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

Forums - Gaming Discussion - As store closures mount up, is there hope left for physical games outlets?

The_Liquid_Laser said:
DreadPirateRoberts said:

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.

You clearly haven't made your homework, first of all they do make a profit on selling hardware it's Sony and Microsoft that taking the lose. Secondly the biggest money maker around video games is actually accessories. Walmart, Amazon and other big retailers have already monetized the move to digital by selling gift card. 

https://www.amazon.com/best-sellers-video-games/zgbs/videogames/ref=zg_bs_nav_0

Just look at the amazon video games top sellers... Gift cards & Accessories make up 22 of the 50 top selling video games items. 

Video games are getting more and more popular and demand is rising. There aren't any sign indicating a potential crash. We're at the dawn of next gen of consoles.   



Brick and motar is the biggest cost to the price of video games. The sooner they die out the better for over all cost of selling video games. Take a look at the PC Market were physical media has died out. More then 50% of the market is digital only. Every indie games don't have a physical release.  

A good portion of the games revenues is coming from DLC and contents bought after the initial purchase, get out of here with the stupid talk about a crash due to the death of brick and mortar.  



Tommy Jean, CPA, CGA

Around the Network
I feel like the price needs to come down on digital goods by a large amount, in order to make it worth my while to go digital. Currently, digital games still sell for $60 at launch and you often have to pay local sales tax on them to boot (tax on digital goods makes zero sense). Meanwhile I can still get my physical games from Best Buy with a 20% discount, 8% cash back on my credit card, and double Best Buy points. In the end my physical games often cost me $33 to $43, depending on whether or not there was a $10 gift card for pre-ordering.

I'm really rooting for Epic's new store, because I feel like a 12% take is more than fair for a digital storefront. A game could launch at $47.73 on Epic's store and still make the developer just as much money per copy as selling it on Steam for $60. And since lower priced games tend to sell more copies, developers would have an even bigger incentive to lower the price even further. I could easily see games launching on Epic's store for $45, and then permanently going on sale for half off a year later.

Finally, we need to get rid of the JC Penny style sales that go on. Marking a ten year old game at $20 and then putting it on "sale" twice a year for $10 is not a sale. It's a scheme that is designed to force impulse buys, by only pricing the game fairly twice a year. This sort of "sale" is inconvenient to people that just want to buy the game right away. Even worse, these sales on digital games often aren't even as low as physical copies go for. DB FighterZ was $23 for a physical copy on Black Friday, and that's without any of my Best Buy discounts. MHW was $30. These prices were for the game brand new. A used copy sold for even less. Meanwhile the digital versions of both games were $4 to $10 more expensive than even the new physical copies.

I was so wrong about Nintendo this year. They had a great year, Poke'mon Let's Go was legitimately a big release. 

Cerebralbore101 said:
I feel like the price needs to come down on digital goods by a large amount, in order to make it worth my while to go digital. Currently, digital games still sell for $60 at launch and you often have to pay local sales tax on them to boot (tax on digital goods makes zero sense). Meanwhile I can still get my physical games from Best Buy with a 20% discount, 8% cash back on my credit card, and double Best Buy points. In the end my physical games often cost me $33 to $43, depending on whether or not there was a $10 gift card for pre-ordering.

I'm really rooting for Epic's new store, because I feel like a 12% take is more than fair for a digital storefront. A game could launch at $47.73 on Epic's store and still make the developer just as much money per copy as selling it on Steam for $60. And since lower priced games tend to sell more copies, developers would have an even bigger incentive to lower the price even further. I could easily see games launching on Epic's store for $45, and then permanently going on sale for half off a year later.

Finally, we need to get rid of the JC Penny style sales that go on. Marking a ten year old game at $20 and then putting it on "sale" twice a year for $10 is not a sale. It's a scheme that is designed to force impulse buys, by only pricing the game fairly twice a year. This sort of "sale" is inconvenient to people that just want to buy the game right away. Even worse, these sales on digital games often aren't even as low as physical copies go for. DB FighterZ was $23 for a physical copy on Black Friday, and that's without any of my Best Buy discounts. MHW was $30. These prices were for the game brand new. A used copy sold for even less. Meanwhile the digital versions of both games were $4 to $10 more expensive than even the new physical copies.

