I can post some interesting numbers later if you guys are truly interested.
As an example, typical retail per-item profit on a new $60 game is about $20. Distribution takes about another $10, and the publisher gets about $30, some portion of which they pay as licensing fees to Sony/MS/Nintendo.. it varies widely, but $10 is a good middle ground. The physical item you purchase only costs the publisher about $2-$5 to make, depending highly upon media type and packaging. The rest of the publishers profit needs to go to recouping dev and marketing costs for the product, before the publisher actually sees profit. The margin for discounted games ("Best Seller" $20 variety) lessens considerably, and really hurts the retailer's % more than everyone else. I don't know the numbers as well for the discount titles, but I seem to recall that the retailer only sees about $2 of the $20 -- but they sell like hotcakes, and although they are not worthy of the prime shelf space, they are still a decent margin item, and thus the stores carry them. As an aside, I can tell you that the developers really get screwed on the $20 discount items -- they usually don't see a dime of royalties once the title hits that stage, no matter how good their royalty deal was with their publisher.
Once a retailer purchases an item, at least from the video game industry (I can't claim expertise on other industries, so I don't know if this is different for other types of products -- and yes I *can* claim expertise on the games industry, and that's where I'll stop with that), that's it. The retailer owns the item, and the only way to recoup losses from the publisher is to claim that the item is defective. Hardware is a little different from software, in that, indeed, hardware price drops are paid for by the manufacturer, but they have never, in my experience, done a price drop for individual retailers, or via a gift card. That's... really new (a nice way to say... that its just not true), if its the case here.
The rental industry purchases new games for a much higher price than the regular retail industry, perhaps for obvious reasons. I've been told that movies actually work via a different mechanism (royalties? dunno), but to-be-rented games I know are purchased for, for example, ~$150/copy when the game is new.
Also (and this data is available from NPD), Wal-mart, despite being a colossal retailer, doesn't have as much pull with the games industry as it once did. They can push publishers around when it comes to making shovelware, and that's about where it ends. Wal-mart sells a lot of shovelware, but when it comes to full-price games, and probably Bluray discs, they can't compare to companies like BestBuy, Target, or even GameStop. Yep, you heard me. GameStop. What used to be a minor sector of the sales has grown by leaps and bounds in the last few years. The "specialty" shops, like GameStop, are doing *really* well. As a matter of fact, I believe that I saw Wal-mart in the #4 or #5 position in raw games industry revenue recently, behind exactly the companies I mentioned... BestBuy, GameStop, Target.. and Target was falling back as well.
Given the Wii's magnitude of shovelware, perhaps Wal-mart games sales will pick up soon, and they'll be the champs again (they once were, in the games industry, but not for a few years now). As is, Sony has no reason to pander special deals to Wal-mart, that they aren't going to push everywhere else.
Wal-mart stands to benefit hugely from their customer base owning BluRay players and PS3s. As I stated, the profit margins on the software/movie items are quite large, and Wal-mart has a "special" place in the retail sector. They *own* the rural market in America, which is not only the largest overall sector, but also the most sparse in regards to console ownership per capita. If they can get rural communities hooked on blu-ray and PS3s (or 360s), they are doing themselves a *huge* favor. Their customers don't have another choice for electronics (or anything else, really -- Wal-mart is very much a rural monopoly, as I said -- they let the other stores have the urban sector, and let them compete with each other), so Wal-mart is it -- BluRay city, and no 100-mile round trip @$4/gallon of gas to get there.
Wal-mart made "future money" (and a lot of it, potentially) with this deal. In a lot of cases, they probably saw the gift-card used directly to purchase high-margin games in the same sale... thus reducing their immediate losses considerably, and retaining the same future potential. The other retailers saw the same oppotunity (Target, BestBuy, etc. all had deals, but not as large) and also dove in. It was worth it to all of them.
Why not do this all the time? Sony doesn't come out with a new, attractive bundle all the time. One of the primary functions of these deals was to clear shelf space (of items that cannot be returned unless defective -- that's just not how it works) for these "improved" items. Yes, it was worth this much to Wal-mart, Target, etc. to have this sale. They make a lot of money from games and BluRay. A lot. More installed base means everything to them... especially Wal-mart, with their "different" customer base (monopoly).
And now, the deals are over... the shelf space is clear, the new 80GB PS3s are on the way, and the market just got larger.
