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Forums - Sales Discussion - Shouldn't Activision Blizzard be making more money?

thranx on 17 November 2010
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.



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Degausser on 17 November 2010
thranx said:
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.

 20% is very low compared to most retail margins which are often 100% plus. Obviously it depends on what you're selling, but 20% isn't alot when you think of all the costs asscociated with running a game shop - staff wages, electricity / heating, loss to theft, tax, store rental and games not selling and thus being sold off cheap.



thranx on 17 November 2010
Degausser said:
thranx said:
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.

 20% is very low compared to most retail margins which are often 100% plus. Obviously it depends on what you're selling, but 20% isn't alot when you think of all the costs asscociated with running a game shop - staff wages, electricity / heating, loss to theft, tax, store rental and games not selling and thus being sold off cheap.

How much theft occurs at retail of video games. I always see them locked up. I usually see games on sale for no less than forty so breaking even. Most items are 100% profit? I doubt that. Please do not just throw out numbers. Sure some low level items may be that high, but not most. Or at least give a link. If profit margin was 100% on most items whole salers would have a field day on ebay and amazon by cutting out the need for a brick and mortar store.



Jereel Hunter on 17 November 2010
Degausser said:

 20% is very low compared to most retail margins which are often 100% plus. Obviously it depends on what you're selling, but 20% isn't alot when you think of all the costs asscociated with running a game shop - staff wages, electricity / heating, loss to theft, tax, store rental and games not selling and thus being sold off cheap.


Don't waste your time explaining things to people. People like the ones arguing here do not realize that buying something for $48 and selling it for $60 is NOT $12 of profit. They don't realize that the cost of running the store comes out of that. or that for ever Halo game that comes out and sells bucket loads at full price, there's loads of copies of Shovelware Party on clearance for $15 that cost them more than $15. Math is hard, and they are ignoring everything besides $60-$48=$12.



thranx on 17 November 2010
Jereel Hunter said:
Degausser said:

 20% is very low compared to most retail margins which are often 100% plus. Obviously it depends on what you're selling, but 20% isn't alot when you think of all the costs asscociated with running a game shop - staff wages, electricity / heating, loss to theft, tax, store rental and games not selling and thus being sold off cheap.


Don't waste your time explaining things to people. People like the ones arguing here do not realize that buying something for $48 and selling it for $60 is NOT $12 of profit. They don't realize that the cost of running the store comes out of that. or that for ever Halo game that comes out and sells bucket loads at full price, there's loads of copies of Shovelware Party on clearance for $15 that cost them more than $15. Math is hard, and they are ignoring everything besides $60-$48=$12.

Profit margin. Its what i've been talking about. How have I been wrong about that? Where was my math wrong? Care to link to all these facts you have? Or you just making them up? I have to see anyone back up the claim no money is made on the sale of video games



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Degausser on 17 November 2010
thranx said:
Degausser said:
thranx said:
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.

 20% is very low compared to most retail margins which are often 100% plus. Obviously it depends on what you're selling, but 20% isn't alot when you think of all the costs asscociated with running a game shop - staff wages, electricity / heating, loss to theft, tax, store rental and games not selling and thus being sold off cheap.

How much theft occurs at retail of video games. I always see them locked up. I usually see games on sale for no less than forty so breaking even. Most items are 100% profit? I doubt that. Please do not just throw out numbers. Sure some low level items may be that high, but not most. Or at least give a link. If profit margin was 100% on most items whole salers would have a field day on ebay and amazon by cutting out the need for a brick and mortar store.

Theft was just one expense in a long list of them - but the preventative measures taken (such as boxing them up / locking them up) costs money too - it's another expense to consider. 

 Will look for examples of retail markup later, about to go out now so ain't got time. 



RVDondaPC on 17 November 2010
bugrimmar said:

On that note, why is Blizzard even hanging with Activision? I'm sure they have more than enough capital to buy themselves out.. or do I not know what I'm talking about?

p.s. Blizzard will never get a cent from me again until they split with Activision. Screw!


You don't know what you are talking about. 

Blizzard is owned by Activision-Blizzard. Activision-Blizzard is a holding company that owns both Activision and Blizzard. Any capital Blizzard has is Activision-Blizzards capital. The only way Blizzard would split from Activision is if Activision-Blizzard agrees to sell Blizzard to another company. Of course it doesn't have to be a company like EA. A capital investment company could come in and buy Blizzard and it would just be Blizzard. Or I guess they could sell Activision to another company just as easily. But either way it's very unlikely to ever happen and def wont happen in the near future. 

What I don't get though is why the hostility towards it's association with Activision? I mean Blizzard was owned by another shitty video game publisher before it was associated with Acivision. It's not like it was it's own company and then got bought out by Activision. And it's not like it's management changed when it became part of Activision-Blizzard. It's in the same exact boat as it has been when you liked them. 



darkknightkryta on 17 November 2010
RVDondaPC said:
bugrimmar said:

On that note, why is Blizzard even hanging with Activision? I'm sure they have more than enough capital to buy themselves out.. or do I not know what I'm talking about?

p.s. Blizzard will never get a cent from me again until they split with Activision. Screw!


You don't know what you are talking about. 

Blizzard is owned by Activision-Blizzard. Activision-Blizzard is a holding company that owns both Activision and Blizzard. Any capital Blizzard has is Activision-Blizzards capital. The only way Blizzard would split from Activision is if Activision-Blizzard agrees to sell Blizzard to another company. Of course it doesn't have to be a company like EA. A capital investment company could come in and buy Blizzard and it would just be Blizzard. Or I guess they could sell Activision to another company just as easily. But either way it's very unlikely to ever happen and def wont happen in the near future. 

What I don't get though is why the hostility towards it's association with Activision? I mean Blizzard was owned by another shitty video game publisher before it was associated with Acivision. It's not like it was it's own company and then got bought out by Activision. And it's not like it's management changed when it became part of Activision-Blizzard. It's in the same exact boat as it has been when you liked them. 

Except with Kotick in charge?  (Note I mean that as a question, is Kotick just running Activision or is he running all of Activision-Blizzard?)



SecondWar on 17 November 2010
bugrimmar said:

On that note, why is Blizzard even hanging with Activision? I'm sure they have more than enough capital to buy themselves out.. or do I not know what I'm talking about?

p.s. Blizzard will never get a cent from me again until they split with Activision. Screw!

Blizzard were/are owned by Vivendi when they were a publishing house part of Vivendi Games. Despite all this stuff about a merger between Activision and Blizzard, a better description is that Vivendi bought Activision and renamed itself Activision Blizzard. 

So really, the real Activision isnt getting any money from Blizzard, it all goes to the Vivendi conglomerate.



RVDondaPC on 17 November 2010
SecondWar said:
bugrimmar said:

On that note, why is Blizzard even hanging with Activision? I'm sure they have more than enough capital to buy themselves out.. or do I not know what I'm talking about?

p.s. Blizzard will never get a cent from me again until they split with Activision. Screw!

Blizzard were/are owned by Vivendi when they were a publishing house part of Vivendi Games. Despite all this stuff about a merger between Activision and Blizzard, a better description is that Vivendi bought Activision and renamed itself Activision Blizzard. 

So really, the real Activision isnt getting any money from Blizzard, it all goes to the Vivendi conglomerate.


52% of it goes to the Vivendi Conglomerate. 48% of Activision-Blizzard is owned by the shares that were formally Activision.