A Key Economic Indicator

[SickPuppy]

My final comment on the subject:

 

Part of the slow down for all GSPs, besides the economy, is that there have been no real big games lately excluding CoD WaW. I don't think Left 4 Dead is considered a huge online game so I don't think it would fall in this category. Seems like Nov 07 was the last good times for GSPs when you had about 4 major titles being released in 3 month time frame.

 

I would agree with JasonF and His Mother, there are a few games scheduled for release in 09 that might stimulate sales, AA 3.0, rFactor 2.0. I don't know if Battlefield Heroes is going to be one of those.

 

What you see happening now is a common occurrence in a declining economy. As disposable income decreases consumers tend to migrate toward cheaper products.

 

If you have the money to spend you are going to spend it on the best products, or at least what you perceive to be the best products. During harsh economic times we look for cheaper substitutes.

 

The $1.00 a slot GSP will see an increase in sales and the $2.99 a slot GSPs will see a decrease in sales. The $2.99 a slot GSPs will also lose some of their loyal customer base (accounts over six months old)

 

As a result the big GSPs will start to drop their prices and have the half off sales. They will sell off their older or unused assets in an attempt to reduce short term and long term liabilities.

 

The economy is now in a recession it will probably take 2 or 3 years to recover and possibly another 2 years for the consumer to recover their confidence and start moving back to the traditional more expensive products. When the economy starts to recover the consumer will again move back to the larger GSPs.

[nosit1]

What's with all this negativity. Let's all be joyful that we are still operating and take it for granted for others that have been less fortunate.

[DanM]

I don't think the economy is just to blame here; the fact is the game hosting industry just isn't what it was a year or more ago.

 

I remember when Branzone was one of the cheapest GSP's around (going back 3 or so years) and everyone else was charging $3.00/$4.00 per slot and more, now people think 99 cents a slot is expensive.

 

The web hosting industry went the exact same way.

 

If you look around you'll notice many GSP's who have been around a while are starting to push their other services more these days.

 

And as Brandon has already hinted at, game servers just aren't our primary service anymore.

[ptadmin]

I refuse to drop into the .99er category. I am happy at $1.59/slot for pub/private because customers will pay more for quality. "Not to say .99 is not quality but the profit margin unless you own all your equipment is minimal"

[SickPuppy]

I refuse to drop into the .99er category. I am happy at $1.59/slot for pub/private because customers will pay more for quality. "Not to say .99 is not quality but the profit margin unless you own all your equipment is minimal"

 

You are correct it does require you to own your equipment.

 

Why don't we all just agree to charge $1.99 a slot, wait a minute I think that would be illegal.

[jbiloh]

Has Branzone shifted away from games and into VOIP Brandon?

[DanM]

No we still support game hosting just as much as we always have done.

[Brandon]

Back on topic, so another key indicator is that the porn industry is asking for a bailout.

 

Thoughts?

 

[SickPuppy]

Back on topic, so another key indicator is that the porn industry is asking for a bailout.

 

Thoughts?

 

 

I was thinking of asking for some GSP bailout support. The three things people will never give up. Sex, Food, and Video Games. These industries must survive.

[KingJ]

I was thinking of asking for some GSP bailout support. The three things people will never give up. Sex, Food, and Video Games. These industries must survive.

 

You also get a free advertising slot on the international news

[AmirKhan]

Server prices are rapdily dropping, at the same time if you look over the past 10 years, although hardware costs have fallen colo prices gone up.

 

When I set up my GSP i saw the only way of ganing customers was price competition, I belive this is not the case with larger companies, they have a customer base large enougth to engage in non price competition, much like an ologopolistic market, there is no point them slashing prices other wise it just ruins profits accross the entire industry.

 

For example is GameServers.com dropped there prices to $0.49, soon enougth everyone else will have to follow or beat it, simply destroying profits, I belive this is called the "Kinked Demand Curve".

[studeggle]

When I set up my GSP i saw the only way of ganing customers was price competition, I belive this is not the case with larger companies, they have a customer base large enougth to engage in non price competition, much like an ologopolistic market, there is no point them slashing prices other wise it just ruins profits accross the entire industry.

 

Don't mean to dime you out, but this is NOT true, it has been tested over and over again through out the years GSPs have been running. There are different markets of shoppers.

There are the bargain hunters and yes the only way to get them is to compete for the best price.

But there are also plenty of shoppers that are looking for other things, and will pay for it.

 

In fact there have been several GSP that have had horrid sales until they raised there prices, then after they raise there prices all of a sudden the sales start coming in.

You price reflects the market you target, and that is the customer pool you will pull from.

The $4/slot hosters will never see the bargain hunter gamer, and the $1/slot (or less) hoster is very unlikely to see the quality hunters (or what ever else they are hunting for) gamer that expects to pay a heftier price. Regardless of how much praise that company gets the praise is always seen in comparision to there competitors. And a $4/slot host is not viewed as a competitor for a $1/slot host.

 

Would you realy expect to find a prada, or armani, or ... at wallmart

[{-SMAKU-}_MotorMouth]

As a past customer of GS, GOAA and gsxn. I have rented from a gsp that cost $8 a slot had sorry service all lag no frag. GOAA was the best service and that is what I paid for.

GSXN it took a week to get a support ticket answered. Cost does not mean top shelf service. When companies stop supporting the customer, the customer stops supporting them. I want to offer the customer a great product at a good price. You really have to do your research to get the best bang for your buck.

 

Most new people coming into the market have the advantage of being able to build a bigger server cheaper. Most companies that's been around for 3 or more years are still on old smaller servers and have a lot of them. So their cost per box is greater than a new company.

