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thranx on 17 November 2010
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Degausser said:
spaceguy said:
Miguel_Zorro said:
thranx said:
 

i never once said they make a killing. I said they make money. you said they make no profit or lose money. I do not see that happening as i do not see gamers buying enough other items to offset that, it would be a bad loss leader item. Unless you disagree with that. When you go buy games what else do you buy with them?

I agree that it's a bad loss leader (in this case, it's more like a "break even" leader).  My girlfriend is not a fan of the category for their business.  We talk about this often.  She states that in her business, the highest margin is on a few categories, such as consumables (blank DVDs,etc - especially printer toner cartridges).   They also make a few bucks on certain gaming accessories.  They stay in the gaming category because:

- Even though they're not really making money on it, they're not really losing money on it either (unless you account for staff time, and things like that).

- They want to maintain the relationship with companies that are very important to their business - in this case, Sony and Microsoft.

- It's a traffic generator - so even though you or I might not buy other things along with our games, some people do.  Most of their business is online, and it gets people to the website.      While browsing a store or website, people do often buy additional products. They sold Uncharted 2 online for $10 off on release day.  They sold out of their inventory, and even though they lost $5 per unit, they did make enough on additional items purchased to make it up.

I'll note that when I go into Best Buy, HMV, etc to look at games, I do buy other stuff from time to time.  If I buy a DVD, they make a little bit of money on that.

This is why so many companies are getting into used games - the profit margins are so much bigger for the retailer.

What about game stop? oh all used games right, thats why they want you to pre-order and buy new games. They make money off new games or they wouldn't stock them or give deals like 35 on a new game. They make around 20 bucks off  of each one new.

Your full of it, you have no data.  NO link. your buddy's sister dad works for a big store in africa. get off it already.

You just think you know what your talking about but you have no clue.

 Actually most of what he says is correct, a $60 RRP game is bought for $48 a copy. Margins are relatively small in the games retail market and Gamespot probably don't make a great deal of money off of first hand sales once you account for all their costs.

 Obviously there would be no used market if there were no first hand games sold in the first place - so that right there is why they push new games so much, and also why so often new games are offered at a discount if you trade in a game that came out a month before. 

 Without the used market the retailers would take a much bigger cut then $12... and thats why when publishers complain about the used game market 'stealing their sales' they fail to neglect the fact they have the most luxury retail margin in retail...


what is that 20-25%? thats not bad at all. 10% or less would be cutting it close, but 20% or more is fine for profit margins.