Editor's note: Jon analyzes the reasons why certain retailers aren't selling the PSP Go. If I ran a game store, I'd be leery not because of digital downloads but because during a recession, I see more people buying an older, more affordable version of Sony's handheld than the pricy Go. -Jason
When people start talking of a future without retail games, the topic of how retailers will react always makes an appearance.
Retailers of media haven't been doing so well, first losing the revenue from album sales thanks to iTunes and online music sales, and as other forms of media transition to digital formats, the continued demise of physical media will further hurt retailers.
The global recession just compounds the issue.
With music sales dominated by digital downloads, the next logical step is games. And with the PSP Go, Sony's taken another step toward a digital future by eliminating the PSP's UMD drive -- removing the need to purchase anything besides the console from a physical store.
But for this system to work, a certain amount of cooperation from retail is necessary. The console still needs to be sold in a store, after all. In recent weeks various retailers, such as EB Games Australia and the Dutch retailer Nedgame, have indicated that they won't stock the new handheld.
The reasons for this are twofold. They believe that the PSP Go's price is simply too high; they may fear low sales and decreased profits. Yet the more significant issue is that the Go removes retailers from the sale of games. Every piece of Go software is purchased online and downloaded directly to the handheld.
But are these good enough reasons for a boycott of the system? (The Bitmob staff has their own reasons for not buying into the Go.) Have these retailers shot themselves in the foot with this move, or are they simply reacting to market demands that to them make the console seem more of a PSP No-Go?
At first glance, retailers' first argument for the boycott -- that the Go costs too much -- doesn't seem valid. When Sony announced the Go at this year's E3, it made a point of saying that it would sell at the same recommended retail price as the original PSP upon its release. Retailers didn't have a problem with stocking the original, so why do they have a problem now? (Other than the worldwide recession.)
Even if retailers deem the price to be too high to make the console a runaway success, this is still a Sony product launch. A large marketing push, plenty of advertising, and word of mouth should ensure that the handheld will be popular. Retailers could believe that demand for the console is low and use this as an excuse to not stock many units, rather than ordering none. Smaller profits are surely better than none at all.
Perhaps the most interesting issue surrounding this boycott is digital distribution. Refusing to sell a product because it won't lead to the sale of more products would be a ludicrous proposition in any other industry; you don't see kitchen-appliance stores boycotting refrigerators because they won't be able to sell the customer food, nor do you see furniture stores refusing to sell wardrobes because they don't sell clothes. If you're making a profit on the original item, why must it lead to the sale of other products?
If you look more closely at the situation, however, a large amount of evidence suggests that Nedgame and co. may be justified in their position. Although the price may be the same, this new iteration of the handheld enters a market that's very different from the one it originally faced. The DS has turned into an unstoppable force in the handheld market. The iPhone is a valid gaming platform. And the state of the world economy means that far less people are willing to shell out for a premium-priced product.
The Go's price becomes more of an issue when you consider that a pretty similar console in the form of the PSP-3000 is for sale just down the aisle for much less -- and with an almost identical feature set. The 3000 can still download games; it just lacks the massive internal storage of the Go, which players can easily remedy with the purchase of a memory stick.
Maybe this is a bad assumption to make, but I don't think many readers of this blog are going to buy this new console. As a result, less-informed consumers may bear the brunt of the Go's price. This could hurt Sony a great deal.
It might be that the console, with its lack of new features aside from an aesthetic redesign, may yet be the orchestrator of its own demise. Maybe retailers haven't affected its success at all; maybe they've just looked at the console and decided it's a no-go after all.
Perhaps the most interesting issue surrounding this boycott is digital distribution. Refusing to sell a product because it won't lead to the sale of more products would be a ludicrous proposition in any other industry; you don't see kitchen-appliance stores boycotting refrigerators because they won't be able to sell the customer food, nor do you see furniture stores refusing to sell wardrobes because they don't sell clothes. If you're making a profit on the original item, why must it lead to the sale of other products?
