DVD Empire exits, slams game biz
Online retailer clearing out stock as it closes its game division, says gaming industry full of "greed," "only cares about mass merchandisers."
Online retailer DVDEmpire.com is no longer selling games, the company revealed. The site, which specializes in selling DVDs over the Internet, is now clearing out its inventory of games by selling titles for 20 percent off.
However, it isn't so much the fact that the company is getting out of the business as much as why it is getting out. On its Web site, the retailer lists the reasons it is exiting the game-selling business, and it doesn't paint a pretty picture for smaller retailers.
Believing that the game industry "only cares about mass merchandisers" and "completely ignore[s] the needs and wants of the medium to small game retailers," DVD Empire says offering games to customers actually ends up costing them money.
"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.
"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."
DVD Empire also says that games that don't sell simply get stuck on their store shelves, whereas bigger stores like Wal-Mart and Toys "R" Us can return their stock. "Of course, if the video game industry produced quality games, we wouldn't have this issue."
While DVD Empire claims that smaller retailers are struggling in the business, the bigger fish in the pond aren't. In the last nine weeks of 2006, GameStop, which also owns EB Games, said that it took in a record $1.7 billion in sales.
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