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DVD Empire Drops Games Sales, Blames Industry Published by patto on Sunday, February 04, 2007
Blames much of the problem on small profit margins.
Given how much the video game industry continues to expand, to hear that someone's abandoning the market is a fairly bizarre move. But, DVD Empire recently announced they're dropping game sales because it's too hard to make a buck. On their website, the retailer outlined (and defended) seven reasons it's too hard to compete.
1. Video Game Industry Does Not Care
2. Can't Make Money
3. No Price Protection + Games Prices Drop Quickly
4. No Product Returns
5. Distribution is Dumb
6. Games Are Better Suited for Brick and Mortar Retailers
7. The Final Reason
For the most part, it seems DVD Empire's too small to compete with the big boys -- Best Buy, Wal-Mart, etc. -- but their break down of game profits work proves interesting, too. Apparently, many game companies set the retail price (what retailers pay to have them in-store) at roughly $5 less than the typical final price. For example, say DVD Empire orders a shipment of Gears of War. They pay $55 to Microsoft, but given retailer standards, can only charge $60 if they want to compete. That's not much a profit margin by anybody's standards.
"The video game industry only cares about mass merchandisers like Toys-R-Us, Wal-Mart, Best Buy, etc. They completely ignore the needs and wants of the medium to small game retailers," said the retailer on their webiste. "You may not care whether or not we make money, but we cannot continue to pay to sell video games. It is impossible for us to make money selling video games."
There's one positive, at least: the remaining stock at DVD Empire is 20% off!
News-Source: www.1up.com
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