A pre-order is an order placed for an item that has not yet been released. The idea for pre-orders came because people found it hard to get popular items in stores because of their popularity. Companies then had the idea to allow customers to reserve their personal copy before its release, which has been a huge success.
Pre-orders allow consumers to guarantee immediate shipment on release, manufacturers can gauge how much demand there will be and thus the size of initial production runs, and sellers can be assured of minimum sales. Additionally, high pre-order rates can be used to increase sales further.
Pre-order incentive
Pre-order incentive, also known as pre-order bonus, is a
marketing
Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce.
Marketing is usually conducted by the seller, typically a retailer or ma ...
tactic in which a
retailer
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesal ...
or
manufacturer
Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the
secondary se ...
/
publisher
Publishing is the activities of making information, literature, music, software, and other content, physical or digital, available to the public for sale or free of charge. Traditionally, the term publishing refers to the creation and distribu ...
of a product (usually a
book
A book is a structured presentation of recorded information, primarily verbal and graphical, through a medium. Originally physical, electronic books and audiobooks are now existent. Physical books are objects that contain printed material, ...
or
video game
A video game or computer game is an electronic game that involves interaction with a user interface or input device (such as a joystick, game controller, controller, computer keyboard, keyboard, or motion sensing device) to generate visual fe ...
) encourages buyers to reserve a copy of the product at the store prior to its release.
Reasons vary, but typically, publishers wish to ensure strong initial sales for a product, and the offered incentive is used to induce shoppers who might otherwise wait for positive reviews or a specific shopping period, like the holiday season, to commit to a purchase. Having paid for part or all of the purchase when placing the order, the consumers will usually complete the transaction shortly after the product's release, often on its first day in stores. Individual stores or
retail chain
A chain store or retail chain is a retail outlet in which several locations share a brand, Management, central management and standardized business practices. They have come to dominate many retail markets, dining markets, and service categories ...
s may also offer bonuses for a popularly anticipated product to ensure that the customer chooses to buy at that location, rather than from a competitor.
The pre-order bonus may be as simple as a
discount on the item's purchase price or other related merchandise, another marketing strategy, or it may be an actual item or set of items. The items may be related merchandise or exclusive items available only through the pre-order program.
In video games
Until around 2000, the primary distribution method for video games were through physical media such as
CD-ROM
A CD-ROM (, compact disc read-only memory) is a type of read-only memory consisting of a pre-pressed optical compact disc that contains computer data storage, data computers can read, but not write or erase. Some CDs, called enhanced CDs, hold b ...
s,
DVD
The DVD (common abbreviation for digital video disc or digital versatile disc) is a digital optical disc data storage format. It was invented and developed in 1995 and first released on November 1, 1996, in Japan. The medium can store any ki ...
s, or
game cartridges
A ROM cartridge, usually referred to in context simply as a cartridge, cart, cassette, or card, is a replaceable part designed to be connected to a consumer electronics device such as a home computer, video game console or, to a lesser extent, ...
, including packaging and instruction manuals. Preparing enough copies for vendors to purchase and sell to consumers on the release day required a significant amount of market forecasting. Episodes in the industry's past, such as the
1983 video game crash
The video game crash of 1983 (known in Japan as the Atari shock) was a large-scale recession in the video game industry that occurred from 1983 to 1985 in the United States. The crash was attributed to several factors, including market saturatio ...
, had made publishers wary of producing in great excess to avoid the situation that led to the
Atari video game burial. On the other hand, having too few copies available at the game's launch can lead to consumer dissatisfaction.
Retailers like
GameStop
GameStop Corp. is an American video game, consumer electronics, and gaming merchandise retailer, headquartered in Grapevine, Texas (a suburb of Dallas). The brand is the largest video game retailer worldwide. , the company operated 3,203 stor ...
and
Amazon.com
Amazon.com, Inc., doing business as Amazon, is an American multinational technology company engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Founded in 1994 by Jeff Bezos in Bellevu ...
discovered in the early 2000s that the pre-ordering mechanism helped with forecasts, as they could order a reasonable number of copies of new games based on pre-order interest, which, in turn, helped publishers to determine how many physical units to create. Then, pre-orders were usually placed by providing the vendor with a small percentage of the game's cost to hold their reservation (such as $5 or $10 on a $50 game), with assurances they would receive their copy on release day after paying the remaining balance. Retailers would be able to use pre-order money towards other investments, effectively accruing some
interest
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...
on the pre-order fee.