[Derek]

As a past customer of GS, GOAA and gsxn. I have rented from a gsp that cost $8 a slot had sorry service all lag no frag. GOAA was the best service and that is what I paid for.

GSXN it took a week to get a support ticket answered. Cost does not mean top shelf service. When companies stop supporting the customer, the customer stops supporting them. I want to offer the customer a great product at a good price. You really have to do your research to get the best bang for your buck.

 

Most new people coming into the market have the advantage of being able to build a bigger server cheaper. Most companies that's been around for 3 or more years are still on old smaller servers and have a lot of them. So their cost per box is greater than a new company.

 

Sorry but that statement is wrong on so many levels.

[AmirKhan]

Don't mean to dime you out, but this is NOT true, it has been tested over and over again through out the years GSPs have been running. There are different markets of shoppers.

There are the bargain hunters and yes the only way to get them is to compete for the best price.

But there are also plenty of shoppers that are looking for other things, and will pay for it.

 

In fact there have been several GSP that have had horrid sales until they raised there prices, then after they raise there prices all of a sudden the sales start coming in.

You price reflects the market you target, and that is the customer pool you will pull from.

The $4/slot hosters will never see the bargain hunter gamer, and the $1/slot (or less) hoster is very unlikely to see the quality hunters (or what ever else they are hunting for) gamer that expects to pay a heftier price. Regardless of how much praise that company gets the praise is always seen in comparision to there competitors. And a $4/slot host is not viewed as a competitor for a $1/slot host.

 

Would you realy expect to find a prada, or armani, or ... at wallmart

 

hence I said non-price compeition

 

Anyway I was just waffling, I had an economic exam today so meh xD

[{-SMAKU-}_MotorMouth]

Sorry but that statement is wrong on so many levels.

 

Whats wrong on so many levels?

[leetservers]

Whats wrong on so many levels?

 

 

You haven't seen my garage... Latest and greatest from 2007. LOL.

 

=bobby

[DougK94]

You haven't seen my garage... Latest and greatest from 2007. LOL.

ebay

[Steven Crothers]

ebay

craigslist

[SickPuppy]

Well I have started a popular thread; no reason to let it die now, so let me kick some life back into this argument.

 

If you have ever taken any kind of business course or college level economics class you should know about the “First in Disadvantage principle.”

 

Simply stated the first to enter a particular industry, especially involving computer technology, will have a cost disadvantage. Advances in computer technology now make it possible to host a larger number of games on single server reducing operating cost. The initial cost of these newer, faster, more powerful, servers is also lower.

 

I have stated in several prior posts that we use a 5 year life expectancy model for our servers. This does not mean that we only expect them to last for 5 years, on the contrary we expect them to last much longer. The 5 year life expectancy indicates that in 5 years technology will have advanced to the point that it will not be cost effective to operate these servers. In order to continue to compete in the GSP industry we will need to replace the existing systems with newer, faster, more powerful, servers that will also reduce our operating cost.

 

No one is exempt from the ever evolving technology world we live in. You either adapt as technology changes or your company dies, it is that simple. If your strategic business plan does not include advancements in technology your business is destined to fail.

[studeggle]

Personally I'd say 5 years is too long to count on, we plan on retiring our machines at 3 years. Sure we have other less demanding arenas many machines may move into, and we will liquidate ones that are not moved into other areas. But in our opinion if you haven't recooped the machines cost in three years you are not looking good for recooping its full costs without reworking your profit figures.

Technology is changing way to fast and new games are just getting to demanding to expect an older server to truly compete and keep your business running with a good profit margin.

[jbiloh]

3 years is more realistic. 5 is a pipe dream.

[SickPuppy]

Personally I'd say 5 years is too long to count on.......But in our opinion if you haven't recooped the machines cost in three years you are not looking good for recooping its full costs without reworking your profit figures.

 

 

It has nothing to do with recovering your investment we recover the cost of our servers in less than 4 months.

 

Useful life is based on when a server is no longer cost effective to operate. I agree, hosting games is going to place a higher demand on servers in the near future. That does not mean you can't get some use out of them running the older games or reducing the number of new games.

 

There will be a point where you will have to reduce the number of games hosted on a server in order to maintain a playable level of performance. Eventually you will reach a point where the operating cost exceeds the revenue. That is when you retire the server.

 

If you can't get 5 years of use out of your servers, then build better servers, simple as that. This is another example of the First in Disadvantage principle. If you entered the industry early then 3 years is about the life expectancy of your servers. Servers being deployed today can reach a 5 year operational life expectancy. They will of course require updates during that time.

[HiDef-Laws]

I've honestly never heard of Hostile Contact before being pointed to this thread by another GSP owner recently. I'm not sure what the point of comparing the size and scope of a $1/slot company to a company charging 3x as much would be. There are a lot of factors involved....hardware, bandwidth, power costs. If the economy is so bad, why am I still chugging along at $4.50-$7.00/slot for our service? If anything, I have the good name and leg room to lower pricing considerably to offer the same pricing as lower market tiers...I don't do this because it would cheapen the brand and lessen the service quality. It is not hard to offer service at $1/slot...

[E_Sheets]

I don't do this because it would cheapen the brand and lessen the service quality. It is not hard to offer service at $1/slot...

 

If you have good quality service when charging $4-$7 and you lower your prices to a $1, those same people will stay with you if you don't drop the ball on support.

 

It's not hard to offer service at $1/slot however, if you don't have good service then you won't have any business. Well, you will for only a short time.