$60 at release is the standard, cost of making video games is going up and many video games (especially niche games) are struggling to turn a profit. if you want a viable industry, you should still be willing to support developers or we will get stuck with a bunch of crappy free to play style of games. 

Cost of digital has similar deals right now compare to physical. I buy all my Microsoft gift card at Costco for 44.99 for $50 gift card. That's a 10% discount, + what ever cash back on credit card (I don't know how you get 8%).  If you don't buy games on release day, they quickly get discounted on the store front, I bought Assassin Creed Odyssey at $53.59CAD compare to 79.99CAD at launch that's a 33% discount not adding in the Costco discount and Credit Card cash back.  I bought Mad Max for $7.50 compare to 29.99 (75% discount).
I also bought 6 month of Xbox game pass for $35.97, That saved me buying Forza Horizon 4 it's on for $51.99CAD, the value of game pass is harder to quantify but for me it's already saved me 30% or 55% if I would of bought at launch on just Forza Horizon 4. 

You haven't mention the benefit of re-selling your game to make some money back, but considering I share my game library with my nephew and we both get to enjoy every single digital purchase I make. I can guarantee that i'm getting more bang for every digital purchase I make compare to your single user physical copy. 

Digital landscape are constantly having deals year round that rivals any brick and mortar. 



Tommy Jean, CPA, CGA

yvanjean said:
Cerebralbore101 said:
I feel like the price needs to come down on digital goods by a large amount, in order to make it worth my while to go digital. Currently, digital games still sell for $60 at launch and you often have to pay local sales tax on them to boot (tax on digital goods makes zero sense). Meanwhile I can still get my physical games from Best Buy with a 20% discount, 8% cash back on my credit card, and double Best Buy points. In the end my physical games often cost me $33 to $43, depending on whether or not there was a $10 gift card for pre-ordering.

I'm really rooting for Epic's new store, because I feel like a 12% take is more than fair for a digital storefront. A game could launch at $47.73 on Epic's store and still make the developer just as much money per copy as selling it on Steam for $60. And since lower priced games tend to sell more copies, developers would have an even bigger incentive to lower the price even further. I could easily see games launching on Epic's store for $45, and then permanently going on sale for half off a year later.

Finally, we need to get rid of the JC Penny style sales that go on. Marking a ten year old game at $20 and then putting it on "sale" twice a year for $10 is not a sale. It's a scheme that is designed to force impulse buys, by only pricing the game fairly twice a year. This sort of "sale" is inconvenient to people that just want to buy the game right away. Even worse, these sales on digital games often aren't even as low as physical copies go for. DB FighterZ was $23 for a physical copy on Black Friday, and that's without any of my Best Buy discounts. MHW was $30. These prices were for the game brand new. A used copy sold for even less. Meanwhile the digital versions of both games were $4 to $10 more expensive than even the new physical copies.

$60 at release is the standard, cost of making video games is going up and many video games (especially niche games) are struggling to turn a profit. if you want a viable industry, you should still be willing to support developers or we will get stuck with a bunch of crappy free to play style of games. 

Cost of digital has similar deals right now compare to physical. I buy all my Microsoft gift card at Costco for 44.99 for $50 gift card. That's a 10% discount, + what ever cash back on credit card (I don't know how you get 8%).  If you don't buy games on release day, they quickly get discounted on the store front, I bought Assassin Creed Odyssey at $53.59CAD compare to 79.99CAD at launch that's a 33% discount not adding in the Costco discount and Credit Card cash back.  I bought Mad Max for $7.50 compare to 29.99 (75% discount).
I also bought 6 month of Xbox game pass for $35.97, That saved me buying Forza Horizon 4 it's on for $51.99CAD, the value of game pass is harder to quantify but for me it's already saved me 30% or 55% if I would of bought at launch on just Forza Horizon 4. 