If you look more closely at the situation, however, a large amount of evidence suggests that Nedgame and co. may be justified in their position. Although the price may be the same, this new iteration of the handheld enters a market that's very different from the one it originally faced. The DS has turned into an unstoppable force in the handheld market. The iPhone is a valid gaming platform. And the state of the world economy means that far less people are willing to shell out for a premium-priced product.
The Go's price becomes more of an issue when you consider that a pretty similar console in the form of the PSP-3000 is for sale just down the aisle for much less -- and with an almost identical feature set. The 3000 can still download games; it just lacks the massive internal storage of the Go, which players can easily remedy with the purchase of a memory stick.
Maybe this is a bad assumption to make, but I don't think many readers of this blog are going to buy this new console. As a result, less-informed consumers may bear the brunt of the Go's price. This could hurt Sony a great deal.
It might be that the console, with its lack of new features aside from an aesthetic redesign, may yet be the orchestrator of its own demise. Maybe retailers haven't affected its success at all; maybe they've just looked at the console and decided it's a no-go after all.
We'll just have to wait for sales figures to come out before we'll know whether they were right.
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Comments (17)
The price issue is utterly contrived - any chain which stocked the PS3 from launch simply can't claim that anything else, up to and including jewel-encrusted unicorn harnesses, suffers from high price or low sales.
The digital distribution issue is obviously the real reason, but the big chains brought this on themselves. Online delivery is coming anyway, in the same way horse-traders had to deal with the fact it was possible to make an engine pull things, but their absolutely mercenary used-game policies accelerated this.
They think they can cut the people who actually make the product out of the budget by reselling the same used game ten times without anyone striking back? This is why they stamped out every other independent game shop, why you can no longer cruise around the bargain bins looking for a good deal - their strategy of offering used games at only $5 off only works if they own every outlet. And that's exactly what they did. And now they're going to go dodo and I honestly can't wait.
The digital distribution issue is obviously the real reason, but the big chains brought this on themselves. Online delivery is coming anyway, in the same way horse-traders had to deal with the fact it was possible to make an engine pull things, but their absolutely mercenary used-game policies accelerated this.
They think they can cut the people who actually make the product out of the budget by reselling the same used game ten times without anyone striking back? This is why they stamped out every other independent game shop, why you can no longer cruise around the bargain bins looking for a good deal - their strategy of offering used games at only $5 off only works if they own every outlet. And that's exactly what they did. And now they're going to go dodo and I honestly can't wait.
Regardless of whether or not certain retailers put it on their shelves, Sony has decided to take the PSP in the digital distribution direction. I imagine that they will eventually stop supplying new PSP 3000 units at some point in favor of the new model. When that day comes, these retailers have a choice: they can continue to boycott the PSP Go and receive no revenue at all, or they can sell it and try to retain at least a small portion of the revenue stream for that system.
Personally, I'd rather have 5% of something instead of 100% of nothing.
Personally, I'd rather have 5% of something instead of 100% of nothing.
I'm glad in many respects that I don't have to shop in US game stores. The stories I've heard not only about their second hand game tactics, but also their constant harrasment of customers to pre-order has me convinced it must be a hellish experience.
Pre-owned games have a much smaller emphasis placed on them generally by UK game stores. I've never once been asked by a cashier to trade anything in, or to buy something that someone else has.
Pre-owned games have a much smaller emphasis placed on them generally by UK game stores. I've never once been asked by a cashier to trade anything in, or to buy something that someone else has.
@Luke "This is why they stamped out every other independent game shop...."
I miss the local game shop in Alameda, CA, that I used to shop at. It's too far to go from where I live now. I also used to buy games from the local game shop in my hometown, Hi-Tek Game Center, but it, too, disappeared when Best Buy and Target and Funcoland and EB and Babbages -- and eventually GameStop -- came into town.
I miss the local game shop in Alameda, CA, that I used to shop at. It's too far to go from where I live now. I also used to buy games from the local game shop in my hometown, Hi-Tek Game Center, but it, too, disappeared when Best Buy and Target and Funcoland and EB and Babbages -- and eventually GameStop -- came into town.
