EXTREMELY bad news for CAGs and all bargain lovers

crap so this basically is the opposite of setting an MSRP. If they set the lowest price on games too high, they will just sit on the shelf collecting dust until they are dumped in a landfill like "Atari E.T."

But maybe this will give publishers incentive to create games that aren't crap and will sit on shelves for years. I predict that they set the lowest price a game can be sold at $19.99. So it stays in line with current Greatest Hits pricing.
 
The bottom line in my mind is; if said game doesnt sell for 29.99 when a retailer today will slash its price or discount it, then its going to be 29.99 and not sell....

Which will lead to development companies needing to make better more attractive products to not have their products sit on store shelves, potentially leading to the department/retail stores not wanting to carry their items that sell like crap at all.
 
It wouldn't have to be that complicated. Based on the decision it seems that producers would now have legal precedent to force retailers to contractually agree to a set pricing scheme. Any retailers that broke the agreement would probably then be subject to legal action for breeching the contract, and producers could stop providing stock to those retailers that won't agree to the terms. Previously it had been illegal to create such contracts, but this ruling seems to reverse that trend.

[quote name='suko_32']Well I don't think in the long run this will affect most video games. I mean, first you have to get all/most retailers in a meeting and I'm sure not all will participate. Then you have to say things like, "Let's agree not to sell Suikoden V for under $10 k?" They then all have to agree, and it's not like the agreed price floor is a law. So some will probably cheat (at least I hope so). I guess what I'm trying to say is, the chances of this applies to games, especially non-mainstream ones (which is most games), is rather low IMO.

Lastly, anyone know if the "Game Theory" applies to this?[/QUOTE]
 
[quote name='DesertEagleXIX']Isn't this a smart thing to do before a recession? That way retailers can be flooded with lots of unsold product. Thanks, GW![/QUOTE]

Before a recession? Where have you been the last 3 plus years?
 
http://www.nytimes.com/2007/06/29/business/28cnd-bizcourt.html?_r=1&oref=slogin

WASHINGTON, June 28 — Striking down an antitrust rule nearly a century old, the Supreme Court ruled today that it is no longer automatically unlawful for manufacturers and distributors to agree on setting minimum retail prices.


The decision will give producers significantly more leeway, though not unlimited power, to dictate retail prices and to restrict the flexibility of discounters.

Five justices said the new rule could, in some instances, lead to more competition and better service. But four dissenting justices agreed with the submission of 37 states and consumer groups that the abandonment of the old rule would lead to significantly higher prices and less competition for consumer and other goods.

The court struck down the 96-year-old rule that resale price maintenance agreements were an automatic, or per se, violation of the Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,” to assess their impact on competition.

The decision was the latest in a string of opinions this term to overturn Supreme Court precedents. It marked the latest in a line of Supreme Court victories for big businesses and antitrust defendants. And it was the latest of the court’s antitrust decisions in recent years to reject rules that had prohibited various marketing agreements between companies.

The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.

For example, they said, such agreements can make it easier for a new producer by assuring retailers that they will be able to recoup their investments in helping to market the product. And they said some distributors could be unfairly harmed by others — like Internet-based retailers — that could offer discounts because they would not be incurring the expenses of providing product demonstrations and other specialized consumer services.

A majority of the court agreed that the flat ban on price agreements discouraged these and other marketing practices that could be helpful to competition.

“In sum, it is a flawed antitrust doctrine that serves the interests of lawyers — by creating legal distinctions that operate as traps for the unaware — more than the interests of consumers — by requiring manufacturers to choose second-best options to achieve sound business objectives,” the court said in an opinion by Justice Anthony M. Kennedy and signed by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.

But in his dissent, portions of which he read from the bench, Justice Stephen G. Breyer said there was no compelling reason to overturn a century’s worth of Supreme Court decisions that had affirmed the prohibition on resale maintenance agreements.

