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?

Comments

Re:1% gross margin

[UbuntuDupe]

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

Re:Used games are what keeps stores open

[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:Yep

[Trojan35]

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