bcn-ron said:
The biggest owners of shelf space (Walmart and other all-in-one store chains) actually do both "grocery" and "videogame specialty" under the same roof. That makes these avenues quite comparable actually. They do compete for space within the same store after all.
Sure, and you'll notice that Wal-Mart doesn't sell used games. They make up for the low margin on videogames through volume and by incorporating them into an overall store. In short, videogames don't have to pay the rent. They only have to pay for their floor space, and get people into the store where they'll also buy other things (which they certainly do).
Name a videogame specialty store that doesn't sell used games. Give up? There aren't any. Because it's probably not possible to stay in business that way--margins are just too low. What I propose is that Sony (and the others) give the retailer a double incentive: a lower MSRP and a lower cost: both lower because Sony's cut is removed, or partially removed. And in addition, the online price will match rather than being lower than MSRP.
For example, on a typical game, Sony's license fee and the retailer's cut are both ~20%. For simplicity's sake, on a $50 game, Sony gets $10 and the retailer buys the game for $40 cost, so they also make $10.
What Sony wants to do is either:
A. Sell this game online at the same $50 price, taking the extra $10 for themself.
B. Sell this game online for $40, cutting out the retailer's margin, as an incentive for customers to buy digitally (giving up the ability to re-sell, loan, etc).
What I'm proposing is for Sony to sell the game to the retailer for, say, $35, and setting the retailer MSRP at $45, and the online price also at $45. Sony makes $5 less off retail copies but $5 more (not including saved manufacturing costs) from digital sales. The retailer still makes $10, but pays less to buy copies up front, and the game may sell better at the lower price, possibly making up the difference from sales lost to online customers.
Truthfully, any situation is a win for Sony, Nintendo, and Microsoft. For retail copies, they get their license fee up front based on copies produced, not sold to customers. For digital sales, they get the retailer cut as well as the license fee, although they only get the license fee on copies sold because there is no "production".
The one caught in the middle is the 3rd-party publisher. They don't have any breathing room.