“The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and that it will create considerable legal turbulence as lower courts seek to develop workable principles,” he wrote. “I do not believe that the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing.”

During the period from 1937 to 1975 when Congress allowed the states to adopt laws that permitted retail price fixing, economists estimated that such agreements covered about 10 percent of consumer good purchases. In today’s dollars, Justice Breyer estimated that the agreements translate to a higher annual average bill for a family of four of roughly $750 to $1,000.

The dissent was signed by Justices John Paul Stevens, David H. Souter and Ruth Bader Ginsburg.

The case involved an appeal of a judgment of $1.2 million against Leegin Creative Leather Products Inc. after it cut off Kay’s Kloset, a suburban Dallas shop, for refusing to honor Leegin’s no-discount policy. The judgment was automatically tripled under antitrust law.

Leegin’s marketing strategy for finding a niche in the highly competitive world of small leather goods was to sell its “Brighton” line of fashion accessories through small boutiques that could offer personalized service. Retailers were required to accept a no-discounting policy.

After the United States Court of Appeals for the Fifth Circuit, in New Orleans, upheld the judgment and said it was bound by Supreme Court precedent, Leegin took the case to the Supreme Court. Unless it is settled, the case, Leegin Creative Leather Products v. PSK Inc., will now be sent down to a lower court to apply the new standard.

The Supreme Court adopted the flat ban on resale price agreements between manufacturers and retailers in 1911, when it founded that the Dr. Miles Medical Company had violated the Sherman act. The company had sought to sell medicine only to distributors who agreed to resell them at set prices. The court said such agreements benefit only the distributors, not consumers, and set a rule making such agreements unlawful.

Justice Kennedy said today that the court was not bound by the 1911 precedent because of the “widespread agreement” among economists that resale price maintenance agreements can promote competition.

“Vertical agreements establishing minimum resale prices can have either pro-competitive or anticompetitive effects, depending upon the circumstances in which they are formed,” he wrote.

But Justice Breyer said in his dissent that the court had failed to justify the overturning of the rule, or that there was significant evidence to show that price agreements would often benefit consumers. He said courts would have a difficult time sorting out the price agreements that help consumers from those that harm them.

“The upshot is, as many economists suggest, sometimes resale price maintenance can prove harmful, sometimes it can bring benefits,” he wrote. “But before concluding that courts should consequently apply a rule of reason, I would ask such questions as, how often are harms or benefits likely to occur? How easy is it to separate the beneficial sheep from the antitrust goats?”

“My own answer,” he concluded, “is not very easily.”
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This has potential to be some very bad CAG shopping news. Publishers could set a minimum retail price for a popular game for $59 and leave it that way for as long as they want.
Will this be the end of clearance priced games?

Discuss.
 
Won't retailers get pissed when Bad Game 12 doesn't sell at $50? They can't lower the price (or not by much) and then it will start to hog valuable shelf space.
 
[quote name='hootie']This should get some good discussion time on the next CAGcast![/quote]

It'd be cool to have Cheapy and Wombat talk to a legal expert and maybe an economist to get some perspective on all this.
 
[quote name='Tybee']It'd be cool to have Cheapy and Wombat talk to a legal expert and maybe an economist to get some perspective on all this.[/quote]

That's actually a good idea.


Maybe we should post the same article in the CAGcast forum so CheapyD and Wombat can see it.
 
[quote name='hootie']That's actually a good idea.


Maybe we should post the same article in the CAGcast forum so CheapyD and Wombat can see it.[/quote]

I'll ask them to talk about it in the CAGbag.
 
Though I'm not thrilled about this, I'm really wondering if this is going to have a big impact on gaming (or any for that matter). Could it, of course. But, will it?

Think about it, Circuit City isn't blowing out games for $2 because they are selling for $40 and they are sick of it. Companies like EA aren't losing millions because retailers are lowering prices too much.

