Online retailer DVD Empire has announced that theyre getting out of the video game retail business, citing an inability to make a profit selling games under the current business model. In their explanation to current customers, they outline seven reasons why current business practices make it, in their words, impossible for us to make money selling video games.
The reasons? High wholesale prices on softwarethey set the retail price at just $5 above the product cost (buy it for $54.99, sell it for $59.99)and hardwaretake a $400 console; we only make $5 on the salethat is a .01% gross margin.
Worst of all? Lack of price protection and rampant price drops on bad or stagnant titles.
The game industry releases many bad games, and word of mouth spreads fast to the consumer. All of those bunk games sit on our shelves. If we do end up selling them, we lose more money, due to the lack of price protection. They wont let us return the bombs. Of course, if the video game industry produced quality games, we wouldnt have this issue.
The only good news here is that DVD Empire is clearing out its entire video game stock at 20% off. Enjoy, cheapasses. Michael McWhertor