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

[DreadPirateRoberts]

0D0 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.

Can you elaborate more on that. With more than 100m current gen consoles out there (PS4+X1), isn't that enough sells to justify the market, at least for Amazon and Walmart?

His argument is that in an all-digital future, stores won't be willing to sell hardware because the big money is in software, which they won't get a cut of.  In general, he's not wrong. Hardware margins are low in most computing instances, not just video games.  So his theory is plausible.

There are two primary ways around this.  First, S, N and M would have to offer up their hardware at lower prices to allow for a satisfactory margin.  Probably not terribly likely.  The second way is one we're already seeing - You can buy digital download cards for games at both Amazon and Best Buy, and likely other retailers.  And if customer adoption of such a practice could be encouraged (i.e.: perhaps by offering a small discount on a game card bought in store vs. the console maker's online store), then this is something companies like Walmart and Amazon would absolutely love, because it drops storage and shipping costs to practically nil.