Now, the bigger deal might be brand new games, where companies won't want stores blowing the game out slightly cheaper. They might want the launch at one set price, so some people wouldn't hold out to purchase at one store, to save $5.

But, towards the end, games get cheap because there isn't a market for the game at the higher price. I doubt anyone is looking to stop that (for video games), since it will only cost everyone money.
 
Agreed, I don't see this having a huge impact on games since for the most part the margins that retailers make on each unit are so slim there isn't much incentive for drastic price wars, at least not in the initial few months after a game is released. Any noticeable discounts, like the sales seen at Target sometimes right after a game comes out, are probably subsidized by the publisher to help attract attention for the game. Otherwise Target is using those as a doorbuster since their per unit cost must be greater than the price when they sell a new $50 MSRP game for around $38. Of course, after the game's been out for a few months and it's not moving stores will discount it just to free up shelf space, except for the rare exceptions which continue to sell well until they finally hit GH status and get universal cuts from the publisher.

[quote name='lordxixor101']Though I'm not thrilled about this, I'm really wondering if this is going to have a big impact on gaming (or any for that matter). Could it, of course. But, will it?

Think about it, Circuit City isn't blowing out games for $2 because they are selling for $40 and they are sick of it. Companies like EA aren't losing millions because retailers are lowering prices too much.

Now, the bigger deal might be brand new games, where companies won't want stores blowing the game out slightly cheaper. They might want the launch at one set price, so some people wouldn't hold out to purchase at one store, to save $5.

But, towards the end, games get cheap because there isn't a market for the game at the higher price. I doubt anyone is looking to stop that (for video games), since it will only cost everyone money.[/QUOTE]
 
[quote name='thingsfallnapart']Before a recession? Where have you been the last 3 plus years?[/QUOTE]

Where have YOU been? We aren't in a recession.

Not yet anyway- inverted yield curve be damned!! :)
 
this is good and bad for economy. Put it this way, product A takes bout $2.00 to make but when it hits the store its $10, we're talking meaningful items like clothes, toliet paper, groceries. they make an $8 dollar profit for every purchase, so that it would be correct in company predictions, Store A can't have sale, bring more business in because they can't price adjust. So consumers have to spend more on typical everyday things, which stimulates economy for BUSINESSES; the employees, consumers won't see shit from it but empty pockets.

as for software; this will hardly damage it, software comes and goes, it decreases in value every 3-6 months after it was launched.
 
CAGs seem to forget that there is more to retail than Video Games. This is bad for games, but good for al ot of other stuff.
 
[quote name='lordwow']CAGs seem to forget that there is more to retail than Video Games. This is bad for games, but good for al ot of other stuff.[/quote]

...like what?
 
[quote name='neocisco']Good points. I'm enjoying the irony of this being argued on a videogame board. All videogame console pricing is done exactly this way!!:rofl: The prices don't drop until Microsoft/Nintendo/Sony say so. [/quote]
You're ignoring the REASON prices don't drop until the manufacturer says so in the case of a console. There is NO retail margin to consoles. No console sold at MSRP is marked up more than $10 over the store's cost. I think for the 360 premium it's actually $6. There's no rule that says they can't sell for less than MSRP, stores just choose not to because they're not in the business of paying you to take their stuff. When Nintendo/MS/Sony announce price drops, there is a correlating decrease in the wholesale price of the console (and often a retailer rebate for unsold stock).

Case in point: Amazon's Thanksgiving day sale last year, where they sold 360 core system for $100. There was no price floor in place that prevented them from doing this. Likewise with Microcenter's promotion late last year where you got a $100 rebate for buying either version of the 360, and another $100 if you bought the premium and signed up for their credit card. Nothing stopped either store from selling below MSRP, it just doesn't usually happen because the store loses money on the sale.
 
