I bought Teenage Mutant Ninja Turtles: Shredder’s Revenge (PS5) the other day (Wednesday 5th April 2023 to be precise). I bought the game from The Game Collection, and paid £16.95 (including postage).
Now, I don’t know about you and your physical game purchasing habits, but I tend to buy the vast majority of my current-gen games (ie PS5, Switch) via online ecommerce vendors – such as Hit, The Game Collection, Amazon, Music Magpie, and Ebay. In fact, I very rarely walk into physical game retail shops anymore, and certainly haven’t bought a physical game from a physical game retail shop in several months. This was when I bought several used PS3 games from a local independent games shop in October 2022.
There are a number of reasons for why I don’t tend to walk into physical game retail shops anymore. The biggest reason is that I don’t really consider them to be the sort of venues that I would like to spend time in. For example, this article was written in a coffee shop that is situated directly opposite a CEX store. And if one were so inclined, I could visit a plethora of online stores via my laptop, and in the comfort of my seated position that also has a window view to the outside world. I could also people-watch, work on my own personal projects (such as this blog post), and engage in a civilised conversation with other coffee shop customers – many of which tend to be a lot more nicer than CEX’s customer base (which mostly consists of desperate people leading desperate lives).
As someone who tends to buy the vast majority of his games in a physical format, I’m all too aware of the fact that the games market is increasingly veering towards digital purchases – with the Entertainment and Retail Association (ERA) estimating that 89.5% of all games sold in 2022 were digital downloads, whilst only 10.5% of all games sold were physical discs or cartridges. This is supported by Capcom’s Q2 2022 filings in which the company stated that 95% of its unit sales for the period were digital, and that only 5% were physical.
VGChartz would also support this sales trend as the media website states that for 2022, digital console spend was £1.98 billion, whilst digital PC spend was £660 million. In comparison however, boxed games (across console and PC) only accounted for £489 million spend. This would mean that (new) boxed games account for only 18.5% across all sales on console and PC. Consumers are also choosing to spend significantly less on pre-owned games (£21.3 million) in comparison to new boxed games (£489 million), to the extent that pre-owned games now only account for 4.4% across all boxed sales – a drop of 37% year on year.
Most of the above doesn’t seem that surprising, but what did pique my interest was the fact that pre-owned boxed sales now account for only 4.4% across all boxed sales – with there being a 37% drop year on year. And if that’s the case, then this downturn in second hand sales must surely have a correlative impact on the fortunes of games retailers who are hugely reliant on second hand game sales (such as CEX) – especially at a time when people are facing increasing economic hardship as the cost of living intensifies.
If second hand games are often perceived as being cheaper than their brand new equivalents, then why are consumers increasingly opting to buy brand new games as opposed to second hand games? After all, and considering the increase in digital spending, brand new games have only seen a drop of 4.3%, whilst second hand games have seen a significant drop of 37%. So with this in mind, what could possibly account for this dramatic change in consumer spending behaviour?
As someone who doesn’t trade-in his games for cash or vouchers, I buy the vast majority of my games in a brand new condition via online ecommerce vendors – such as Hit, The Game Collection, Amazon, and Ebay. And if I don’t trade-in my games for cash or vouchers, then surely there must be others like me who also don’t trade-in their games for cash or vouchers. And if that’s the case, then this would lead to a possible shortfall in available second hand stock in second hand stores, and Martyn Gibbs (ex-GAME CEO) would support this as he would argue that “if you have less people trading in games, you have less stock to sell“. This would therefore pose a problem for consumers who are after niche or newly released titles that are highly sought after. Indeed, as an example, Hogwarts Legacy and Resident Evil 4 Remake were both sold out across all of CEX’s stores the day after their release.
Another reason as to why people would spend less on pre-owned games is something that GameStop’s Shane Kim alluded to in the firm’s 2019 financial call. He argued that “customers can get some of those older titles, the very inexpensive titles that you can get through either subscription memberships or online in a pretty heavily discounted mode“. This certainly seems to be a credible theory as I recently bought two backwardly compatible XBox 360 games (via Microsoft’s online digital store). These were Disney Epic Mickey 2: The Power of Two for £2.24, and Split/Second for £2.24. The reasons for this were that the games were cheaper than their physical boxed equivalents – with CEX selling Disney Epic Mickey 2: The Power of Two for £5.00, and Split/Second for £3.50 (at the time of writing).
But going back to newly released games that are in high demand – such as Hogwarts Legacy – and if you take a look at how much CEX sell second hand copies of the game for presently, you’ll realise that CEX are more expensive than what the game can be bought for in a brand new condition. For example, CEX are currently charging £50.00 for a second hand copy of Hogwarts Legacy (PS5), with there being an additional £1.95 postage charge if the customer wants the item delivered via mail-order (therefore equalling £51.95). However, brand new copies of the game can bought for less than £50 from other reputable retailers (including postage). For example, Coolshop are currently charging £46.95, 365Games are currently charging £48.99, Amazon are currently charging £49.84, and Hit are currently charging £49.89. The game can also be bought from less established sellers on Ebay for £40.79 (a saving of roughly £10 in comparison to what CEX charge).
This situation is the same for the newly released Resident Evil 4 Remake – a game that’s sold over 4 million units since the game’s release on 24 March 2023. Currently, CEX are charging £55.00 for second hand copies of the game on PS5 (with there being an additional £1.95 postage charge). However, the game can be readily bought from other reputable retailers in a brand new condition for slightly less (such as Amazon who are currently charging £54.47 (including postage)), although Hit are currently offering savings of roughly £10 – by charging £45.85 (including postage).
