Web Retailer Bails on Games Industry, Hard

Online retailer DVD Empire has gotten out of the sale of videogames, and on their way out the door they made a point to call out the industry on a number of sore spots. As reported by Gamespot, the company felt that they actually lost money by offering games to customers. In their eyes big publishers only care about large chain stores, leaving small and medium-sized retailers to pick up enormous overhead costs on the titles they carried. They have an extensive list of frustrations on the former 'games' page, including: "When we sell a game we make on average 8.3% gross margin. That does not take into account any of the cost to store the video game or labor to receive/ship an item. The only way we can make a profit on an item is to sell it over the MSRP, but unfortunately we are not allowed to do this. Take a $400 console; we only make $5 on the sale--that is a .01% gross margin (note the decimal point). The game companies make their profit selling to us. We make no profit selling to you." Besides Gamestop there are two other videogame stores in my town ... but both of them are exclusively used game resellers. Are used games the only way to make videogame sales profitable?

1% gross margin

[montyzooooma]

Surely. .01% would be 4cents.

Re:1% gross margin

[UbuntuDupe]

No, it's .01% -- he uses the Verizon Numerical Convention (VNC).

Verizon Math

[spleck]

It's Verizon Math!

I guess it should be: 5/400 = 0.0125 = 1.25%

Re:

[eviloverlordx]

Surely. .01% would be 4cents.

It's no wonder they're having trouble staying in business then, if math is such a problem. Seriously, though, I can see his point. There are so few independent games stores around these days, I can imagine that competing against EBGames/GameStop or Walmart must be difficult, at best.

80% crap

[Lazerf4rt]

Wow, not so good with percentages. I wonder if they made the same kind of error with this other figure they cited?

We all know how fast games devalue in prices; this is due to the fact that 80% of the games created are crap.

Re:

[gEvil (beta)]

I'd say that number is a bit on the low side...

Re:

[C_Kode]

This isn't what it actually says on their website.

Here is what I saw: Take a $400 console; we only make $5 on the salethat is a 1.25% gross margin. The game companies make their profit selling to us. We make no profit selling to you.

I don't know why the GameSpot story says .01%

Re:

[twistedsymphony]

maybe the fixed it after GS posted their story?

Re:

[C_Kode]

Possibly, but that would mean both DVDEmpire and GameSpot both are mathematically inept. Of course DVDEmpire being mathematically inept could be the reason they are failing at game sales. Knowning how the game industry is though, I doubt it.

Re:

[spleck]

This isn't what it actually says on their website.

You're right. They edited it.

Re:

[Lazerf4rt]

I can confirm that, too. I saw the .01% figure on their site before they corrected it. (I was quite interested in whether or not they actually wrote it.)

Yes used games = $$$$

[master_kaos]

The only way EB Games, and Gamestop stays in business is from their used game sales. Depending on the game, they will buy it off of you for 10-20 bucks, and resell it for 90% of the normal retail price, making a huge margin. Now EB and GS probably make a bit extra than an independent store, but not much.

Re:Yes used games = $$$$

[HappySqurriel]

A friend of mine ended up working at futureshop after failing out of University. When he first got the job one of his 'perks' was that he got to buy anything from his department (videogames) at cost. Soon enough, he found out that with how small the mark-up on videogames was that the store made more money off of the chocolate bar rack at the front of the store than they did off of their videogame department.

Now, the reason most stores (either electronics or big-box stores) keep sections of videogames is that they bring tons of foot trafic into your store. Imagine how many people walk into Futureshop/Walmart to see if they have a Wii/PS3 in stock and end up buying a DVD/CD or snacks (all of which the store's margins are way larger on). I imagine that EBgames continues to stock new games/systems so that people will pick up a copy of a used game when they buy a new game.

Re:

[Thansal]

they don't even have to pick it up when they buy the new game, if GS can get the idea of "We LOVE to take your used games" into customers they are more likely to come back with the game they bought from GS and turn it back for credit to a new game.

Admitedly this type of customer would be better served by a company like Gamefly (either buyign used games for much less then GS sells them for, or just putting down the $20+ a month and having games when ever you want)

Re:

[CastrTroy]

I don't know about the US, but in Canada, EB has pretty good prices on used games. I got Metroid Prime used for $12.99. Now the prices vary widely from game to game, but you can find lots of games for under $20, when most of the new stuff is still up around $60. Sometimes you'll see used games for $50, but I think most people ignore those. If there's that small of a difference, most people just buy the new games. I think most of the time when you see this, is when the game is new, but somehow they got a

Re:

[Soygen]

Metroid Prime is almost 5 years old though and EB would buy it from you for about 5 bucks, if that. Sure, you can find lots of games under 20 bucks. Old games and it's not really the price they sell the used games at that's messed up. It's the pathetic amount they buy them back for.

