Wii game budgets 1/4 of HD budgets according to EA

[mike_intellivision]

Squilliam said:

stribution costs are another significant expense. It costs more per game to ship fewer titles more often than it costs to ship 40-60 titles at once to a store. When the game gets there it has to compete for shelf space with "market development funds" or it has to justify a good position with continued sales and with low development there are a tonne of games pouring in gunning for that shelf space.

I'll put it in bullet points to make it easier:

• Costs more per title to ship with smaller shipments.
• Greater competition for shelf space from other titles.
• Retailers are hesitant to re-order games that are selling slowly

Thats compared to HD console titles which tend to sell quickly and justify their shelf positioning. Which is why they get prime billing in the stores.

 

 

I agree that my analysis inadvertently and incorrectly omitted distribution costs.

However, I am not sure this is as much of a factor as you make it out to be. This is because the manufacturer ships to a wholesaler or distributor who then sends the games to retail outlets.

The shipments to retail are mixed of all game types. I can only speak to what I have seen in the US. For example, Gamestop shipments often come with a variety of different games for different systems. So you might see Wii, DS, PSP, PS3, Xbox 360 and PC all in the same big box.  The only exception is the big pre-sale reserved games. Those are shipped separately (or picked up at central points by employees). That is more costly and more often than not is for those front-loaded sales of games commonly assocaited with the PS3 and Xbox 360.  The same basic thing is seen for small, independent game stores -- ground shipments of most games and restocks, air shipments of the big blockbusters.

As for store placement and shelf space -- that is a factor of marketing. Companies provide reasons/inducements/considerations for companies to place their product.  This is seen in stores small and big alike -- but different companies focus on different segments (for example, Nintendo really does not do much with smaller game stores).

 

Mike from Morgantown