Last week, the gaming industry was caught off guard by an online retailer named DVDEmpire as they decided to drop gaming from their online store.
Now while that alone isn’t all that newsworthy, what is provoking is HOW they are handling this situtation and what they are saying. Simply put, DVDEmpire has slamed the gaming industry for not making enough quality games, and has called most companies out for being “greedy”.
As a result, they have decided to sell their entire library for 20% off. *Update* (Since I wrote this post, they’ve now changed it to 50% off to clear out inventory)
You can read most of this on their website but here are some excerpts:
“Here is an example of the video gaming industry greed: they set the retail price at just $5 above the product cost (buy it for $54.99, sell it for $59.99). When we sell a game we make on average 8.3% gross margin. That does not take into account any of the cost to store the video game or labor to receive/ship an item,” the site says.
Also they state: “Take a $400 console; we only make $5 on the sale–that is a .01% gross margin (note the decimal point). The game companies make their profit selling to us. We make no profit selling to you.”
That does seem harsh and leads me to wonder if something indeed wrong with they way games are being sold. To make such a low return of profitably, if thats true… than it seems DVDEmpire was correct in dropping games from their current product line.
Makes you wonder why the business of selling games isn’t regulated.
It seems DVDEmpire does have a point. I mean, if you look around there aren’t many thriving independent gaming stores. Gamestop/EBgames is the only major retail specialty store around and even they have their hard time selling games.
Most gamers will agree that the only way they make their company profitable is through trade-ins/used games. By buying low and selling high, its the best way for the game store to turn a profit.
Yet, its hard to imagine that DVDEmpire took their games business seriously. While they have listed their points as to why they are bowing out, by blaming the ENTIRE gaming business, from corporate greed to the production value and such, it makes you wonder if they truly were in it for the love of gaming.
To market a games business especially in today’s world where you are competing with the big box companies, both online and off, it takes a bit more than just adding games to your inventory. And apparently that looks to be a major reason for DVDEmpire as to why they failed; whether they see it or not.
I mean I don’t see an uproar of gamers saying “Oh man that’s a shame DVDEmpire is leaving the gaming market.” Did they have a loyal customer base to keep at all? Did they position themselves to truly make the gaming market a serious venture for their company?
If anything, their complaints about small business vs larger business is irrelevant. A business is a business, and while the gaming retail industry does indeed have its share of pitfalls, doesn’t every market have their downfalls?
Compare music & movies. In our region, both The Wherehouse, Samgoody, Suncoast and more recently Tower Records all bowed out from selling either music, movies and/or gaming or all three.
So truthfully, yes, it is hard to sell these types of media in today’s ever changing market. But then again, there are ways to sell, and profit, but its hard and takes time and devotion to that genre.
To simply blame the entire industry (from designers to companies) for being greedy, and for not being able to turn a profit isn’t the industry’s fault. It may be a big part of how the market ticks but if DVDEmpire was serious about their complaints of the industry, it could have tried other ways to profit off of gaming.
However, this argument of small business vs. big business applies to almost every industry. Does DVDEmpire than imply that every small business is under attack? If it did, maybe the comments they made would have not struck as loudly as it did.
As a business owner, from Home Depot to Walmart, the landscape of business is ever changing. Yet, just because you can’t compete with the big boys like Gamestops/EBs and Best Buys, etc., doesn’t mean you can’t find your niche.
And for DVDEmpire, maybe THIS is one reason for their fall. Not being able to strike a cord with GAMERS. Also, while DVD and gaming have their similarities, they are two seperate products that should be held in two different strategies for selling. By comparing the two, you are only comparing apples and oranges. Both are similar, but different; equal but unique.
For DVDEmpire, gaming became too much of a risk for them to continue, which is understable as they ran the risk of losing more money. But unfortunately, instead of saving face with a graceful bow out, they decided to burn bridges that apparently were never really established.
In the end, while I can emphathise with their loss, I can’t say that I totally agree with their stance. If they really were dedicated to the gamers, I believe they would have found a way to make a profit from the business of gaming.
Life is all about perspective.