Re:

[CastrTroy]

What's pathetic is that people buy games that they later decide is worth only $5. If it's only worth $5, then is it even worth selling. Surely the gamer thinks that they will basically never want to play it again if it only costs them $5. I can't think of any games I own that I would give up for $5. At lot of people must be buying a lot of crappy games.

Re:

[Drawkcab]

I have to ask how long you've been buying games? How often do you really pop in that excite bike nintendo cartridge or put the 5.25" Impossible Mission floppy in your C64? The technology changes. At some point your games will be worth approximately $0 to you (not worth the shelf space). Somewhere on the road from $50 to $0, it will hit $5. Some games are excellent but have highly limited replay value. If you spend 30+ hours playing all the way through a game, and maybe do it again, how much more of yo

Referrer link?

[Valdrax]

I notice that the link to the screed in their games section has a userid component. I also notice that the link to the 20% off all games link has the same userid in it.

Does this site reward referrer links?

Re:

[bladesjester]

Even if it does, I don't see the problem. Okay, so the person who posted may get a couple of bucks from the company in question, but it costs you jack. In the end, all three parties come out ahead.

I fail to see what so many people here have against someone getting a small return on passing on some potentially interesting information to people as long as it doesn't cost the end users.

Get over it.

Re:Referrer link?

[Valdrax]

I fail to see what so many people here have against someone getting a small return on passing on some potentially interesting information to people as long as it doesn't cost the end users.

Because people hate being used as rubes for someone else's gain. Referrer links should either be publicly disclosed or stripped. To do otherwise is to try to make a buck on the sly.

It also calls into question the integrity of Slashdot as this is very close to being an advertisement. Yeah, yeah, a game company posts a big publicity-gaining screed about how selling games sucks.... oh, and hey! 20% off! With nobody credited with the story, I have to wonder whose user id this might be. I'm just saying it creates a bad impression.

Re:

[Pope]

It also calls into question the integrity of Slashdot...

You new around here? ;)

My bad, then.

[Valdrax]

I just always get suspicious of such things.

Price fixing?

[Fozzyuw]

"The only way we can make a profit on an item is to sell it over the MSRP, but unfortunately we are not allowed to do this."

I've been wondering about this for some time. Video games, unlike many other items, are always sold at MSRP. If I got to large retailer 1, 2, 3 or small specialty store X, Y, Z the price is always the same. There is no competition going on. *Maybe* I'll see a special sale on a game, but it's rarely for newer releases. Last 'special' I ever got was when I picked up some DDR games and got a free dance pad and a "buy 2 get one free" deal at Toys'R Us looking for some Xmas gifts, which is a very rare promotion to find (outside of used games that is).

It only makes me wonder, why do I never see one place have a sale (besides there 'bargain bins') on some games to compete with others. I guess the above answers my question. It appears game companies/publishers are forcing a fixed price to the point that there's very little profit to be had.

Is this necessary to recoup the multi-million dollar investment to make a game these days? It is a weird industry.

Cheers,
Fozzy

Re:

[Itchyeyes]

I've always thought that rather strange as well. I imagine that the producers force retailers to sign a contract that they will sell the game at a certain price. There are other things rather fishy with the state of game retail too. For instance, how come DVDs always arrive on store shelves on Tuesdays, yet with games they are only guaranteed to ship on Tues. and the game may arrive on shelves a day later, maybe 3 or 4 or 5 days later. Another thing is retailers' odd reliance on pre-orders (even though

Re:

[honkycat]

Another thing is retailers' odd reliance on pre-orders (even though they can't guarantee to fulfill them), something else you don't see with DVDs.

Just a thought, but maybe this is because DVDs are typically second releases of movies that many people already saw at the theater, so there's less buzz about the DVD release. The sort of game that people preorder has typically never been seen before.

Re:

[jkabbe]

I imagine that the producers force retailers to sign a contract that they will sell the game at a certain price. Resale price maintenance is illegal under antitrust law. However, a manufacturer can legally decide to stop selling to a distributor/retailer that sells the products at too low of a price. In other words, you can achieve basically the same result but you can't SAY that you're doing it.