You haven't mention the benefit of re-selling your game to make some money back, but considering I share my game library with my nephew and we both get to enjoy every single digital purchase I make. I can guarantee that i'm getting more bang for every digital purchase I make compare to your single user physical copy. 

Digital landscape are constantly having deals year round that rivals any brick and mortar. 

Buying a game with a 30% cut doesn't support developers though. It supports the greedy storefront that thinks it deserves nearly 1/3rd of the money just for hosting a server. The cost of hosting a server is 4% of the price of a game according to Epic. So even at an 8% cut a storefront could double their investment on every sale. I learned in business class that any company making $1.10 for every $1 it spends is insanely profitable. 

Most game companies that manage to get a physical copy into stores aren't going anywhere. Atlus continues to make Etrian Odyssey games despite selling abysmal numbers. Why? Because the development costs of making a 3DS game are low enough, that they still turn a profit. I'm happy to buy Indies digitally, because the price difference is more than fair. Indies are usually $30 for the physical edition and then $10 to $15 for the digital version. 

What's the price of a Costco membership? Do they sell something other than MS gift cards for that 10% discount? IMO, (and a lot of people on this site agree) XB1 is the worst current gen platform. So to get those discounts for a system that I don't own or plan on owning is kind of a moot point. For PS5 I'd go digital if there were a good deal like that. Something like 5% cash back on a card plus the 10% discount for buying a gift card would be perfect. Next gen games will be over 100 GB on two disks so the price of physical might go up. I'm calling this the double disk tax. 

Yeah PS+ and MS Gamepass are both really good deals. Free games for about $3.33 a month if you buy a year sub at Black Friday prices is a great deal for several $10 to $20 games a month and the ability to play online. 

I can share my physical games with friends too. My collection is so big that the odds of both me, and a friend wanting to play the exact same game at once is practically zero. I rarely start a game at launch, because I'm usually finishing the last game I started. 

I use https://www.pricecharting.com to compare physical vs digital prices, and physical just beats the pants off digital prices most of the time. This is even when you use key reseller sites like Kinguin. 

For example: Shadow of War is $12.49 used vs $18.74 on Kinguin. 

MHW is $19.50 used vs $33.59 on Kinguin. 

Dragon Quest XI is $32 used vs $52 on Kinguin. Or $42 on Steam. A new copy was selling for $30 on Black Friday at many retailers. 




I was so wrong about Nintendo this year. They had a great year, Poke'mon Let's Go was legitimately a big release. 

RaptorChrist said:
Sixteenvolt420 said:

Because i have Prime, and also a Prime Rewards credit card, where i earn 5% cash back in the form of Amazon credit. I end up with $30-$40 of free stuff from Amazon, every month.

Holy crap is that 5% cash back on all purchases? I am in the market for getting a new credit card and that sounds amazing.

5% Cash back on Amazon w/ Prime, i think 4% if u don't have Prime,then it's 2% back at restaurants, gas stations, drugstores and 1% elsewhere. I pretty much use the card to pay all of my bills and do my shopping with it, and just pay it off every month, so that i get charged no interest.



Around the Network
yvanjean said:
The_Liquid_Laser said:

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.

You clearly haven't made your homework, first of all they do make a profit on selling hardware it's Sony and Microsoft that taking the lose. Secondly the biggest money maker around video games is actually accessories. Walmart, Amazon and other big retailers have already monetized the move to digital by selling gift card. 

https://www.amazon.com/best-sellers-video-games/zgbs/videogames/ref=zg_bs_nav_0

Just look at the amazon video games top sellers... Gift cards & Accessories make up 22 of the 50 top selling video games items. 

Video games are getting more and more popular and demand is rising. There aren't any sign indicating a potential crash. We're at the dawn of next gen of consoles.   



Brick and motar is the biggest cost to the price of video games. The sooner they die out the better for over all cost of selling video games. Take a look at the PC Market were physical media has died out. More then 50% of the market is digital only. Every indie games don't have a physical release.  

A good portion of the games revenues is coming from DLC and contents bought after the initial purchase, get out of here with the stupid talk about a crash due to the death of brick and mortar.  

