Alright so I recently got in a argument about this. 

Do games make a  company money when they are shipped to the retailer or when they are actually sold to a consumer?

An IGN user insisted it was the former while I've always thought it was the latter.

What's right?

Company gets paid shipped to retailers

Depends of the contract.

There are contracts where the Retail already pays the company when get the items but there are others that the Retail just pays what was sold to the consumers (they can return what did not sell).

Each time is made a new contract.

9/10 the company gets paid when they ship and retailers buy games from them. Thats also why you see games going at bomba prices when they cant get rid of stock, because they cant just return it back to the publisher.

this.   each contract is distinct.

while i'm sure each publisher get's money at the shipment date it might not be the full amount or there may be buyback clauses.  if the price drops quickly after launch the publisher will tend to have to share in that failure.

the better the game is (GTA, Cod) the better terms the publisher can negotiate.   poor selling franchises/publishers get worse terms.  that's why smaller games never seem to "ship enough".   if a small publisher ships 500k units and only sells a small percentage of them it's possible that the publishers net income is negative which can be devistating for a publisher.

...that's one of the benefits of digital distribution actually, much less risk.  you get payed for what you sell.  no risk of overestimating your sales potential and the losses associated with royalties, printing, and shipping of unsold units.

What everyone else has said.

Most of the time yes, unless the terms and agreement says otherwise.

Retailers pay the full amount to publishers, but publishers will set up and income protection liability for the retailers if the game does not sell out or the retailers have to drop the price in which they will contact the publisher and arrange a sort of refund for the retailer. But yes initially just shipping them is when the publishers make there money at face value

You're usually allowed a certain amount of consignment, which is "returnable product". Something like 10,000. After that, you have to eat all the losses for a poorly selling game.