As the video game market grew with some widely popular series like ''
Call of Duty
''Call of Duty'' is a first-person shooter military video game series and media franchise published by Activision, starting in 2003. The games were first developed by Infinity Ward, then by Treyarch and Sledgehammer Games. Several spin-of ...
'' and ''
Grand Theft Auto
''Grand Theft Auto'' (''GTA'') is an action-adventure video game series created by David Jones and Mike Dailly. Later titles were developed under the oversight of brothers Dan and Sam Houser, Leslie Benzies and Aaron Garbut. It is prima ...
'', publishers would prepare by printing large runs of the games and having them ready to ship to retailers so that even consumers who failed to pre-order would likely be able to get a copy within a day or two of release, negating the primary drivers to pre-order. Furthermore,
digital distribution
Digital distribution, also referred to as content delivery, online distribution, or electronic software distribution, among others, is the delivery or distribution of information or materials through digital platforms. The distribution of digital ...
eliminated the need for retail versions started to take off, as there is effectively no fixed volume of digital copies.
Then, publishers and retailers started to turn to other methods to encourage pre-orders. Publishers created limited edition packages that would include additional physical items with the game, such as art books, soundtrack CDs, or figurines of the game's characters. Such editions would be published only in limited numbers encouraging consumers to pre-order early to reserve one. Retailers made deals with publishers to allow for unique content for the game that could be obtained only by pre-orders through that vendor.
Pre-ordering is a part of most major releases but is now a significant point of contention. Some consumers believe pre-ordering to be a waste and do not believe that any kind of incentive is truly worth a marked up price of sometimes over twice the original price for certain digital in-game pre-order bonuses, which may be released as free
downloadable content
content (DLC) is additional content created for an already released video game, distributed through the Internet by the game's publisher. It can be added for no extra cost or as a form of video game monetization, enabling the publisher to gain ad ...
sometime later after the game's original release.
Others have pointed out that with the pre-ordering process, publishers can effectively assure a sale of the game to those consumers and so can release the game in an unfinished state or missing certain features to that
captive audience
Captive audience may refer to:
Law
* Captive audience meeting, a mandatory meeting used by employers to oppose unionization
* A legal concept in:
** '' Rowan v. United States Post Office Department'', 1970, in which the United States Supreme C ...
, but without pre-orders, critical reviews of a game released in such a state would have harmed their sales.
That itself then leads to issues of promotion and marketing of how to sell a game as to gain pre-orders, which can lead to some potentially deceptive practices. In some cases, a game can be significantly delayed or even canceled, making the pre-ordering process useless.
In most cases, a pre-order can be refunded to the purchaser prior to release. However,
Nintendo
is a Japanese Multinational corporation, multinational video game company headquartered in Kyoto. It develops, publishes, and releases both video games and video game consoles.
The history of Nintendo began when craftsman Fusajiro Yamauchi ...
has a policy for digital pre-orders that does not allow such refunds. Consumer authorities in Germany and Norway took Nintendo to court in 2019, arguing this practice violated the
Consumer Rights Directive 2011
The Consumer Rights Directive 2011/83/EU is a consumer protection measure in EU law. It was due to be implemented by 13 December 2013.
Scope
The Directive applies to most contracts between traders and consumers and applied to all contracts concl ...
for the European Union. The court ruled in January 2020 that Nintendo's practice does not violate the directive, though the German consumer authority does plan to appeal the ruling.
See also
*
Crowdfunding
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and Alternative Finance, alternative finance, to fund projects "withou ...
References
{{Reflist
Sales
Video game industry