(referring to bold)  I already answered this post.  Here is my "homework":

The_Liquid_Laser said:
0D0 said:

I did, but could you add more? Do you have sources, numbers .. ?

Here is an article I found about how much profit a store can make on hardware and software.
https://nintendosoup.com/much-money-video-game-store-make/

Basically profit margins on hardware are 2% - 5%.
Profit margins on new software are 25% - 35%.

For a big retailer, new software is obviously where the money is at.  Now I have been told that these margins on new games aren't even enough for a specialty store like Gamestop to be successful.  But the margins on used games are more like 40% - 80%.

So any way that you slice it, the money is in the software.  The hardware is just there to get people to come to your store to buy the games.  If you take away the software, then hardware prices would have to increase, so that the stores could sell the hardware at a decent profit.  



Cerebralbore101 said:
yvanjean said:

$60 at release is the standard, cost of making video games is going up and many video games (especially niche games) are struggling to turn a profit. if you want a viable industry, you should still be willing to support developers or we will get stuck with a bunch of crappy free to play style of games. 

Cost of digital has similar deals right now compare to physical. I buy all my Microsoft gift card at Costco for 44.99 for $50 gift card. That's a 10% discount, + what ever cash back on credit card (I don't know how you get 8%).  If you don't buy games on release day, they quickly get discounted on the store front, I bought Assassin Creed Odyssey at $53.59CAD compare to 79.99CAD at launch that's a 33% discount not adding in the Costco discount and Credit Card cash back.  I bought Mad Max for $7.50 compare to 29.99 (75% discount).
I also bought 6 month of Xbox game pass for $35.97, That saved me buying Forza Horizon 4 it's on for $51.99CAD, the value of game pass is harder to quantify but for me it's already saved me 30% or 55% if I would of bought at launch on just Forza Horizon 4. 

You haven't mention the benefit of re-selling your game to make some money back, but considering I share my game library with my nephew and we both get to enjoy every single digital purchase I make. I can guarantee that i'm getting more bang for every digital purchase I make compare to your single user physical copy. 

Digital landscape are constantly having deals year round that rivals any brick and mortar. 

Buying a game with a 30% cut doesn't support developers though. It supports the greedy storefront that thinks it deserves nearly 1/3rd of the money just for hosting a server. The cost of hosting a server is 4% of the price of a game according to Epic. So even at an 8% cut a storefront could double their investment on every sale. I learned in business class that any company making $1.10 for every $1 it spends is insanely profitable. 

Most game companies that manage to get a physical copy into stores aren't going anywhere. Atlus continues to make Etrian Odyssey games despite selling abysmal numbers. Why? Because the development costs of making a 3DS game are low enough, that they still turn a profit. I'm happy to buy Indies digitally, because the price difference is more than fair. Indies are usually $30 for the physical edition and then $10 to $15 for the digital version. 

What's the price of a Costco membership? Do they sell something other than MS gift cards for that 10% discount? IMO, (and a lot of people on this site agree) XB1 is the worst current gen platform. So to get those discounts for a system that I don't own or plan on owning is kind of a moot point. For PS5 I'd go digital if there were a good deal like that. Something like 5% cash back on a card plus the 10% discount for buying a gift card would be perfect. Next gen games will be over 100 GB on two disks so the price of physical might go up. I'm calling this the double disk tax. 

Yeah PS+ and MS Gamepass are both really good deals. Free games for about $3.33 a month if you buy a year sub at Black Friday prices is a great deal for several $10 to $20 games a month and the ability to play online. 

I can share my physical games with friends too. My collection is so big that the odds of both me, and a friend wanting to play the exact same game at once is practically zero. I rarely start a game at launch, because I'm usually finishing the last game I started. 

I use https://www.pricecharting.com to compare physical vs digital prices, and physical just beats the pants off digital prices most of the time. This is even when you use key reseller sites like Kinguin. 

For example: Shadow of War is $12.49 used vs $18.74 on Kinguin. 

MHW is $19.50 used vs $33.59 on Kinguin. 

Dragon Quest XI is $32 used vs $52 on Kinguin. Or $42 on Steam. A new copy was selling for $30 on Black Friday at many retailers. 