Re:

[Detritus]

I've read that the manufacturers use subsidized advertising to fix prices. They wont subsidize the retailer's ads if their products are listed in the ad at a discounted price.

Yup...

[Chmcginn]

I worked sales during college at a jewelry store, and the nicer watch companies (Movado, Tag Huer, Rolex) do the same thing. The funny thing is all the paperwork you get with each order... "While each retailer has the right to sell stock at a price of their choosing, (company name here) reserves the right to demand copies of sales records before shipping additional stock, and to refuse sales for any, or no, reason."

Re:

[0123456]

Sounds like America is very different to the UK. Even when I buy games when they're released rather than waiting for price drops, I can typically buy them for 60% of the recommended price by shopping around.

If game retailers can do that here, I'm not sure why they can't do it elsewhere, unless they've got a really bad deal with the distributors in America.

European MSRPs are higher

[tepples]

If game retailers can [discount new releases by 40% in the United Kingdom], I'm not sure why they can't do it elsewhere, unless they've got a really bad deal with the distributors in America.

The MSRP for games in Europe is also higher. A game sold for 50 USD in the United States ($53 including a typical 6% state VAT) might sell for 50 euros ($64.85) in Ireland and continental Europe or 35 GBP ($68.57) in the UK.

Re:

[0123456]

That does make a certain amount of sense, but Vanguard, for example, is $49.99 on Amazon.com and the equivalent of about $35 on play.com.

Re:

[Col. Bloodnok]

Play.com are not paying UK taxes as they ship from a channel island tax haven.

Re:

[HiVizDiver]

I find this to be true of software in general. Unless you're eligible for academic pricing (which I am, thankfully - you can get some huge breaks there), you're pretty much going to pay a similar price for most large-brand software (your Microsofts, Adobes, etc.) wherever you go, if you're essentially buying "off the shelf" and wanting the latest version of said software. You might see a $10 discrepancy across the board for, say, a full version of Microsoft Windows XP Pro, but that's about it. Rarely, if ev

Re:

[justchris]

Ummm, the article pretty much answered your question. You don't see these kinds of deals on software because retailers can't afford to make those kinds of deals. Margins on software, any software , be it games or otherwise, are very small. A $10 drop in the game price, without a similar drop in the cost to the retailer to purchase the game from the publisher, pretty much eats any profit you might get from that game.

On the other hand, let's say one store decided to increase the price of all their games

Re:

[realityfighter]

I would check out Fry's then. They actually have a habit of knocking a few bucks off the price of games the week they come out. (Don't ask me why, I just know it happens.)

You need to look closer

[DeadScreenSky]

I don't find this to be true at all. Sales for videogames seem to be very common, including for new releases. I routinely buy new releases of videogames at Fry's for $5-10 off the MSRP, and I know Best Buy at least generally has sales the week after release. Hell, if videogame sales were really that rare then sites like CheapAssGamer wouldn't be so amazingly popular and successful. But sign up for the forums there and you'll see info on videogame sales nearly every day of the week. I'll agree that sales for

Target

[steveo777]

Often times Target will sell Game Boy and DS carts for 5-10 bucks off in the US. Haven't seen that kind of discount for any disk-based media though. About the best I've seen for disk based is extra trade-in value for a particular game at EB/Gamestop.

No loss to me.

[kabocox]

I buy most of my video games at Wal-mart. We have a Gamespot and GameXchange though I've only used the GameXchange once. Why buy from Gamespot when the same exact game can be had cheaper and with a better return policy at Walmart? Gamespot will check if you've opened video game and won't take it back. Walmart will as long as its a video game and not a computer game. I support the business with cheaper products and a better return policy.

Re:No loss to me.

[WinterSolstice]

I buy mine used at GameStop for two reasons
1) 90% or so of the retail cost, with an additional 10% discount (for a mag subscription that I enjoy)
2) If the game reeks I can take it back within 10 days and return it, exhange it, etc. 90 days if it just doesn't work

Walmart and Target don't give me that.

-WS

Re:

[Impy the Impiuos Imp]

Wal-mart might very well tell them "you will refund us for every piece of crap we take back and can't re-sell, regardless of reason, or we won't sell your stuff. Licensing agreements? I'm sorry, there's the door."

It's good to be the king.

