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Best Buy GCU is being Discontinued?


#511 lionheart059   CAG in Training CAGiversary!   305 Posts   Joined 5.8 Years Ago  

lionheart059

Posted 20 May 2018 - 11:38 AM

Oh, since people mentioned it in THIS thread, it must be true! :)
 
Consoles don't make much money at all, and often are loss leaders.  Way back when I worked at EB in college, it was told to us that if we sold a SNES without an attached game and the customer used American Express it was actually a loss.  Games are where the margin lies, it has always been like that.  If the console margin is razor thin, and the games margin are razor thin, then why would ANY retail business deal with gaming at all?  Do the logic here.  They make a ton on games.  They make money on GCU games, maybe not as much as they would like, but they do (except for maybe big sales, like BF which is why they nixed that two years back).  No program would operate at a loss as long as this one if it didn't.  And they definitely would not have let it stack with other discounts (minus price match) from the beginning if it was a loss.
 
As far as how easy it is, the answer is in your post.  They had to outsource it to specialists because it isn't easy to do in house.  BB simply isn't set up for that sort of thing, it would be cheaper to just ride it out and as we agree, most people are done by early 2020.  Then you can just set an end date and deal with the people that renewed for a decade on a case by case basis.

Do you have data showing it's not true? Oh, when you worked at EB, a company that no longer operates in the US because they weren't able to keep up with another specialty retailer, it must be true! (EB "merged with", was bought out by, GameStop over a decade ago - except their international stores, which were considered somewhat separate and are now completely separate from the original company)

Do the logic here. GCU was clearly never designed to make money through the sale of a discounted item - BB knew that buying 2 games would already "lose" them a dollar amount greater than annual admission. The point was to drive people into purchasing more related products like accessories, and driving use of reward certificates.

Also - I never said it was outsourced to specialists. It was outsourced to the lowest bidder, and could just as easily have been done in-house - but the cost of the contract was less than the cost of paid hours for our own staff. It's basic clerical work, not rocket science - we gave them an Excel sheet, they plugged in a few pieces of account information, and put the pages in a pile so the next person could look at a cell, cut a check, and move on. It's exceptionally easy, and they only headache it would cause Best Buy would be choosing which contact labor company to send it to.

http://latimesblogs....video-game.html the study for this article (8 years old) had retailer margin at $15 on a $60 game - meaning GCU would give a profit of 2 and change, which isn't exactly going to pay overhead costs associated with a b&m

https://www.google.c...akdown-514/amp/ here's another article, referencing the same rough figures. You can find more, I'm sure, and they're all fairly consistent the the amount going to the retailer is roughly $15, not the vast pile of cash you seem to think it is.

#512 lionheart059   CAG in Training CAGiversary!   305 Posts   Joined 5.8 Years Ago  

lionheart059

Posted 20 May 2018 - 11:42 AM

FYI - if your GCU expires Before your preorder’s release date - the GCU discount goes away. My GCU expired last year and I had some amibos preordered and when they shipped it was at full retail price. It was a big pain in the ass...


I wonder if that's still the case when paying with PayPal, since the first payment is debited and applied when you preorder instead of when the item ships

#513 jsb2642   CAG Veteran CAGiversary!   68 Posts   Joined 8.0 Years Ago  

Posted 20 May 2018 - 11:53 AM

What exactly is special about this newsweek article that keeps getting posted? Besides a blatant attempt to give them clicks?

There are no revelatory bits of information to be gleaned from there. It is just speculation. Stop giving them clicks.

Yet there's how many posts speculating about whether GCU cost Best Buy money on every sale? I'm more inclined to believe publishers pressured Best Buy to drop the program after all these years than Best Buy suddenly realizing how much money they were losing. It took a few years but other retailers have been basically price matching GCU, or at least coming close to doing so in the last year. Maybe the larger retailers pressured the publishers since their profit margins were shrinking or, more likely, the publishers refused to devalue their product by competively pricing their digital products to compete with the same retail product, effectively dropping the MSRP of a new game.

#514 gepet0   CAGiversary! CAGiversary!   1281 Posts   Joined 12.9 Years Ago  

Posted 20 May 2018 - 12:07 PM

I haven't been this sad since we lost the guy who use to hook us up with Amazon digital games, I think his name was Tony.   Great loss but hopefully they can think of something else. 



#515 CheepyDee   Hello I am Best Buy GCU's Scolding Mother Banned   304 Posts   Joined 0.8 Years Ago  

CheepyDee

Posted 20 May 2018 - 12:14 PM

I don’t think they’d let it run past 2018, forget 2020,2021,2022,and 2023, most people who abused GCU are already members till 2030
They won’t honor past this year, but question is, will the guys who have paid $15 for 2 years be honored...most likely not, BBY is taking a tip,from GS


I mean, I paid for the service and I have it till Nov 2020. Unless they refund us, can just...do that? You know, take money for something then not deliver that thing but keep the money.

