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

[The_Liquid_Laser]

yvanjean 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.

You clearly haven't made your homework, first of all they do make a profit on selling hardware it's Sony and Microsoft that taking the lose. Secondly the biggest money maker around video games is actually accessories. Walmart, Amazon and other big retailers have already monetized the move to digital by selling gift card. 

https://www.amazon.com/best-sellers-video-games/zgbs/videogames/ref=zg_bs_nav_0

Just look at the amazon video games top sellers... Gift cards & Accessories make up 22 of the 50 top selling video games items. 

Video games are getting more and more popular and demand is rising. There aren't any sign indicating a potential crash. We're at the dawn of next gen of consoles.   

Brick and motar is the biggest cost to the price of video games. The sooner they die out the better for over all cost of selling video games. Take a look at the PC Market were physical media has died out. More then 50% of the market is digital only. Every indie games don't have a physical release.  

A good portion of the games revenues is coming from DLC and contents bought after the initial purchase, get out of here with the stupid talk about a crash due to the death of brick and mortar.  

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

The_Liquid_Laser said:

0D0 said:

I did, but could you add more? Do you have sources, numbers .. ?

Here is an article I found about how much profit a store can make on hardware and software.
https://nintendosoup.com/much-money-video-game-store-make/

Basically profit margins on hardware are 2% - 5%.
Profit margins on new software are 25% - 35%.

For a big retailer, new software is obviously where the money is at.  Now I have been told that these margins on new games aren't even enough for a specialty store like Gamestop to be successful.  But the margins on used games are more like 40% - 80%.

So any way that you slice it, the money is in the software.  The hardware is just there to get people to come to your store to buy the games.  If you take away the software, then hardware prices would have to increase, so that the stores could sell the hardware at a decent profit.