Walmart's other effects

[Anonymous Coward]

I agree with you generally but Walmart is a special case. Their refusal to stock adult-only rated games is often cited as a major problem in game development, and leads to the rather ridiculous situation that game developers wanting to make a game the addresses adult themes (or is just about violently blowing shit up) have to target 17 year old "children" rather than real adults if they want to get stocked in Walmart, where a large number of sales happen. It's mostly a problem with the broken USA ratings sy

Adult themed games? Aw, get real will ya...

[Shivetya]

first off, define what that means? Does it require a force feed back controller?

Sorry, but the gaming industry blaming wal-mart for their inability to offer "adult themed" games is like a crazy uncle claiming that he suffered a heart attack because you stubbed your toe"

Adult themed means : We don't really have a game but lots of titties and ass shots will make up for it, if that don't top it off we will even offer simulated sex.

Sorry, Wal-Mart is only 12-15% of the retail industry at most, the games are b

Re:

[WreathOfBarbs]

I think you underestimate the sheer volume of sales that go through Wal-Mart by a huge margin. There is a reason that they are able to force manufacturers to alter thier business practices to suit Wal-Mart's vision of how business should be done. Wal-Mart has bankrupted several large companies simply by taking thier product off the shelf (Rubber-maid) or in the case of Clausen pickles by offering thier product at a ridiculously low price as a loss leader for Wal-Mart. I see no reason to believe they have

Re:

[damiangerous]

Sorry, Wal-Mart is only 12-15% of the retail industry at most,

Back in 2001 they accounted for 25% of video game sales.
http://www.wired.com/news/games/0,2101,55955,00.ht ml [wired.com]

I've also found several dead links referencing them as the number 1 games retailer with between 23-28% depending on the article date.

Re:

[hal2814]

One thing I've learned by really being an adult is that real adults often don't care too much one way or another about T&A or violence in the games they play. Those "adults only" games are more often than not just attempts to make a game more popular to minors by making it forbidden fruit but that's really beside the point.

If Wal-Mart doesn't stock a game people want, they'll get it elsewhere. The music industry still sells quite a bit of material that Wal-Mart refuses to carry and there's a whole ind

Re:

[KDR_11k]

"Adult only" is a fancy way of saying porn. A game designed to be AO (very rare in the US) usually is meant to be played one handed. Nothing about forbidden fruits, everything about Americans being so uptight they need to hide the porn away. Look at the uproar over the hot coffee mod for GTASA, I don't think any other country gave a damn (because GTASA does contain lots of stuff that's worse than that joke of a porn minigame by all sane standards and hot coffee really shouldn't have increased the rating).

Re:

[Impy the Impiuos Imp]

For games, that's not necessarily the case. Indeed, it's rarely the case. There are a number of popular video games the past 10 years that were 17+ only, like Kingpin or that other mafia game ("Mafia"?) In them, the cut scenes (and live action!) have people swearing with full blown 4-letter words, then blowing people away in very gorey action.

The only two "sexy" modern games (not counting the hackable GTA scene) are the beach volleyball and creating a maximally assy with small waist girl in City of Heroe

Re:

[KDR_11k]

The list [wikipedia.org] does look like most of thse were meant to be porn. 17+ is not Adults Only, 17+ is Mature and Wal-Mart carries those. For what it's worth, the ones of these I've seen on store shelves here were rated 16.

Re:

[tomservo84]

Check that link for AO rated games on wikipedia quickly...as it is currently on its way to being deleted. (Which I have to admit makes no sense to me...it seems to me a perfect place for it to be.)

Re:

[Quiet_Desperation]

[CANNED ANSWER]Because WalMart am eeeeee333333vil![/CANNED ANSWER]

I go to the GameStop near my house because:

1. It's *really* near my house. I mean, I can walk to it in 2 minutes.
2. I like to support a local store.
3. There's cute girls who actually know about gaming working there.
4. Nice selection of used games.

Re:

[kabocox]

[CANNED ANSWER]Because WalMart am eeeeee333333vil![/CANNED ANSWER]

I go to the GameStop near my house because:

1. It's *really* near my house. I mean, I can walk to it in 2 minutes.
2. I like to support a local store.
3. There's cute girls who actually know about gaming working there.
4. Nice selection of used games.

I bust out laughing at this. I live in Texarkana, AR. Walmart has been in Texarkan for over twenty years. It is the local business. We've gotten two GameSpots within maybe the last 5-6 years. One is

Re:

[Anonymous Coward]

I prefer most of my clothing to be made in China.

