EBGames' Potential New Deal

I was visiting my local EBGames up here in Canada and noticed they've got a new deal that I hadn't seen mentioned anywhere online. It turns out this new offer is actually in market testing and my local area just happens to be one of those markets giving it a shot. In a move that is obviously targeting rental shops, almost all of the new games on the shelf that have just been released sported a gold medallion sticker that says you could "rent" this game for $10 dollars a month. I was somewhat perplexed so I talked to the manager about the deal to see how it was supposed to work.

Essentially, you pay full price for your new game and if you trade it in within one month of your purchase, you get the full price of the game minus $10 (and taxes) in store credit for it. So if I were to buy Far Cry Instincts for the Xbox at $59.99 Canadian tomorrow, I could return it anytime before October 28th and get $49.99 store credit for it. So I've basically "rented" the game for $10 bucks. While you don't get your taxes back on the purchase, keep in mind that trade-in credit is NOT taxable (at least, not in Canada) so if I bring Far Cry Instincts back and use the credit to buy another $59.99 dollar game, I'll only get charged tax on the money I actually pay out additional to my credit so it's not a 100% return on the taxes, but it's close.

What does EBGames get out of the deal? Weak willed gamers like myself who are always on the lookout for the latest and greatest will be even more likely to buy more games knowing they are guaranteed an excellent trade-in value, regardless of how good/bad/popular a given game ends up becoming. EBGames turns around and gets more used games to put on the shelf and to eek out even more profit. Of course, the old way of giving someone only 40% of what they paid for and selling with a 100% markup would make them more money on one game but I think they hope the volume will make up for the smaller profits up front.

I've got a Blockbuster about a five minute walk away from my place so why not rent anyways? They don't hit you with late fees (at least, not for a couple weeks) and it's only $8 bucks to rent any given title. The problem is one of selection and timing, especially given that they are pushing for more game sales and trade-ins with a deemphasis on having plenty of games on the shelf for renting. EBGames will always have the latest and greatest on the shelves, I won't have to worry about Blockbuster arbitrarily deciding not to stock certain games for renting like they did with Advent Rising. I could BUY it, but god forbid I wanted to rent instead.

Will it work? For the steady gamer, it's a viable option and a way to keep the gaming budget under control while still getting new titles the day of release. For EBGames it may discourage the purchase of used games since the trade-in value drops like a rock once you buy used, but then used games are the typically domain of casual gamers and consumers who aren't as likely to trade in anyways. For my sake, I hope it works for them.

Please note this deal applies for their console and hand-held titles, I didn't see any PC games with the medallion applied to them.

Comments

GameStop did this a while ago (when I still worked there) and it was a PITA to process in the register. We were actually told to not do it by our managers and stuff.

This is a great idea. Just yesterday I bought an issue of the Official Playstation Magazine so that I could get the DVD with the demo of Shadow of the Colossus. I wish them the best. Now, what I REALLY wish is that, with the spread of broadband and the advent of consoles with hard drives, game makers would start making downloadable demos for console games.

Sounds cool. I'd probably take advantage of that all the time.

Seems like a good idea but the taxes thing seems pretty questionable. They should only get to charge you taxes on the $10 profit not on the $50. Pretty steep rental rate. Though maybe if volume picks up the prices will become competitive. I would go for it....maybe, don't like the store credit issue either. If you rent something to me then it should be entirely cash based, this is little shady in it's implementation.

Hmmm lets see though, you can rent the game but you can't buy it and return it if it doesn't work because of all those darn pirates and the mean old publishers forbidding retailers to help their customers? Sounds like a few new lines are going to need to be drummed up.

I'd be surprised if this gets full implementation. I think the devaluation of games over more than about two or three months will eat up the meager profits generated, and that it will impact a customer's likelihood of becoming involved in other profitable programs like the Gameplay Gurantee. It also subverts the very pre-played program that it's supposed to prop up. After all the benefit to the customer of buying pre-played product is the opportunity to get games at a lower cost, but by offering this third in-store option EB is pulling customers away from both ends of the buying spectrum while raising and guaranteeing trade-in values in the process. The plan, after all, is only successful if the majority of the games which are traded back in through the rental program are sold before they are discounted more than, say, $5 (after all, the used game is sold at a lower price which eats up some of that $10 fee right off the bat). Considering that the program thins the pot of pre-owned customers while increasing the volume and lowering the profit margin all at once, I'm surprised they're even trying it.

Now, I can imagine a hybridization of this program where pre-owned titles are available to rent with some kind of guranteed percentage return within a month, but the logistics of that might prove unwieldy. I think this program will evaporate in just a few months.

