GAME + General price erosion.

[Ginza]

I know it has been posted already but I think that it is pretty big news and has many underlying motives.

I posted this on my blog and am trying to think of it more than just from a consumers point of view.

It was with interest that I read about GAME the retailer is planning a 10 day 'Sale' as it were with all games on all formats that were full priced games with a RRP (recommended retail price) of ?39.99 all slashed to ?29.99

With a vested interest in the retailer I'm not sure whether this is a good thing or not. For a consumer it is excellent news. Saving a potential ?10 and just walking in to the store and buying said game. However, could this be doing harm to the industry? I've just heard about it tonight so I'm not sure what to think. It might not really sound like much but for any person who spends money on games and hunts out a bargain will find that places like Amazon for example charge ?29.99 for games. This is because they are online only and don't have hundreds of shops to pay wages for and rent etc. With the ?10 decrease in price of game X how will GAME fare on the whole?

This is good for the games buying consumer but is more than certainly going to put small games shops completely out of business. With GAME selling the same game at ?29.99 as a small indie shop selling it at ?39.99 where would you go to part with your hard earned cash (if you wanted to buy a game)? Which in turn equals no customers for small indie and out of business in no time.

This could be also a canny move on GAME's part. Microsoft has announced that the Xbox 2 will launch in 'late October or early November' OF THIS YEAR. THAT IS 2005 AND A NEW GENERATION OF CONSOLE. That is also pretty huge news and possibly why GAME are trying to shift all the stock of the current Xbox console out in preparation for all things new. The PS3 is also sounding like it is near completion too. It is going to be shown to the public BEFORE E3 which happens in May. Rumour has it that both PS3 and Xbox2 will be shown in March at some point. Very interesting times are ahead.

[ryodi]

In my local Game is was only on the top 10 titles, most of the rest were still full price including Phantom Brave which I would have bought if it had been the 'sale' price. I don't think it will have as much effect as you think. I have seen Asda selling new releases for ?29.99 as a standard price and would regard their cheap games as a bigger threat to the indies that Game's occasional one off reductions.

[gossi the dog]

It's only on chart items and it's half term next week. It's a one off that should boost sales and get rid of surplus stock. Therefore improving their results just prior to the financial year end.

EDIT: It really wouldn't be in their interests to permanently reduce the price of games to ?29.99

[gossi the dog]

So Ginza do you have shares in GAME?

[E. Randy Dupre]

It really wouldn't be in their interests to permanently reduce the price of games to ?29.99

It's happened before, though - late on in the Saturn's life, Virgin and others reduced all Sat and PS games from ?39.99 to ?29.99, much to Sony and Sega's annoyance. Then, when every high street chain did the same and sales increased as a result, they finally saw the light and reduced the RRP of their games to that lower price.

[gossi the dog]

But it's not in GAME's interest. They sell far more games than any other retailer. If they decided to reduce the price of all games to ?29.99 it would mean that they would make ?8.50 less on every full price game they sell. To make it worth while for them, the increase in sales would have to at least match the fall in revenue per game sold. This simply wouldn't happen. The reduction in price would boost GAME's sales (as people can buy more games for the amount of money they have) but they wouldn't gain market share off anyone else because all their competitors would price match them and sell all games at ?29.99. Furthermore it could lead to further price competiton and game prices falling further. GAME definitely do not want that and hence will continue to sell full price games at ?39.99

[cleandude]

All they are doing is a loss leader to get people back in store.

Chrimbo was a let down for the whole industry and jan wasnt a great month either. They are just trying to get people in and then try and maximise the sale with a high profit addon or pre-owned sale with that. They might not be making money on the chart title but they will be making it back in other areas. Just watch out for there deal of the week/day or special offer, I bet they bought it in for no less than a quid at cost.

I wouldnt read into it as a decline or emptying of stock, if it was they prob have a full blown sale to get rid of backstock, not new release stock.

[Ian(not Ian)]

All they are doing is a loss leader to get people back in store.

That's all that's to it. Thursday I went into my 2 local GAME stores to buy DK Jungle Beat, but didn't buy it as the rascals wanted a whopping ?37.99 for it. GAME need to get people like me to part with their money and will have succeeded if DKJB is ?29.99 when I go down town today.

The Half Term break is another factor here. Mums will be dragged to town this coming week with purses at the ready, buy a game for Johnny to keep him quiet for a while. GAME need those mums to spend in their stores, something they wouldn't do if Tesco round the corner is selling the same thing at ?8 cheaper.

Simple market forces.

[Adrock]

In my local Game is was only on the top 10 titles, most of the rest were still full price including Phantom Brave which I would have bought if it had been the 'sale' price. I don't think it will have as much effect as you think. I have seen Asda selling new releases for ?29.99 as a standard price and would regard their cheap games as a bigger threat to the indies that Game's occasional one off reductions.

The game i work at had it in the ?29.99 deal. So check it out again if you can

[MACO]

Get some feet instore before the results in April IMO, and not sustainable. Supermarkets are more of a threat to indy shops.

[gossi the dog]

All they are doing is a loss leader to get people back in store.

Chrimbo was a let down for the whole industry and jan wasnt a great month either. They are just trying to get people in and then try and maximise the sale with a high profit addon or pre-owned sale with that. They might not be making money on the chart title but they will be making it back in other areas. Just watch out for there deal of the week/day or special offer, I bet they bought it in for no less than a quid at cost.

I wouldnt read into it as a decline or emptying of stock, if it was they prob have a full blown sale to get rid of backstock, not new release stock.

It's not a loss leader because by selling games at ?29.99 their still making a nice profit.

They've just had a sale to get rid of all the shovelware, so it would be pointless to have another.

[Spatial]

I'm not sure how much profit they actually make mind you.

Most games cost around ?27 - ?28 with VAT, the rest is mark up price and profit for the retailer.

With something like GAME with a large no. of stores and who are able to sort out their own distribution, it not a problem.

Might have an effect on some smaller stores / chains if it erupts into a full blow price war (but then isn't the day of the small indi on its way out anyway ?)

[RobN]

Games have been ?30 online for ages now so it's about time the large chains matched them. I think I've only ever bought 1 game from the highstreet. And then only because it was SMS and Play were offering a measely ?5 discount. Much easier to buy games off the net anyway. Especially when pre-orders can turn up on the Sat before the official mon release.

[RobN]

I'm not sure how much profit they actually make mind you.

Most games cost around ?27 - ?28 with VAT, the rest is mark up price and profit for the retailer.

With something like GAME with a large no. of stores and who are able to sort out their own distribution, it not a problem.

Might have an effect on some smaller stores / chains if it erupts into a full blow price war (but then isn't the day of the small indi on its way out anyway ?)

You have to remember that V.A.T. is only paid on the final retail price. Otherwise you'd be paying it twice. Therefore, a ?30 price incurs 25% less V.A.T. than a ?40 game, which means ?1.75 is no longer paid.

[mr_sockochris]

I very rarely use shops these days, I don't see the point of paying ?40 + the expense of petrol to get to GAME and back, when I can order from Gameplay for ?30 and have it delivered to my door a day before it's even in the shops. Same with music and DVD's. it always makes me laugh when the likes of HMV have a 'sale' and the sale prices are no cheaper than what Play.com have had as a normal price.