[quote name='geko29']You're ignoring the REASON prices don't drop until the manufacturer says so in the case of a console. There is NO retail margin to consoles. No console sold at MSRP is marked up more than $10 over the store's cost. I think for the 360 premium it's actually $6. There's no rule that says they can't sell for less than MSRP, stores just choose not to because they're not in the business of paying you to take their stuff. When Nintendo/MS/Sony announce price drops, there is a correlating decrease in the wholesale price of the console (and often a retailer rebate for unsold stock).

Case in point: Amazon's Thanksgiving day sale last year, where they sold 360 core system for $100. There was no price floor in place that prevented them from doing this. Likewise with Microcenter's promotion late last year where you got a $100 rebate for buying either version of the 360, and another $100 if you bought the premium and signed up for their credit card. Nothing stopped either store from selling below MSRP, it just doesn't usually happen because the store loses money on the sale.[/QUOTE]

MicroCenter didn't sell them below MSRP, they offered a rebate. Not the same thing. Also, promotions like coupons or special financing or offers wouldn't count either.
 
Paranoid ramblings aside, the Supreme Court is not meant to decide what is good or bad for the economy: It is meant to decide whether a law is within the powers the government should have, which is why I find it ironic that the article has a bunch of old men in robes pontificating on what is good for the economy. That is neither their expertise nor is it their perogative. Gripe all you want about big evil business if that helps your rather childish view of the world, but if the law was not Constitutional, that's that. Full stop.
 
[quote name='lordwow']Like for local grocery stores who get destroyed by Wal-Mart?[/QUOTE]

So once again without the Union brainwashing.... how is it better for me to shop at Kroger, or some locally owned store for my goods at a much higher price.... instead of a highly stocked, less expensive, Sam's Club, or Walmart Supercenter? How is that good for me?

The local store still pays minimum wage, the local Walmart Supercenter may put a dampening on the other grocery stores profits, but it also brings in other businesses.... restaurants, auto dealers, gamestops, strip mall stores, etc. Which is much more beneficial than some one stores' few employees.

I am so tired of the complete bullshit on this subject. Once again why do the unions want into Walmart if its so evil.... they want in to make money... meanwhile they sink our economy from within on the Auto industry..
 
Why don't we wait until game companies/retailers actually set their lowest selling points before crying to the world about it. I can't help but think Target won't give a shit about Wal-Mart pricing Ultimate Spiderman $5 lower than them. There's thousands of products retailers make much more profit on that they'd be pissed about other retailers selling lower, I doubt video games will ring high on their list.

Makes you wonder what it'll be like dealing with Gamestop though, and what their reaction will be.

Man, this is going to be more trouble than it's worth.
 
[quote name='CocheseUGA']MicroCenter didn't sell them below MSRP, they offered a rebate. Not the same thing. Also, promotions like coupons or special financing or offers wouldn't count either.[/quote]
And amazon did what? Sold below MSRP. 66% below MSRP, to be exact. No rebates, no coupons, no special financing. Amazon seems to still be stocking 360s, so they didn't break some agreement. Sam's Club sells Wiis for $242 (on the rare occasion that they're in stock).

I was simply pointing out WHY prices below MSRP (regardless of origin) are so rare, but that they ARE occasionally available. There's no collusion that restricts retailers from offering consoles for less than MSRP, it's simple economics. If they sell a PS3 for $499, they lose ~$94 on the sale. In general, this is not a good business practice.
 
[quote name='Snake2715']So once again without the Union brainwashing.... how is it better for me to shop at Kroger, or some locally owned store for my goods at a much higher price.... instead of a highly stocked, less expensive, Sam's Club, or Walmart Supercenter? How is that good for me?

The local store still pays minimum wage, the local Walmart Supercenter may put a dampening on the other grocery stores profits, but it also brings in other businesses.... restaurants, auto dealers, gamestops, strip mall stores, etc. Which is much more beneficial than some one stores' few employees.