Certis wrote:
I didn't see any PC games with the medallion applied to them.

Did you see any PC games at all? These days they have them shoved so far in the back you'd find them next to the porn.

They should only get to charge you taxes on the $10 profit not on the $50.

That's what I said, isn't it? You pay full, regular price up front but when you trade in, the taxes are only applied to what the credit doesn't cover.

Strictly as a consumer, I think it's great if I simply MUST have a game on day one anyways. I agree with Elysium though, it's hard to make sense of it from a business perspective.

Perhaps this is a move to eradicate depreciation or at least slow it down considerably. Afterall, the system probably will not allow for a speedy reduction in price and may require that you put up the full retain price ...everytime. So that the full retail price acts as a deposit. In other words EB games is generating credit and can use the money for investment purposes, just as a bank does with your current account. It'll be a cash flow ballet for them.

Problem is I can't see them wanting to regurgitate used games for full price, even if the rentee means only to keep a hold of it for a month. Perhaps the deposit price will gradually diminish but the rent price will remain flat for all games.

P.S: Do you think they've looked at the impact of piracy will have on the overall full game ownership numbers with this deal?

P.S: Do you think they've looked at the impact of piracy will have on the overall full game ownership numbers with this deal?
I don't think piracy on home consoles has ever impacted their bottom line one bit. Usually people interested in that have to find a modchip, which means they are savvy enough to download CD/DVD images of the games, which have to be custom modified per game to rip out art assets in order to fit on burnable media. Meaning it's rather hard to rip a console game from a legit copy, and rather easy to download an ISO and burn it.

Nice, but wouldn't a regular posting in Games forum suffice? Or all posts The Certis creates automatically go to the frontpage?

Nice, but wouldn't a regular posting in Games forum suffice? Or all posts The Certis creates automatically go to the frontpage?

You dare question our benevolent overlord? Shame on you primate!. No more bananas.

Could be a strategy to kill Blockbuster. BB is wobbly at best; a significant portion of their cash flow comes from game rentals. If EB can implement this in a few key markets they may drive BB out of them.

Don't know if EB has the balance sheet strenght to pull it off though.

Gorilla.800.lbs wrote:
Nice, but wouldn't a regular posting in Games forum suffice? Or all posts The Certis creates automatically go to the frontpage?
Seems like there's enough there for a front page article to me. I mean, not every front page article is going to blow your socks off with it's amazing brilliant introspection, this is just something to discuss with each other and possibly the gaming community at large (through links).

Nice, but wouldn't a regular posting in Games forum suffice? Or all posts The Certis creates automatically go to the frontpage?

It's called filler, jackass.

It's called filler, jackass.

I got first dibs for the above as my new sig!

Hey, when it's a slow week and everyone is busy, you do what you gotta do. I thought it was interesting

Certis wrote:
Hey, when it's a slow week and everyone is busy, you do what you gotta do. I thought it was interesting :)

Everything you write is interesting... can I have my cookie now?

IMAGE(http://www.subway-sg.com/COOKIE.gif)

IMAGE(http://www.boingboing.net/images/cookiemonster.jpg)

PyromanFO wrote:
I mean, not every front page article is going to blow your socks off with it's amazing brilliant introspection
True. Some of them are written by Certis.

You see? Pyro already gave me the back-handed, subtle insult. You just had to bring it home, didn't you? No cookie for you!

IMAGE(http://img13.imageshack.us/img13/7679/cookiemanf203ir7wa.gif)

Cookie = BAD!

It's not like we could pull Elysium away from Fable (PC) long enough to write a article.

It's not like we could pull Elysium away from Fable (PC) long enough to write a article.

Lies! Actually there'll be a review up before the evening is out.

Elysium wrote:
It's not like we could pull Elysium away from Fable (PC) long enough to write a article.

Lies! Actually there'll be a review up before the evening is out.

You know, I've seen you play this all week during afternoons. You make me so jealous.

Elysium wrote:
It's not like we could pull Elysium away from Fable (PC) long enough to write a article.

Lies! Actually there'll be a review up before the evening is out.

Damn I am good.

*pelvic thrust*

Certis wrote:
They should only get to charge you taxes on the $10 profit not on the $50.

That's what I said, isn't it? You pay full, regular price up front but when you trade in, the taxes are only applied to what the credit doesn't cover.

Strictly as a consumer, I think it's great if I simply MUST have a game on day one anyways. I agree with Elysium though, it's hard to make sense of it from a business perspective.

I must have miss read it or somthing it seemed the other way around.