The Death of Console Gaming?

[Plaupius]

cleveland124 said:

Plaupius said:

Other than the console itself, those seem pretty standard retail margins, and if you turn them into absolute profit it is clear that the (roughly) ten bucks per sold game is where the retailers make their profits. Touch that and you're on thin ice. That's the point the guy was trying to make, but he conviniently left out any mention of PC retail markups, which I don't think are much better than concoles. So what you're left with is a change in the retail structure of both console and PC gaming.

Yeah, the question is though, could the Walmart or retailer replace the showspace with something that could make as much money? If it was as simple as just sell items with high margin, then we'd see football fields of retail stores lining the world. Retailers need to have items they don't make as much on. Case in point, I don't usually mind, in fact I usually enjoy, going to a store and looking through their game deals/selections. However, if the store takes that away, I won't go as much. Which means I won't buy as much non gaming related items from the store. Look at the huge discounts surrounding Thanksgiving and December, which are largely designed to get people into their store, and then tell me that retail stores are itching to get away from games. Also, look at the NPD articles about record sales in the gaming industry and tell me nobody wants those $. If they can sell something of higher value they will, but most of the time the two are not mutually exclusive.

Well, the starting point of the discussion is that if/when digital distribution takes over, retail stores lose big time because that is exactly the part of gaming related markets they want. Selling consoles is bad business for them, accessories on the other hand are very good business, but much more limited than games. But they sell both to boost game sales. Take away the game sales, and what are you left with? You say it yourself: you go to the store to see their game deals, and if they don't have that, you won't go. So the retailers really don't want to lose the game sales, but digital distribution is going to at least shrink the sales of shrink wrapped games. Small speciality stores are a different matter, but big retail chains have all the bargaining power when it comes to what products they sell, and if they see that console + accessories are not as profitable as something else, they won't hesitate changing. Of course, that's somewhat of an oversimplification, as the retailers obviously care about the causality of sales, so it might be that having consoles helps them sell other, more profitable products, in which case they won't be so hasty to drop consoles.