Fuck the independent retailers, who needs 'em anyway.

Right?

Large retailers make money on the extras

[ConfusedSelfHating]

From what I understand, large retailers make a lot of money on things like cables. Look at the price of cables online and look at what Best Buy charges for Monster cables. Certain retailers make more money on the USB cable sold with an inexpensive printer than on the printer itself.

Mod Abuse for parent

[ShadowsHawk]

The post is not off topic. It clearly discusses margins in the summary and this post is relevant.

Not allowed over MSRP?

[sqlrob]

There's games (not used) over MSRP at Gamestop. Some of the $29.99 DS games are there at $34.95

Re:

[hansamurai]

A lot of DS games have a MSRP of $35, do you know for sure that Gamestop is not just setting the price at the MSRP and most other retailers are discounting it to $30?

Re:

[sqlrob]

The crossed out price on Amazon is the $30. If they could claim a higher percentage discount from 35, they would.

Tetris [amazon.com] at Amazon
Tetris at Gamestop [gamestop.com]

Re:

[twistedsymphony]

I was at Gamestop last night picking up a new 360 title and noticed "Big Bumpin" (a $4 Burger King game) for $7.99 USED.

I find that most of the time I can get a game NEW at Best Buy for less then what EB/GS charge for a recently released Used title.

FWIW I get most of my games at Walmart, and that's only because they're the only store that sells new games within a 20 mile radius of my house. And the only used retailers are pawn shops that like to charge $10 for a scratched to crap with no case PS1 game

Re:

[British]

I think it was Circuit City you could by Need for Speed: Most Wanted for $40, or the "greatest hits" Need For Speed: Most Wanted for $19. Even big-box retailers have inconsistent pricing.

Re:

[the dark hero]

They usually only do this with the handheld games(atleast the nintendo handhelds from what i've noticed). I have been able to go to Fry's Electronics and buy GBA or DS Games for a few bucks under MSRP within the first week of its release.

If I recall correctly...

[vrmlguy]

Tycho and Gabe already covered this. http://www.penny-arcade.com/comic/2006/12/18 [penny-arcade.com]

Loss Leader

[Detritus]

The retail stores may be looking at it as a loss leader. Get the customer in the store and sell him accessories and other stuff that has a better profit margin. I knew that margins on consoles were very small, but I thought that they were better on the games.

Used games are what keeps stores open

[Sciros]

Basically the folks that work at Gamestop and EB are told that the store makes most of its money off used game sales, and that's how it stays open. This is why you see the store employees telling visitors the most blatant BS on the planet in order to make a sale on a used game. It also explains why online retailers of predominately new games can't make a profit -- they have no used games and even if they did they'd be hard-pressed to BS potential customers into purchasing any.

I don't mean to bash EB and G

Re:

[Quiet_Desperation]

Not sure why you consider them garbage. Half the games I buy are used. Never had a problem. You can look at the disc for major scratches or blemishes before purchase. If you check regularly, you can get used games used that have only been out a few weeks. The young kids who gotta have the new stuff *NOW* beat them quickly and trade in for newer games.

Wait until games are sold on tough little Flash RAM cards. Used gaming will be even better.

Re:

[honkycat]

Wait until games are sold on tough little Flash RAM cards. Used gaming will be even better.

I'm waiting until they're sold on ROM chips encased in a custom plastic cartridge that plugs into a flimsy plastic socket on the console. That's the true future of gaming technology!

Oh, wait...

Re:

[Sciros]

Oh, not so much that used games are garbage, but that an employee of EB/Gamestop will tell you that a used game they have on the shelf is at least as good as whatever new game you're looking for, even if it totally isn't.

I've bought used games before, and haven't really had any problems with the disc-based ones (cartridges? terrible experiences with used ones, heh). My point though was that game quality is hardly a concern for the game store employee when suggesting something to buy, if the choice is new

Re:

[Shiptar]

Uh, and who exactly is game quality a priority for?

Certainly not the millions who buy Madden. Certainly not the publishers selling the drivel. Nor would a game store care, as it's in their best interest (and mine) to sell used games. Only an idiot buys new. If you can't wait a couple months for a games price to go down, you really should find something else to do.

It's the only way to economically protest the shitware that gets sold as new games.

Re:

[joystickgenie]

If no one buys new then there will be no used games on the market as well.

