and add new customers to their Prime Service. Most years Amazon doesn’t even turn a profit. It can go decades without having a profitable quarter. Years of disrupting the book publishing business generated Amazon tons of sales but not tons of money. It is looking like they plan to so the same thing in the video game space. Make no mistake, Amazon is in this for the long game.
Some of you may be asking, “But Rob, I end up with cheaper games. Why the heck should I care?” Or, “I did all my shopping on Amazon anyway. I just ended up saving 20%.” To you I say, maybe you shouldn’t care, and that sounds like a pretty good deal. But here is how I see we all end up being losers. Developers make poorer quality games when they worry about the business aspects of making games and we have no way to tell them to stop treating consumers as commodities when we line up in droves to pay for pre-order trash. Also having less retailers to buy goods from is typically not a good thing but that’s a story for another day.
Developers need to make the game they envisioned, not end up being a part of the marketing department. Developers end up having to spend time devoted to making some form of pre-order exclusive to one retailer or the other when they could otherwise be working on making a polished product. Sometimes these items are nothing more than cosmetic, sometimes they are a little more like potent mounts or weapons.
Pre-order items are nothing new but they are growing more extravagant as time goes on. But Amazon’s new 20% off of pre-orders is just one more carrot on the stick to get people to buy games before we even know if they are ready. The more people pre-order games the more they silence themselves.
Most of us are adults and we can spend our money how we want. Just be warned that the more we become obsessed with getting that exclusive shiny from preordering a game, or in this case catching a price break, the more we silence ourselves when we attempt to complain that the game is a broken mess. It shouldn’t be acceptable that developers ship games that are riddled with bugs, but they do, because we allow it. As long as people still continue to pre-order games in droves it will not stop. Only by taking a wait and see approach and speaking out with our wallets can consumers truly be heard. Let a few early adopters buy the game first and take the bullet if it's terrible. If it's good you can still hop on Amazon and buy the game a few days after it's released and take advantage of that 20% off.