How does Gamestop make money?

[quote name='adidas']companies like taketwo witch owns rockstar games and ea have their own distributors which is a company within a company.. Take two games owns rockstar games, 2ksports, 2k games and has them distribute under taketwo games... .. 20% to 30% is enough.. Apple ipods only have 10% markup... and everyplace that sells them seems to do well.. Many food places that sell food giant food, safeway only have 2-4% profit margins. Places like costco only have between 5-15 % profit margins. Circuit City has 22% and best buy is roughly around 25%..[/QUOTE]

You are driving this so far off topic by comparing apples and oranges. For at least the fifth time this thread, we are not talking about Best buy, costco, etc... (Hence the fucking thread title.) We are talking about Gamestop and Gamestop does in fact use distributors as do most VIDEO GAME RETAILERS.

Your iPod comment is so far off base that it clearly shows flame bait. WTF does a 10% mark up on an iPod have to do with Gamestop's new game cost? 10% mark up is not enough to run a successfull business. I love this thread, I seriously do. I love coming in here reading what all of the arm chair quarterbacks who happen to have worked at Best Buy for a holiday season happen to think it takes run a good business.

(10%) Sounds like some good profit to me at the retail level
Click to expand...

10% is a joke. Do you honestly think that rent, utilities, insurance, healthcare marketing, and staff salaries can all be met somehow with only a 10% profit margin? Let alone actually turning a profit? No fucking way. I'm done with this thread as the intelligent people on the first few pages clearly saw logic and common sense left a long time ago.

You are both covering old, irrelevant ground that has no bearing on the topic at hand and you have no experience in the matter. And if you would actually read the thread from the beginning and pay attention when we all say "LOSS-LEADER", I beg both of you, look it up.
 
Gamestop makes the moneys by giving u jack for a game and selling it at tripple jack! 300% profit... everyone has stated this before.

But what people also seem to forget is the strat guides and accessories. "If you buy the strat guide we'll give you 20% off!" Kiddie: WOWZAS! *buys strat guide* theres another $12+ profit for Gameshaft.
 
More of a "convenience" to the game developers / publishers. The new games draw customers to the stores. Then Gamestop traps them with a used copy for $5 less. It's the ol' 1 2 punch. [quote name='Roufuss']At the most, like $4 a copy.

Most store sell new games only as a conveinence. Plus, with PC games, the profit stops right there, since they won't be getting that game back used to sell again at a high profit margin.

The only games I know that are marked up by a good $9 - $10 are 360 games.[/quote]
 
yep giving store credit of 20 bucks for LoZ:CE then turning around to sell it for 75 bucks USED 4 years ago! :whistle2:( Geez I wonder if its still sitting on the shelf at that store I sold it at.
 
[quote name='rabidmonkeys']You are driving this so far off topic by comparing apples and oranges. For at least the fifth time this thread, we are not talking about Best buy, costco, etc... (Hence the fucking thread title.) We are talking about Gamestop and Gamestop does in fact use distributors as do most VIDEO GAME RETAILERS.

Your iPod comment is so far off base that it clearly shows flame bait. WTF does a 10% mark up on an iPod have to do with Gamestop's new game cost? 10% mark up is not enough to run a successfull business. I love this thread, I seriously do. I love coming in here reading what all of the arm chair quarterbacks who happen to have worked at Best Buy for a holiday season happen to think it takes run a good business.



10% is a joke. Do you honestly think that rent, utilities, insurance, healthcare marketing, and staff salaries can all be met somehow with only a 10% profit margin? Let alone actually turning a profit? No fucking way. I'm done with this thread as the intelligent people on the first few pages clearly saw logic and common sense left a long time ago.

You are both covering old, irrelevant ground that has no bearing on the topic at hand and you have no experience in the matter. And if you would actually read the thread from the beginning and pay attention when we all say "LOSS-LEADER", I beg both of you, look it up.[/quote]

LOL, I mean Amen! Need a partner? :applause:
 
[quote name='marctina']
Console Owner: On a $60 game, the console owner is paid about $7 in royalty fees. Blades and razors.

Retailer: There's about $12 in markup on an average game.

Design: The artists and designers get about $25 from the sale, which is comforting; nearly half of what you pay goes towards making the game look and feel good.

Engineering: The programming and encoding of the game costs about $12, which includes localization.

Marketing: $7 goes to advertisements and keeping the game "funky fresh" in the eyes of consumers

Corporate Costs: Only about 20 cents goes towards corporate salaries and other executive positions."


So looks like the retailer makes around a 20% profit on an X-Box 360 game.
Costco generally sells a 360 game for around 53.99-54.99, which is around $6 profit per game, so about %10.

Sounds like some good profit to me at the retail level :)[/QUOTE]

I believe this... part of Best Buy's discount is to sell stuff to the employees at cost, and I remember Gears of War ended up costing me $48.50 there when it came out.
 
I know I said I wouldn't come back but this is too good. As most've you have seen from the homepage article, DVD Empire is getting out of the new game business and two of the main reasons for the change are exactly what I and many others had said multiple times:

2. Can’t Make Money:
You may not care whether or not we make money, but we cannot continue to pay to sell video games. It is impossible for us to make money selling video games. Video Game Manufacturers set the price using what is called MSRP (Manufacturers Standard Retail Price). 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 only way we can make a profit on an item is to sell it over the MSRP, but unfortunately we are not allowed to do this. 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.

3. No Price Protection + Games Prices Drop Quickly:
Surprise, Surprise….we do not receive price protection. Price protection is a way to decrease the risk of purchasing a product that may not sell. It puts the responsibility of producing a quality product in the hands of the manufacturer. When something doesn’t sell, the manufacturer reduces the MSRP. If the MSRP falls, price protection would give us our initial investment back. Again, we are not big enough to receive it. We all know how fast games devalue in prices; this is due to the fact that 80% of the games created are crap. So take the fact that we only make $5, now if the price of a game drops $20, we are now losing $15 every sale.


Thread closed...

http://www.dvdempire.com/index.asp?userid=99365301263680&tab_id=3&site_id=2&site_media_id=0
 
[quote name='rabidmonkeys']I know I said I wouldn't come back but this is too good. As most've you have seen from the homepage article, DVD Empire is getting out of the new game business and two of the main reasons for the change are exactly what I and many others had said multiple times:[/QUOTE]

Looks like you forgot to read the whole thing. How about this part?:

"5. Distribution is Dumb:
Since we are not one of the top game retailers we have to buy through a middle man or distributor."

They are a small to medium business and have to buy through a middleman. This thread was talking about a B&M retailer (top game retailer). Huge difference, which means they can't buy directly from the publisher.

This is not what we were talking about. Sounds like DVD empire just got squeezed out buy the big boys, and now they are venting.
 
You must log in or register to reply here.
bread's done
Back
Top