There is a reason why it is so hard to find copies of sleeper hits. It's because customers didn't know about them when they were new and by the time customers heard the word of mouth it is too late all the new copies have been removed from the shelf and only a small finite number of used copies are in circulation.

I really have no problem with selling used games; I have a problem with the way used games are being sold at the detriment

ACWW

[tepples]

The young kids who gotta have the new stuff *NOW* beat them quickly and trade in for newer games.

But can Animal Crossing be "beaten"?

Wait until games are sold on tough little Flash RAM cards.

Nintendo DS anyone?

Re:

[KDR_11k]

I bought only one used game from GS so far, it was Castlevania: Circle of the Moon for the GBA (tough little cart, yes) and it lost the savegames every day or so. It didn't reset the game completion flags, though. No idea what happened there but I had to return it because that's not a game you can finish without saves.

Used games don't get better when they're sold as durable plastic carts.

Re:

[hal2814]

Um, used games typically are not garbage (at least not anymore garbage than new games). I've bought many used and have only had to return one due to defect. The EB (or was it Gamestop?) exchanged no problem (with receipt). They're not as good a deal as they used to be. I still remember getting Ghost Recon for the PC 1 week after it came out for $25 and I got Red Alert II for $20 used while the new copy was still going for $40. Those types of deals are long gone, but you can pick up good used games at r

Re:

[SydShamino]

I don't mean to bash EB and Gamestop, because it's not like they are committing a crime by selling an overpriced, used piece of garbage to an ignorant parent (any customer should be responsible enough to either know exactly what he/she is buying, or to not care).

I don't see that as a problem. They aren't overpriced and the buyers aren't ignorant. If I go into a store to buy a game, and can get 20% off by buying it used, I'm saving money. The fact I could have bought it on eBay for 60% off is irrelevant,

Misnomer

[Tancred]

If they're not allowed to sell above MSRP, then it's more than a suggestion, it's an upper limit.

I wonder if the guy that has problems with percentages had anything to do with their failed game business.

If only

[el_womble]

there was a way to transmit digital data between places that didn't cost any real money.

It could be a connection of all the big networks, an Internet if you will.

Over this internet we could send our electronic wares like music, video, photos and games for for a reasonable amount of money. Of course, to make this possible home networks would need to be connected this internet too, and at speeds of 1-2 Mbps at least!

Oh shit, its 2007 and this has actually happend. The games industry is lazy and greedy, just l

Re:

[cdrguru]

Yeah, if only.

The problem is most people would like to get something for nothing, and with the Internet it happens every day. So, you buy the game, download it and I ask you to "borrow it". You let me and I "share" it with a few more friends. Great PR for the company that made the game.

Since one of the friends is into "sharing" big time, this now gets distributed all over the planet through P2P networks. Popular game, but so far they have sold only one copy. That is all they will ever sell, because eve

Re:

[cliffski]

Too many of the 'business guys' at big retail developers and publishers are too old, too ill-informed and too darned crap at their jobs to make the change. I worked for a nameless big retail dev for 3 years. We had a business Q& A once, and 3 years ago I asked the biz dev guy what our companies plans were for digital distribution, like steam. His answer (to a packed room) was

"I don't really see us moving in that direction, theres so real future in [stuff like steam]".

I think he left in the end, but I kn

Re:

[p0tat03]

As an indie developer I have to say this:

First you whine and moan about not having online distribution. Now we do, and we cover our asses by enforcing anti-piracy measures like Steam. Yes, it's not perfect, but it is all we've got for now.

Then you whine about how said online distribution is draconian, unfair, and turn us all into faceless corporate drones bent on making your life hell.

Then, inevitably, somebody will bring up Galactic Civilization II and how the disc has zero copy-protection but the ga

Steam DS?

[tepples]

Over this internet we could send our electronic wares like music, video, photos and games for for a reasonable amount of money. Of course, to make this possible home networks would need to be connected this internet too, and at speeds of 1-2 Mbps at least!

Would something like Steam be practical for a handheld video game system such as the Nintendo DS?

Re:

[el_womble]

Why not? It's internet enabled, the device is uniquely identified by both its MAC and its processor ID and with flash memory at £12 for 2GB even at consumer prices it seems that its probably more viable for a DS-like device than a console where the games are gigabytes not megabytes. Of course it might be the end of game sharing, but hopefully the games will drop from £30 to £20 (yeah right).