I am so tired of the complete bullshit on this subject. Once again why do the unions want into Walmart if its so evil.... they want in to make money... meanwhile they sink our eceonmy from within on the Auto industry..[/quote]

I'm tired of the bullshit too. The bullshit that says $1 or so cheaper = good. Because once you understand how WalMart operates, you realize that it's not just competing retailers that they drive out of business. It's manufacturers. It's service providers. It's everyone who doesn't fit into their business plan. The point is, the WalMart model is not sustainable, and if it's not affecting you now, it will soon. All for a few cents off laundry detergent.

It's no secret that by controlling the huge percentage of the retail market that they do, they often dictate what will and will not be sold. If WalMart won't carry it, then the product often doesn't have a chance, and many times simply doesn't come to market. And WalMart often demands that products be delivered at prices that drive manufacturers out of business. They did it with Vlasic pickles (see http://www.fastcompany.com/magazine/77/walmart.html) and they've done it with other brands.

And despite their dyed in the red, white, and blue corporate image, WalMart has been the SINGLE BIGGEST FACTOR in the exporting of jobs to China. Try to find a product made in the U.S. on their shelves. I dare you. They offer little or no healthcare (while most of their competitors do...Costco being the best example, but even Target puts them to shame), practice Christian hypocrisy through what they will and won't carry, and generally market to the lowest common denominator. All in all, a blight on society and a place at which my family is proud not to shop.
 
[quote name='RollingSkull']I love anti-Walmart screeds. They fill my day with laughter.[/quote]

You'll be crying when WalMart sells your babies....to...um...pirates.

;)
 
[quote name='Tybee']I'm tired of the bullshit too. The bullshit that says $1 or so cheaper = good. Because once you understand how WalMart operates, you realize that it's not just competing retailers that they drive out of business. It's manufacturers. It's service providers. It's everyone who doesn't fit into their business plan. The point is, the WalMart model is not sustainable, and if it's not affecting you now, it will soon. All for a few cents off laundry detergent.

It's no secret that by controlling the huge percentage of the retail market that they do, they often dictate what will and will not be sold. If WalMart won't carry it, then the product often doesn't have a chance, and many times simply doesn't come to market. And WalMart often demands that products be delivered at prices that drive manufacturers out of business. They did it with Vlasic pickles (see http://www.fastcompany.com/magazine/77/walmart.html) and they've done it with other brands.

And despite their dyed in the red, white, and blue corporate image, WalMart has been the SINGLE BIGGEST FACTOR in the exporting of jobs to China. Try to find a product made in the U.S. on their shelves. I dare you. They offer little or no health care (while most of their competitors do...Costco being the best example, but even Target puts them to shame), practice Christian hypocrisy through what they will and won't carry, and generally market to the lowest common denominator. All in all, a blight on society and a place at which my family is proud not to shop.[/QUOTE]

This is going to get way off topic with a dead horse subject. The argument goes both ways. Smaller PC games boxes:

http://www.escapistmagazine.com/issue/40/11


Bottle manufacturers methods of bottling, I can go on and on.... They don't necessarily demand products at a set price to intentionally put a manufacturer out of business (that makes no sense, they don't compete with pickle manufacturers). They do however force the suppliers to become less wasteful of hours and more streamlined in wages and waste for example: http://www.foodinternational.net/ar...rt-changes-packaging-rules-for-suppliers.html

"Wal-Mart's goal is to reduce packaging on its products by 5% by 2013. The company has already made changes to some of its packaging that has cut down on waste, shipping costs and shelf space. It often cites the US$3-million it saved by shrinking the cardboard box holding one line of private label toys. The one-inch reduction in height and width, and the elimination of plastic wrapping, reduced cardboard use by 3,450 tons and plastic by 600 tons."

They have strived to reduce pollution by teaming with light bulb companies, reducing waste and shipment materials, streamlining production methods etc, as well as put some serious attention on generic drug pricing (which is and was getting out of hand).

