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

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yvanjean said:
The_Liquid_Laser said:

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

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? 

In the previous post you talked about hardware.  I gave an answer about hardware.  Now this post ignores everything I've said about hardware.  You know that people are going to need hardware to play these games right?  That is why I made a point about hardware.



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The_Liquid_Laser said:
yvanjean said:

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? 

In the previous post you talked about hardware.  I gave an answer about hardware.  Now this post ignores everything I've said about hardware.  You know that people are going to need hardware to play these games right?  That is why I made a point about hardware.

You think that the Walmart, Costco, Groceries super store and Amazon are going to stop selling hardware. Hardware sales have been switching from mostly brick and mortar to online store like Walmart online, Costco online, Amazon, Ebay & Microsoft store. I personally bought 3 consoles from online store last year, Xbox one S and PS4 slim from Amazon and Xbox one X from Microsoft store.

There always going to be store or online store to sell Hardware because you're ignoring accessories which have a much greater margin compared to Hardware. Have you been to a best buy lately, their gaming section is now a small fraction of the total store space. 



Tommy Jean, CPA, CGA

yvanjean said:
The_Liquid_Laser said:

In the previous post you talked about hardware.  I gave an answer about hardware.  Now this post ignores everything I've said about hardware.  You know that people are going to need hardware to play these games right?  That is why I made a point about hardware.

You think that the Walmart, Costco, Groceries super store and Amazon are going to stop selling hardware. Hardware sales have been switching from mostly brick and mortar to online store like Walmart online, Costco online, Amazon, Ebay & Microsoft store. I personally bought 3 consoles from online store last year, Xbox one S and PS4 slim from Amazon and Xbox one X from Microsoft store.

There always going to be store or online store to sell Hardware because you're ignoring accessories which have a much greater margin compared to Hardware. Have you been to a best buy lately, their gaming section is now a small fraction of the total store space. 

Yes, if you take the games away, then stores won't want to sell hardware.  At least they won't sell it at current prices.  Most likely what you will get is hardware prices shooting way up, and then sales going way down.  Accessories alone aren't enough to sustain the current model without games.



The_Liquid_Laser said:
yvanjean said:

You think that the Walmart, Costco, Groceries super store and Amazon are going to stop selling hardware. Hardware sales have been switching from mostly brick and mortar to online store like Walmart online, Costco online, Amazon, Ebay & Microsoft store. I personally bought 3 consoles from online store last year, Xbox one S and PS4 slim from Amazon and Xbox one X from Microsoft store.

There always going to be store or online store to sell Hardware because you're ignoring accessories which have a much greater margin compared to Hardware. Have you been to a best buy lately, their gaming section is now a small fraction of the total store space. 

Yes, if you take the games away, then stores won't want to sell hardware.  At least they won't sell it at current prices.  Most likely what you will get is hardware prices shooting way up, and then sales going way down.  Accessories alone aren't enough to sustain the current model without games.

Retailers don't get to assign MSRP that's on the manufacturers. Have you never been to a Costco in your life?, they only have hardware/accessories, gift cards with hardly any software. I won't even call what your saying a theory since it's simply flawed thinking. If there are any profit to be made online or brick and mortar retailers will sell it.  Every store are already shrinking and getting ready to rid of dedicated store space for games. You really think that Walmart and company got to decide how much the Xbox one X was going to cost? They told Sony that the PS4 must cost $399. 5-10% profit margin on a $500 consoles is $25-50 per units sold. 



Tommy Jean, CPA, CGA

yvanjean said:
The_Liquid_Laser said:

Yes, if you take the games away, then stores won't want to sell hardware.  At least they won't sell it at current prices.  Most likely what you will get is hardware prices shooting way up, and then sales going way down.  Accessories alone aren't enough to sustain the current model without games.

Retailers don't get to assign MSRP that's on the manufacturers. Have you never been to a Costco in your life?, they only have hardware/accessories, gift cards with hardly any software. I won't even call what your saying a theory since it's simply flawed thinking. If there are any profit to be made online or brick and mortar retailers will sell it.  Every store are already shrinking and getting ready to rid of dedicated store space for games. You really think that Walmart and company got to decide how much the Xbox one X was going to cost? They told Sony that the PS4 must cost $399. 5-10% profit margin on a $500 consoles is $25-50 per units sold. 

I go to Costco regularly.  Their business model is different from every other retailer, so they are a bad example.  Also they do sell games too, but they don't have near the selection of anyone else.  

