As store closures mount up, is there hope left for physical games outlets?

[The_Liquid_Laser]

DreadPirateRoberts said:

The_Liquid_Laser said:

Brick and Mortar allows hardware to be cheap, because brick and mortar makes their profits on software.  That means they are ok selling hardware at roughly cost.  Without brick and mortar, then hardware will need to be sold at costs similar to a PC.

Also brick and mortar specialty stores like Gamestop provide very effective and efficient marketing.  That cannot be underestimated.

Brick and mortar stores will make a profit on both hardware and games.  Gamestop and Best Buy don't subsidize the cost of consoles to sell them - Sony, Nintendo and Microsoft do.  Though, obviously, they will make more on software both because the margins are larger and because of much larger overall unit sales.  

Everything you claim brick and mortar does is actually what the console makers do.  Sony and Microsoft especially have traditionally subsidized early console sales because they want their systems in the hands of as many customers as possible.  And that is because software drives their own revenues.  So no, the loss of brick and mortar games stores will not force console prices to rise at all.

As far as your "other reasons can cause a crash like 83" comment goes, that's basically meaningless argumentation.  You tried to tie the disappearance of physical storefronts directly to what happened in 1983.  There's no indication that is likely.  In fact, there is no indication that any crash is likely given the gaming industry continues to grow even as companies like Gamestop drown in red ink. 

It is true that the console makers subsidize the cost of consoles.  However, the stores don't make a profit on them either.  The margins are slim to none.  Selling hardware is not profitable enough for retailers by itself.  They sell the hardware though, because they can make decent margins on the software.  Take away the software and all of the sudden brick and mortar stores will stop selling hardware.  Then console makers are in deep trouble.  Not even Amazon would sell hardware without the software to go with it.

And of course there is a huge marketing advantage going through a brick and mortar store, especially a specialty store like Gamestop.  Take all of these advantages away and...crash.

Last edited by The_Liquid_Laser - on 04 December 2018