[dogma1138]

Brick and mortar stores pay about $45 for a $60 dollar game, and have additional bonuses for sales targets.

Some larger publishers operate on a different scheme similar to the large DIY and big box stores in which they “rent” shelf space, pay for promotional services and share a smaller percentage of each sale revenue.

A lot of times there are other restrictions such as game stores need approval for things like unofficial bundles e.g. if they want to bundle a specific game with a console outside of officially branded promotional bundles.

I think the big problem with Steam at least as far as big publishers go isn’t that they charge 30% this is about the same as other channels but that the big publishers have their own distribution platforms atm.

If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client.

Granted they caused this problem to themselves by trying to compete with Steam but they still bare the majority of the cost these days.

[tgsovlerkhgsel]

> you’ll download it from the Publisher via their own client.

And the main reason for pushing their own clients is because all of these publishers would love to a) avoid some of the cost of Steam in the future b) have a sufficiently big customer base to be an attractive platform for third parties to sell their games on, so that EA/Activision/Ubisoft/Blizzard can become the next Steam and squeeze others for 30% of their revenue.

Because 30% of everyone's game sales is a lot more (and more easily earned) than 70% of your game's sales, especially since in the latter case you actually have to develop (and market etc.) a game...

[cptskippy]

> If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client.

All of my Ubisoft titles have been downloaded via Steam and not the UPlay client.

[e12e]

> Brick and mortar stores pay about $45 for a $60 dollar game

Really? I thought anything less than a 100% mark-up generally meant retail wasn't profitable? (ie 30 for a 60 dollar game)?

[sbuttgereit]

Back when I was in the retail industry, we saw nowhere near those kinds of gross margins (100% that is) on average (I worked in corporate management with ~4 chains and consulted to a few dozen others of varying size over a little more than a decade).

More typical gross margins were in the ~40% ballpark. Some higher/some lower; the entertainment retailer I worked with was averaging around 35%. That's not to say it couldn't be dramatically higher by business or product line, one of the retailers I worked for had a popular product closer to 95% gross margin (excluding the stupid crazy 50% shrink we were experiencing on that product)... but we were also manufacturing that product and the chain wasn't doing that well across the assortment.

[e12e]

Just to be clear, when you say 35% you mean you bought inventory at 10 dollars and sold at 13.5? And everything covering rent, pay other costs and profit you made off those 35%?

[sbuttgereit]

Actually, I didn't read the message I commented on closely enough.

In retail, we think of gross margin: (retail price - cost of goods)/retail price.

So, in your example we'd be just under 26% gross margin, not 35%. Regarding the original message I commented on, I looked at the percentages, ignored the example amounts, and presumed gross margin. So in reality, the gross margin there is 50%. Still higher than the averages I saw while I was in the industry (and I was mostly with B&M retail) and higher than the break even point for reasonably well run and conceived retail businesses. That's not to say those more common margins are comfortable for the retailer... more often than not they are cutting it pretty close to the edge much of the time.

[dogma1138]

Most retail doesn’t do 100% markup or anything close to that other than maybe parishables and low priced goods that aren’t bought on credit.

Also game stores hope that you’ll buy other items and also sell your older games back to them so they can resell them while giving you back arguable worthless store credit.

[georgeecollins]

Most dedicated game retailers (GameStop) make their profit from selling used games. There is a higher markup for that.

[dogma1138]

Not sure why this is downvoted this is correct, you get store credit and they get another resell at likely a higher markup than the original.

This is why both publishers and console makers have constantly tried to get into this market, which have already been somewhat killed on the PC the moment CD keys were introduced.