What I am hoping is that the PSPGo is like New Coke and soon we will have an amazing Coca-Cola Classic version of the PSP.
Great post, great comments, bad Sony!!!
Great post, great comments, bad Sony!!!
I would say the reason has nothing to do with the price and everything to do with the inability to sell games for it. Companies themselves sell systems at a loss because they know they'll make money back on games. Games are where the money is not the systems themselves necessarily.
The retail mark-up on hardware's so little, no retailer is going to be making much money off selling PSP Gos. Plus they get no revenue in subsequent game sales, so they have very little motivation to stock these.
I bought a PSP Go day and date, and I love it so far, as does my girlfriend. (I also have a PSP 2000.)
Mark nailed it- game retailers sell consoles because they have to, not because they're profit centers. Stocks rise based on software sales, and if you cut retailers out of that equation the retailers lose money and begin losing locations, etc.
I can't blame retailers for not stocking a product that won't make them any money.
I can't blame retailers for not stocking a product that won't make them any money.
I didn't know some retailers weren't going to put the PSP Go on their shelves. I think they are just over reacting.
@Jon- I've been to a lot of game shops and EB Games here in Canada and I never get harassed. They just ask for a pre-order or used game copy once and that is it.I thought that was the norm. DO people really get harassed in other places?
@Jon- I've been to a lot of game shops and EB Games here in Canada and I never get harassed. They just ask for a pre-order or used game copy once and that is it.I thought that was the norm. DO people really get harassed in other places?
I'm may be wrong on this but...here i go.
I was under the impression that most of the money made on consoles goes back to the company such as microsoft or sony. I say this because when working in retail, they always wanted us to push accessories with consoles because they made a huge profit on them and not the console. When it came to the employee discount we never got a discount on consoles but a $50 dollar controller would cost us $10 bucks. They would just say they couldn't give us a console discount because it's price was controlled by the companies.
So if that is the case i could see why retailers wouldn't want to stock it, because they're not going to be making a lot from it. Does it make it right? Who knows?
I was under the impression that most of the money made on consoles goes back to the company such as microsoft or sony. I say this because when working in retail, they always wanted us to push accessories with consoles because they made a huge profit on them and not the console. When it came to the employee discount we never got a discount on consoles but a $50 dollar controller would cost us $10 bucks. They would just say they couldn't give us a console discount because it's price was controlled by the companies.
So if that is the case i could see why retailers wouldn't want to stock it, because they're not going to be making a lot from it. Does it make it right? Who knows?
@David - I've heard that when calling up a Gamestop you can guarentee that they'll try and sell you a pre-order. It may have been the Giant Bomb guys I was listening to talk about this.
I might be horribly misinformed, in which case I apologise.
I might be horribly misinformed, in which case I apologise.
sony should just sell it through the Sony store and On-Line store. Like itunes (apple). But, Sony needs to lower the price of the games you can download and very user friendly.
Not stocking a product that will hurt your business is a smart move. In this case it's a moot point since you can just go somewhere else, but I understand the thought process. I for one will be glad to see the used market cut down by digital distribution. I don't begrudge anyone their right, where legal, to sell something they no longer have a use for, but the mass used games trade that EB and Gamestop have going is not good for this industry and when developers start to see all the money from every sale come back to them rather than just get recycled in those retailers they'll have more capital to make us, the gamers, more and better games.
I think its just a simple matter of money honestly.
EB, Gamestop etc are greedy greedy bastards and they want money. PsPGo = no money but that which comes from hardware sales so its a sizable chunk of prophet they wont be getting, no new game sold, no old games traded in and re sold for inflated prices. That's millions of dollars taken away by digital distribution.
Why on earth would they WANT to stock the Go?
I really don't think its any more complex than that, good article nonetheless.
EB, Gamestop etc are greedy greedy bastards and they want money. PsPGo = no money but that which comes from hardware sales so its a sizable chunk of prophet they wont be getting, no new game sold, no old games traded in and re sold for inflated prices. That's millions of dollars taken away by digital distribution.
Why on earth would they WANT to stock the Go?
I really don't think its any more complex than that, good article nonetheless.
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