Costco offers: 10% discount on Microsft; 5% on Nintendo & 3% on Playstation gift card .... right now in Canada.
Costco USA offers 10% of Nintendo gift card, not sure about Microsoft and Sony since I'm not american. But the price always varies. 

If you shop around you can get some pretty good deal on all the gift cards, not just microsoft.

Might not be able to share with more then one person but we can both play online together with one digital copy. 

I agree that retail might be cheaper but at what cost? We never factor in availability, time spent to research and drive around, gas money for the drive & opportunity cost of simply downloading the game. 



Tommy Jean, CPA, CGA

The_Liquid_Laser said:
yvanjean said:

You clearly haven't made your homework, first of all they do make a profit on selling hardware it's Sony and Microsoft that taking the lose. Secondly the biggest money maker around video games is actually accessories. Walmart, Amazon and other big retailers have already monetized the move to digital by selling gift card. 

https://www.amazon.com/best-sellers-video-games/zgbs/videogames/ref=zg_bs_nav_0

Just look at the amazon video games top sellers... Gift cards & Accessories make up 22 of the 50 top selling video games items. 

Video games are getting more and more popular and demand is rising. There aren't any sign indicating a potential crash. We're at the dawn of next gen of consoles.   



Brick and motar is the biggest cost to the price of video games. The sooner they die out the better for over all cost of selling video games. Take a look at the PC Market were physical media has died out. More then 50% of the market is digital only. Every indie games don't have a physical release.  

A good portion of the games revenues is coming from DLC and contents bought after the initial purchase, get out of here with the stupid talk about a crash due to the death of brick and mortar.  

(referring to bold)  I already answered this post.  Here is my "homework":

The_Liquid_Laser said:

Here is an article I found about how much profit a store can make on hardware and software.
https://nintendosoup.com/much-money-video-game-store-make/

Basically profit margins on hardware are 2% - 5%.
Profit margins on new software are 25% - 35%.

For a big retailer, new software is obviously where the money is at.  Now I have been told that these margins on new games aren't even enough for a specialty store like Gamestop to be successful.  But the margins on used games are more like 40% - 80%.

So any way that you slice it, the money is in the software.  The hardware is just there to get people to come to your store to buy the games.  If you take away the software, then hardware prices would have to increase, so that the stores could sell the hardware at a decent profit.  

Who do you think pays for the Big retailer profit margins of 25%-35% the end users. If we don't have any big retailers anymore and the price stays the same, it just means that the developers get much more money for any games they sell. Which is better for the industry or you can sell for cheaper.

If we cut out the big retailers and all cost associated with physical media (cost of product, shipping, storing, selling & mark up), than you can sell the same product for much cheaper and still make a profit. 

You actually believe that people will stop buying video games if there no more Brick and mortar store? Do you think PC games sales are non existent because they don't sell physical copies? 



Tommy Jean, CPA, CGA

konnichiwa said:
VAMatt said:
GameStop and other retailers can survive, but they're going to have to significantly decrease their footprint. I don't know what's GameStop's debt load will allow them to do that. But, if they can right-size, they'll be fine. Physical game sales are not going away anytime soon, especially when you consider the 40 years of gaming that has already taken place and is almost all physical. There will be a market for those games forever.

Well it goes fast,  10 years ago TR anniversary was the first retail game that you could download and the response from the cummunity was luke warm. 
Now we have so many people who only buy digital.  The next ten years will be interesting =).

I agree with all that. But, there are still 40 years worth of games on physical media out there. Those items will continue to be bought sold and traded. That certainly is it going to warrant change of thousands of stores. But, it will certainly be able to support some number of brick-and-mortar retailers.



I think we will see a reduction in the number of stores but I think they will stick around for a while. One of the biggest issues with physical media is that often it still requires a day one download. It's odd because for movies I still prefer physical disk but with games I really like digital. It does bother me though that digital games don't seem to go on sale as often.

"There are things which, if done by the few, we should refuse to imitate; yet when the majority have begun to do them, we follow along - just as if anything were more honourable because it is more frequent!"

-Seneca