Little Sympathy

[Swanktastic]

These guys waited till point 6 out of 10 to explain the REAL problem:

6. Games Are Better Suited for Brick and Mortar Retailers:
There is not a huge selection of games; it is a new release industry (majority of sales are in the first two weeks of release). Large retailers make money on other products after they get you in the door. We do not; most people come to a website to purchase a video game, not a video game and a bunch of movies. There is also no game catalog market, if you wanted to buy an old copy yo

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[Detritus]

Oh, and by the way, 8.5% retail margins are not horrible. These guys should talk to independent grocers if they think they've got it bad.

Maybe not for a grocery store that does huge volume. I don't think many retail stores would survive on such low margins.

Game Store Provides No Value To Me

[patio11]

For PS2/Wii games, I go to my local game shop because that is the only way to get them. For PC games, I get it from whatever online retailer has the lowest price/shipping combo or Direct2Drive if its an option. My heart bleeds for you, video game stores, but the high schooler behind the counter trying to upsell me into a strategy guide provides no value to me, and since I only go to the store when I have a specific game in mind I don't need his advice (and if I did need advice, I could get better informed advice online -- sorry, kid).

The money from a video game sale has to get split three ways: developer, publisher, point-of-sale. Everybody thinks the other two get too much money. Publishers need developers, they can't make games without them. Developers sometimes need publishers, because AAA games cost $$$ to make and you don't want to have to self-insure against not getting a hit. Who needs retailers? Um, nobody, if there is an alternative distribution model which can move the same number of units. For products targetting the core demographic (which is perfectly capable of downloading games already... TOO capable, to hear many tell the tale), distribution via download works now and will only get better as bandwidth increases. In the next couple of years, we'll hear of a name game being distributed as an Internet exclusive. After one publisher proves that they can make mad, mad bank doing that (not on the scale of GalCiv2, on the scale of WoW), and keep it all, you'll see a stampede of PC games out of the current retail channel.

Prices

[KingEomer]

Has anyone noticed that game prices haven't really risen much latelty? At least, they are definitely BELOW inflation. In fact, here in Canada, I'm pretty sure many computer games, backin 1997, used to go for $70-$80 (I'm remembering Daggerfall in this case). Now, the prices are down to about $60, 10 years later!

I can understand prices going down if the cost of game development has gone down as well, but I really don't think this is the case.

Could it be that game publishes are still trying to expand th

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[bVork]

Anyone complaining about "next-gen" prices needs to recall the incredible amounts that games such as Strider, Final Fantasy III, and Phantasy Star IV sold for.

I don't recall any computer games being slapped with a more expensive MSRP, but I do remember that our dollar was absolute shit back in the mid-90s and prices on just about everything went up. And as our dollar has gotten better, prices have come down a bit (but not enough for me to stop importing stuff from the US - retailers seem awfully delayed wh

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[KingEomer]

The prices went down before the CAD went up. They were at 50ish when the CAD was at something like 67 cents US. I remember thinking about how lucky we were up in Canada because of that. :P

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[linxdev]

I paid $60 for South Park for the N64. Please don't make fun of me...

Who?

[Jaysyn]

I've never even heard of DVD Empire. GoGamer.com takes care of most of my gaming needs....

Using Razor Blades

[RyoShin]

Are used games the only way to make videogame sales profitable?

No, but unfortunately the console developers have decided to stick to the "razors and razor blade" way of business. So companies like Microsoft and Sony sell their product at a loss, and Nintendo makes only a small profit on each console. All three rely on the sales of the games to offset their costs. It makes sense that they'd want to prices to be "reasonable" (which varies between companies) at outlets.

However, if DVD Empire was disallowed fr

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[DeepCerulean]

>After all, the R in MSRP stands for recommended. I know that GameStop/EBGames routinely have prices a few dollars over the MSRP.

Actually, the 'R' in MSRP stands for "Retail". The 'S' does stand for "Suggested" though...

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[JordanL]

After all, the R in MSRP stands for recommended.

Man, the video game industry is REALLY using marketing speech if MSRP stands for Manufacterer Suggested Recomended Price. ;)

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[RyoShin]

Er, thank you for that. I was trying to figure out what the other letters stood for as I typed, but got too lazy to look it up.

Oh well, this is Slashdot- as long as I'm close to the truth, that's good enough, right?

Yep

[UserChrisCanter4]

I was the assistant manager of a mom and pop shop about 7 years ago. They eventually went out of business because this is exactly the way the industry works.

