PostalGamer Offers Used Game Sales Kickback to Publishers

August 15, 2011 -

A new used games reseller named PostalGamer thinks that it has the secret sauce that will keep gamers who want to buy used games and publishers who claim that their sale cuts into their profits, both happy. The company plans to distribute games in self-addressed postage paid envelopes much like Netflix and GameFly to customers. When the customer is done with the game they'll mail it back to them, get credit from PostalGamer, and spend it on another game that arrives in the mail 2-3 days later, along with another envelope. The prices they will get for trade-ins will supposedly higher than what GameStop offers, and the prices they pay to trade in for another game will be less, because the company (claims) keeps its overhead cost low by not operating storefronts.

The unique part of PostalGamer's business model is that it wants to kick 10 percent or so of each of these "sales" to the game's original publisher. In exchange for this money a publisher that cooperates helps to promote the service. PostalGamer says that a cooperative publisher might even include the envelope in their new games. PostalGamer was put together by its CEO Mike Kennedy and his business partner, Steve Sawyer. Kennedy is also the man behind GameGavel, an auction site dedicated to buying and selling video games, like eBay.

"Everyone thought I was nuts taking on somebody like that. And I probably am a little bit crazy, but I'd used eBay forever, and just got sick and tired of the high fees and everything else," Kennedy told Gamasutra in a recent interview.

While GameGavel has been running for around four years, the company has only brought in around $300,000 in revenue. Kennedy is fine with that because it allowed him to hire Sawyer as a part-time employee. Sawyer encouraged him to tackle the used games business in a prominent way, which is how PostalGamer came into existence.

"It's like the publishers have been forced into a situation where they're almost penalizing gamers for using the secondary market," Sawyer says.

Kennedy says that he is already developing a system with Bastian Solutions, a company that specializes in fulfillment centers. Its clientele includes Netflix, game distributor Jack of All Games and GameStop. Kennedy and Sawyer have also assembled a board of directors that includes Subdued Software's Phil Adam (who you may know better as the former president of both Spectrum HoloByte and Interplay and the former chairman of the Software Publishers Association).

"He really believes in this concept as well, and has really opened up a lot of publisher doors to us, because he knows everybody He knows all the execs and owners of about every publisher that there is," says Kennedy.

Kennedy says publishers will get a quarterly check (around $6 to $8 a game out of the $15 gross per title he expects). If publishers accept the money and cooperate to promote their service the duo says that they will give publishers and even bigger piece of that pie.

"The feedback has been very very positive, but...nobody wants to be first," claims Kennedy.

Sawyer claims that a big publisher (who he wouldn't name) said to him that "the idea was attractive," but said they were unwilling to take the initiative to be the first to publicly commit to what would be considered a slap in the face of GameStop.

"It just takes them a certain amount of time to process something like this, especially something that originally they never ever considered they'd ever get a piece of. So it's just a completely new concept to them," Kennedy says.

One way the PostalGamer founders are trying to sweeten the deal is by offering data on secondary sales. The company is developing a tracking system that can give publishers data on how often its games are being resold, where it's being resold, and how long someone holds on to a title before chucking it in the mail, etc.

"You look at a game like Mirror's Edge. I think that the likelihood of that game getting a sequel is probably slim to none at this point. But I know for a fact from a lot of people who work at GameStop...that the game sells really well on the secondhand market," Sawyer says. "So you're looking at a situation where it's theoretically possible that all the income that they generate from the secondhand benefits could maybe justify keeping a franchise alive."

PostalGamer currently has no publisher support even as its official website has a soft launch this week. Kennedy tells Gamasutra that its trade-in program will begin later this year, and the company will do it with or without anyone on board.

Source: Gamasutra


Comments

Re: PostalGamer Offers Used Game Sales Kickback to Publishers

execs have been bitching and moaning and complaining about used games and as soon as someone offers up what they've been whining for, no one wants to jump on board?  seriously?

Re: PostalGamer Offers Used Game Sales Kickback to Publishers

They're more intent on using it as an excuse to make games more restrictive. If someone removes that argument, it hurts their real cause.

Personally, I still think the idea of paying publishers for used game purchases is a bad idea. The business has been around since the first home video games have been sold. The only reason it's such a major problem now is because the time span that a person gets bored with a game from when they purchase it is anywhere between a few hours to a couple of days. The reason for this is because there's more of a focus on making a game graphically appealing that there's nothing there apart from a ( often poorly conceived) multiplayer and a slapped on single player aka, the old focus on style over substance.

The best way to really solve the issue of used game sales cutting into profits is to make games that people actually want to keep beyond a few hours. And yes, that can be done without going into extreme budget increases. It's a lot more effective than treating anyone that wants to get a good deal for their games as the enemy.

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