But these huge disparities in prices aren’t only applicable to newly released games. Indeed, there are other (popular) games which CEX stocks that are also markedly more expensive than what other retailers charge. As an example, Hit charge £18.99 (including postage), whereas CEX charge £25 (+£1.95 postage) for Grand Theft Auto V (PS5). However, when comparing CEX to their (brand new) competitors, one realises that CEX are markedly more expensive than what other retailers are charging – to the extent that CEX aren’t even able to compete against what the average price is (whether one includes or excludes them whilst determining the average price).
As someone who understands that there exists a perception that second hand games are meant to be cheaper than their brand new equivalents, one is also aware of the argument that puts forwards the theory that a product should only be priced as high as the market can bear. And if this is the case, then this calls into question CEX’s target market and the sort of people that buy from the company. Now, as someone who firmly believes that the company tends to attract scummy people, I’m also aware of the fact that the company leverages its high prices by offering high trade-in rates for existing games. After all, how many companies are you aware of that currently offer £44 trade-in “voucher” for Resident Evil 4 Remake (PS5)?
But even if this is the case, I’m also of the opinion that a product can be priced too highly, and that second hand copies should be cheaper than their brand new equivalents – especially if the product isn’t rare and is readily available. And in the case of Grand Theft Auto V (PS5), the game is most certainly not rare (as it has already sold 175 million units across numerous formats) and is indeed readily available from a plethora of retailers at a much cheaper price (as indicated above). So with this in mind, are customers prepared to buy second hand copies of the game for £25 – even though brand new copies can be bought for around £18 – or has CEX over-priced the (extremely popular) Grand Theft Auto V (PS5)? I decided to check for myself by seeing how many copies my local CEX has (and you can see this below).
But going back to Teenage Mutant Ninja Turtles: Shredder’s Revenge (PS5) (and the reason for why I wrote this article), I bought a brand new copy of the game from The Game Collection for £16.95 (including postage). By doing a Google search, I discovered that the online retailer was substantially more cheaper than its competitors – including CEX. In fact, CEX were again much more expensive than a number of other retailers operating in the games sector (and you can see these comparisons below).
So although CEX are (significantly) more expensive than the competition, what’s even more egregious is the fact that because the company deals in second hand games, it does so at the expense of the wider games industry – to the extent that the industry (as a whole) doesn’t benefit from any of CEX’s game sales. Add to this, CEX enjoys significantly higher profit margins (in comparison to the competition), whilst also ensuring that none of the profits are reinvested back into its staff. As an example of this, there have been numerous reports of stores being understaffed, and staff not being paid a fair wage. There are also very few security arrangements in place in order to protect staff and ensure that they feel safe whilst at work.
This lack of investment is also evident within stores – despite the obscene profit margins which the company enjoys (and I highlighted some of these “obscene profit margins” in an email which I once sent to the company). This would also explain why I seldom walk into CEX stores, as the stores often look incredibly run-down. And if I don’t walk into CEX stores, then surely there must be other people (like me) who also don’t walk into CEX stores.
To conclude, and as stated earlier, I don’t walk into videogames shops. And considering that CEX holds the monopoly on high street videogame retail shops in the UK, it would be best to state that in most cases, when one refers to a videogames shop, one is really referring to a CEX shop. So if this is the case, then why don’t I walk into CEX shops? Because in my opinion (which is justified by fact), and taking into consideration that a company takes on the character of the people in charge (where “like attracts like”), then it’s fair to say that CEX is a company which is headed up and frequented by trash-tier people. At the same time, CEX shops are uninviting, suffer from awful decor, and often feel run down and tired.
CEX’s prices are also awful – to the extent that their used games are often priced similarly to brand new games (and sometimes a lot higher). This is another reason why I refuse to buy from the company, and can imagine that a lot of people feel the same way as me. Indeed, if I can buy a brand new game (from the likes of Hit, The Game Collection, Amazon, Music Magpie, and Ebay) for a considerably lower price than what CEX charge for a second hand game, then why would I want to buy from CEX? At the same time, and considering that CEX is a second hand retailer, then it stands to reason that CEX also holds a large market-share on second hand sales. And if I (as well as many other people) refuse to pay rip-off prices for second hand games, then this would explain why the pre-owned market has seen a 37% drop year on year.
Considering that this article was written inside a coffee shop, why can’t we have a videogames shop that also has a coffee lounge section? After all, this approach works really well for book shops (like Waterstones) and music shops (like Rough Trade), so why can’t it work for a videogame shop? And whilst Four Quarters and Loading Bar have come close, they’re not really videogame shops (per se), but are more like traditional bars with a videogame aesthetic.
In a world where physical console games are quickly becoming a relatively niche concern, it would be increasingly important for a videogames store to leverage its physical premises in order to account for this decline, as well as the decline in high street commerce. And if internet sales now account for around 25% of all retail sales, then it’s even more important for videogame shop owners to think of reasons as to why anyone would want to visit their physical premises. Indeed, I detailed a number of these in-store initiatives via my blog in 2018 (which you can read here) and also think that videogame shops can further utilise their premises in order to become transformative community hubs that will go on to spearhead a videogames retail revival on the high street. After all, if CEX can corner the market with their plethora of downmarket shops (whilst also convincing everyone that the company and its (braindead) board of directors have no new ideas), then there’s nothing stopping an independent videogames retail outfit from seizing the initiative and making videogames retail exciting again.