A Craze Involving Haze
Oh, my:"PLAY HAZE FOR A WEEK
Pre-Purchase Haze
And get full in-store credit back when
you trade Haze in within one week of pickup!"
That's on a flyer being sent out by Gamestop and EB to people "interested" in Haze (according to Dark Zero here). There's a scan of the flyer as well.
Has there ever been a more ingenious, twisted promotion in the history of retail?
Let's dissect this, and I only hope I do it properly so that we don't wind up with unidentified guts all over the place.
Joe Customer pre-orders Haze for $59.99. Gamestop's cost for the game is probably about $50 (based on Matt Matthew's margin analysis), so they'd make about $10 off the transaction.
Joe Customer comes back within a week, though and trades in Haze for his full $59.99 purchase price. So Gamestop is in the hole for $50, right?
Not exactly.
Yes, they have a sunk cost, but let's look at what happens.
Joe has $60 in credit. If he buys a new game for $60, Gamestop makes $10 from the transaction. If he buys used games (50% margin), they make $30.
In the new game path, Gamestop is now down $40. In the used game path, they're down $20. And I'm guessing that most people will use the credit to buy used games, because Gamestop devotes most of its shelf space to them.
But wait. Gamestop has a sunk cost when they buy any used game. And a new game within a week of release is going to retain roughly 50% of its value (a little more for top games, less for dogs). Joe could have walked in and sold Haze for $30 within the first week.
If even half of the people with in-store credit from a Haze return spend it on used games (which I think is a conservative assumption), the average cost Gamestop is paying for a copy of Haze under this special promotion is--$30!
In other words, they're guaranteeing themselves a high percentage of pre-orders (some of which won't be returned for a refund in the first week), they're increasing store traffic, and they're guaranteeing themselves an immediate used supply of a high-profile game. Plus, it's costing them essentially nothing extra compared to their standard model.
Seriously, that is evil genius.
Even one additional inventory turn of used copies of Haze is staggeringly profitable for Gamestop. And given that they'll have ample supply of used copies sooner than usual, they probably will get that one extra turn. Or two.
How will this affect retail sales of the game? It's hard to tell. I assume pre-orders go through the roof, but will they increase enough to make up for the almost immediate, ample supply of used copies? I don't think anyone knows at this point.
Purely from the standpoint of a consumer, how do I feel about this? Well, I know this: it's a hell of a lot better deal than Gamestop gives us on used games.
Is this a one-off for Gamestop? Not if it's successful, I'm guessing.
<< Home