So, maybe a pure digital model can work if Costco is the only one selling hardware, but really they are just a small chunk of the game market.



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Intrinsic said:
I don't think so.

I don't even understand how anyone still thinks physical game sales is a sustainable business model. One thing for certain is that internet speeds will get better and cheaper. Digital will keep growing every single year at the expense of physical sales. And at some point, it will take less time to just download your game than it does to get dressed, go to your car/train/bus and go to the store and back.

Uh, no... Internet IS getting better (slowly) but premiums aren't getting cheaper. And don't mistake cheap prices for good internet because cheap internet ($30 - $40 monthly) gets you cheap speeds. (5 Mbps - 15 Mbps) 



TranceformerFX said:
Intrinsic said:
I don't think so.

I don't even understand how anyone still thinks physical game sales is a sustainable business model. One thing for certain is that internet speeds will get better and cheaper. Digital will keep growing every single year at the expense of physical sales. And at some point, it will take less time to just download your game than it does to get dressed, go to your car/train/bus and go to the store and back.

Uh, no... Internet IS getting better (slowly) but premiums aren't getting cheaper. And don't mistake cheap prices for good internet because cheap internet ($30 - $40 monthly) gets you cheap speeds. (5 Mbps - 15 Mbps) 

I really don't know what you are talking about. Or how in good conscience anyone can say what you are saying.

  1. Its actually pretty good we are even in a world where 5mb/s - 15Mb/s could be considered as "cheap speeds".

  2. In my part f the world I pay $50+ for Tier 2 internet of 20Mb/s (Tier 1 is 6Mbs@$40 and goes all the way up to Tier 5 or so @ ridiculous). But at my part of the world everything costs more than it should. But t put things in perspective.... this time 2 years ago that $50 would have got me 6Mb/s.

  3. I don't know how it is for you, but 20Mb/s means pretty fast downloads and buffer free 4k on youtube and netflix. As it stands the only reason I can think of to having internet even faster than what I have now is that I won't have to take abut 5 - 8hrs downloadingg some games. But thats not even  real issue as most games I get are preloaded or i just start the download before I go to sleep.

  4. The internet is not immune to competition. Fact remains that we are getting a lot more internet for what we used t pay before. And that will keep getting better.

  5. You say "slowly".......  I am sorry but how much faster do you need the improvements to be? And look at the gains made in internet speeds over the past 5yrs. and the 10yrs.... and thats slow growth to you?     



Digital Sales are still a growing minority of video game sales. I do anticipate a industry crash if Physical medium is eroded.....for very important reasons.

For one, nobody seems to recognize that the sheer existence of physical medium is how we know the games exist most often. If you are not the biggest of Publishing companies your game only gets visibility via meme word of mouth, or accidental discovery while going through life. One of Retailer's profit margins is Advert space. Space allocated for the encouragement of game sales. Without game consoles becoming more immediately profitable to sell, they become essentially pointless for any retailer to bother advertise selling. Think about it. The avg profit margin on a console is 0-5% usually. Imagine....Amazon, Bestbuy, Gamestop putting time and effort into selling product that makes them no money. At least TVs and Cellphones are largely pure profit when sold alone. And the occasional controller sale is not enough to offset that huge drop in profit.

There is also the issue that Digital Market spaces are the most competitive for consumer attention. I mean that in visibility. While App store markets have now booned into this huge money making system......very few of those apps succeed or get noticed. Some data released a while back showing that the vast majority of Steam output are financial failures, and that the only way of pushing visibility is Flash sales slashing your game's value to pieces. The money empire of Steam is almost entirely Valve side of the transaction. Majority of Apps can no longer be sold at any entry price as folks are accustomed to getting them for free, a symptom of the need to match and beat every competitor pricing just to get noticed by App Store limited ad space. So will this happen to full video games? If it does I don't think it sustainable. Console AAA Video games do not have the luxury of being super cheap to offset the potential to failure app stores have. Also eliminating the initial pricing of all games will pretty much kill any genre that isn't capable of garnering microtransactions, which would then be requried to recoup loss of Freemium releases. From my perspective, Games as a Service/Streaming has always been in preparation of this very outcome.

Pushing to eliminate physical medium entirely as a market initiative seems to spite itself for a small initial perceived profit boost. Yes, the elimination of the $7 out of $60 you would have given retailers is big, but the loss of visibility and exposure from those said retailers will tank its ability to sell without attractive pricing. Freemium Multiplayer games galore and kiss the singleplayer experience goodbye....

      

      

      

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