Also on your subject of their medical coverage humor me. I am in the medical field for a living. Show me why Target is better than the multiple plans that Walmart offers... I worked at both retailers within the past 12 years and I had both their medical plans. Besides repeating what you hear, give me some info on why their health plan is so terrible? Is it high cost, too few of options, non reputable carrier, what exactly....

I suppose you are one of the people that also believe Walmart hires in older employees to take life insurance policy out on them, and then cash in when they die to right? I had thought I heard it all until I heard that.


This can go on and on..and on. And before you go into the wage department... what is minimum wage in your state? The national average wage at Wal-Mart for full-time hourly associates is approximately $10.11 per hour. (as of December 2005). If they dont pay that much their most recent kansas City store took in over 1200 applicants for its 480 positions... Sounds like quite a few people wanted to leave their "high paying" jobs and go work for Walmart... I don't see how another 480 working people is hurting the economy in their area.

Wal-Mart benefits – available to full- and part-time associates – include healthcare insurance with no lifetime maximum. Wal-Mart associates are eligible for health care benefits. Wal-Mart also offers a 401(k) plan and profit sharing contributions, whether an associate contributes or not, store discount cards, performance-based bonuses, discounted stock purchase program and life insurance.

I am curious on why their healthcare is so bad though.


***

***edit I read your link on the pickles from 2003. What I find funny is first that they specifically claim Walmart imports 12 billion in mechandise from China, yet earlier in the article they claim they have sold 244.5 billion in goods in 2002... I am no math major but thats what less than 5% of their total sales! Wow I mean then it goes into the report about the textile company that employed 2600 workers and due to Walmart buying some of its clothes from overseas they had to close a few locations and let go of 1400 workers! That sounds terrbile until you realize that less than two new Walmart locations will more than replace that entire companys workforce.

Then it goes into the point that :

The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy's productivity gains in the second half of the 1990s could be traced to Wal-Mart alone.

Then on to Vlasic... they had 30% increase in sales, and 25% decrease in profits.. as well as "Wal-Mart's business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level".. So had walmart never picked up the company's many other products where would its business been to begin with?

To finish off the article they specifiaclly say:
... Not long after that, in January 2001, Vlasic filed for bankruptcy--although the gallon jar of pickles, everyone agrees, wasn't a critical factor.

Wasnt a factor... once again what did Walmart do to Vlasic?


Just a few other key points from your article:

Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly. "They are tough people but very honest; they treat you honestly," says Peter Campanella, who ran the business that sold Corning kitchenware products, both at Corning and then at World Kitchen. "It was a joke to do business with most of their competitors. A fiasco."

By now, it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient and focused, leaner and faster. Wal-Mart itself is known for continuous improvement in its ability to handle, move, and track merchandise. It expects the same of its suppliers. But the ability to operate at peak efficiency only gets you in the door at Wal-Mart. Then the real demands start. The public image Wal-Mart projects may be as cheery as its yellow smiley-face mascot, but there is nothing genial about the process by which Wal-Mart gets its suppliers to provide tires and contact lenses, guns and underarm deodorant at every day low prices. Wal-Mart is legendary for forcing its suppliers to redesign everything from their packaging to their computer systems. It is also legendary for quite straightforwardly telling them what it will pay for their goods.

Getting ready for Wal-Mart has been like putting Levi on the Atkins diet. It has helped everything--customer focus, inventory management, speed to market. It has even helped other retailers that buy Levis, because Wal-Mart has forced the company to replenish stores within two days instead of Levi's previous five-day cycle.
 
[quote name='Snake2715']This is going to get way off topic with a dead horse subject. ... This can go on and on..and on. I am curious on why their healthcare is so bad though.[/quote]

Agreed. Taking to PM.
 
Personally as a buyer this is terrible but as a Seller this can be great. Also this would not affect a used item seller but people marketing goods that are recent.

I'm telling you, moving to Canada keeps sounding better and better
Click to expand...

Sky Lander but what about free downloading and promiscuous relationships on the Internet?
 
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