Used games and accessories are the way to keep a store profitable, period. Now, my experience was from the PS1 up through DC and PS2 era, but it's basically still the same.

Consoles are worth zero profit. Our store manager actually bought them from Target on an "air miles" card because it made more sense than ordering a $199.99 console for $197 plus shipping (sales tax can be refunded if forms are filed correctly). The games themselves weren't all that great, either. $50 games were sold to us for $41 to $43. I later verified these numbers when I got to look at employee discounts in big box stores - we were paying a bit more than the Best Buys of the world, but not much.

Best Buy uses the games to draw people in for the more profitable items, and we did the same. Used games usually had a 100% markup. New games that sold for $50 were purchased from gamers for $15 cash or $20 in credit toward another used game, and sold for $30 or $35 retail depending on the popularity. Just as in every other retail store, the key is attachment. Go walk into EB/GameStop, and look at all of the strategy guides, toys, trading cards, and accessories. We made more on a $20 memory card than on a $50 game; we pushed hard to sell the strategy guides because they tripled our profit on the transaction. One month, we made almost 1/3 of our profit on pokemon cards during the height of that trend. It was still a losing battle, though. New game systems became harder to get during the launch cycles, the emergence of three viable consoles instead of two made our inventory balancing much more difficult, and the store ultimately folded about a year after I left for good. I've since seen several other mom and pop game shops come and go in the various cities I've lived in, and I've arrived at the same conclusion as TFA - big boxes are the only ones who can afford to sell games.

The videogame industry just isn't the music industry; the culture that allows the small record stores to still exist in the trendy urban areas doesn't translate to videogames. The "indie" games are all available for sale online, and there's no concept of "local scenes." It's cool; I'm okay with that. I just hope people realize this before they throw their savings at the dream of combining their hobby and business.

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[Trojan35]

Actually, "local scenes" do exist for videogames. It's just that they're something you never, ever want to be a part of.

OK, so games make little money, consoles almost 0

[phorm]

How about game accessories?
You know, the hi-def cables, the controllers, the special cases, game guides, figurines, etc etc?

I don't know about online, but there's definately a decent markup on some of these at the local retailers. Mind you, in physical stores it's often about location and salesmen... you put the console behind all the other stuff the store wants to sell, and beside all the hi-def cables, then have the salesman sell them a PS3 for $2.00 profit, and the cables, carrying case, extra warrant

What bothers me most

[Alzheimers]

What bothers me most are retailers (Gamestop/EB, I'm looking at you) that only sell new releases to preorders. You mean I have to pay before I even get the game to get a copy? Do I get interest on this loan I'm giving you? And then you can't even guarantee you'll have enough in stock to give me my copy from the first shipment! If I'm in your store willingly, chances are I'll buy something else I want on a whim. If I'm preordering, I already know what I want and I'm not going to browse.

Requiring preorde

Indie games?

[Futaba-chan]

Medium-sized retailers complain that large game publishers ignore their concerns in favour of huge big box chains. Game studios complain that large game publishers squeeze out quality offerings in favour of crappy sequels and licensed games aimed at sales at big box stores. Gamers complain that all they can buy at the local big box store are crappy sequels and licensed properties, and that there's very little exciting to play.

Is it just me, or is the obvious solution to all of this for the medium-sized re

BestBuy & Wal-Mart don't sell video games

[corysama]

They sell shelf space that publishers use to sell video games. Particularly end-caps.

Even for the big guys, the mark-up on games is insignificant. But the video game market is so crowded that being one of the tiny fraction of games that are actually on the shelf at Wally World is incredibly valuable -and therefore incredibly expensive.

I don't know if the Babbages monopoly is chain

[C0R1D4N]

Interestingly enough we have three stores, all owned by Babbage's in the Freehold Raceway Mall. (Funcoland, GameStop and PlanetX) less than ten miles away from them we have two stores in two adjacent shopping centers (Gamestop and EBGames) less than ten miles away from them is another PlanetX, and less than ten miles from that PlanetX is the Ocean County Mall with an EBGames AND a Babbage's. They all seem to be managing just fine, which is odd because you can go into Blockbuster and get any game you want f

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[MeanderingMind]

Arcades are actually alive and well in Japan, it's just the US that tanked. Sega has an arcade all to themselves in Sapporo, and probably in most other major cities. I can't say I did a thorough survey while I was there, but it was really easy to find them.