#516 nordic1229   The Ultra n00b CAGiversary!   31 Posts   Joined 3.2 Years Ago  

nordic1229

Posted 20 May 2018 - 12:52 PM

I mean, I paid for the service and I have it till Nov 2020. Unless they refund us, can just...do that? You know, take money for something then not deliver that thing but keep the money.

Their terms of service says GCU can be discontinued at any time for any reason. But they would face some awful backlash since it's a pay service and not free.



#517 smallsharkbigbite   CAGiversary! CAGiversary!   251 Posts   Joined 9.7 Years Ago  

smallsharkbigbite

Posted 20 May 2018 - 01:06 PM

Do the logic here. GCU was clearly never designed to make money through the sale of a discounted item - BB knew that buying 2 games would already "lose" them a dollar amount greater than annual admission. The point was to drive people into purchasing more related products like accessories, and driving use of reward certificates.

http://latimesblogs....video-game.html the study for this article (8 years old) had retailer margin at $15 on a $60 game - meaning GCU would give a profit of 2 and change, which isn't exactly going to pay overhead costs associated with a b&m

Gamestop is a public company which has financials available.  They primarily sell video game hardware and software.  Their Gross margin in 2017 was 33%.  For reference, in 2016 it was 35%.  In their initial section to shareholders they mention increases in video game hardware and software sales and don't mention accessory sales.  Depends on what you believe, but it's my guess that video game software margins are higher than video game hardware margins, thus for the 33% to hold true for Gamestop, software margins would have to be higher than 33%. 

 

The problem with the articles you post is they never really get to how they estimated the video game cost.  Reality is big companies like Best Buy get favorable terms and other potential rebate programs that aren't disclosed.  And they will never be disclosed because usually it's illegal to release those terms because the seller doesn't want everyone showing up to their door saying so and so gets it for this so give it to me for this.  It's kind of like the BOM that get released on Apple products.  Those get generally accepted as costs for those products, but according to Apple's CEO they are wildly inaccurate.   But then again, he's not legally allowed to correct those reports because his pricing contracts are proprietary. 



#518 jimbo8574   CAG Veteran CAGiversary!   7603 Posts   Joined 8.9 Years Ago  

Posted 20 May 2018 - 01:27 PM

Many others do rewards points etc. CC that doesn't restrict you to one store...

Hell GS does rewards as well.

 

Most of my rewards from BB is from game purchases anyway, rarely do I buy anything not game related there. Now I have zero reason past my GCU end date.

 

Nintendo hardest hit, once GCU ends... My Switch purchases die.

Where do you buy electronics stuff normally?  I have Walmart, Target and BB.  I will buy at which ever has what I want at the best price.  Best Buy has the best selection.  Amazon I guess is also an option as well.  People need to remember BB sells a lot more then Video games.  They are an option for home appliances too.  I would have to think they looked at the numbers and figured out GCU wasn't really that important to their bottom line.  

 

Personally I have bought less from them over the last few years when they nerfed the points for non elite and elite plus people.  The points they give just didn't add up to anything for me to be concerned with.  

 

But if I need something and they have a good price on it I still will buy it there.  I am not going to boycott them over the change in their points system a couple years ago nor am I going to boycott them over discontinuing GCU.   As always I shop for the best deals, availability and convenience. 



#519 mrclutch   CAGiversary! CAGiversary!   3869 Posts   Joined 7.2 Years Ago  

Posted 20 May 2018 - 01:33 PM

My dad just bought a fridge at BBY so there’s that,

#520 lionheart059   CAG in Training CAGiversary!   305 Posts   Joined 5.8 Years Ago  

lionheart059

Posted 20 May 2018 - 01:41 PM

Gamestop is a public company which has financials available.  They primarily sell video game hardware and software.  Their Gross margin in 2017 was 33%.  For reference, in 2016 it was 35%.  In their initial section to shareholders they mention increases in video game hardware and software sales and don't mention accessory sales.  Depends on what you believe, but it's my guess that video game software margins are higher than video game hardware margins, thus for the 33% to hold true for Gamestop, software margins would have to be higher than 33%. 

 

The problem with the articles you post is they never really get to how they estimated the video game cost.  Reality is big companies like Best Buy get favorable terms and other potential rebate programs that aren't disclosed.  And they will never be disclosed because usually it's illegal to release those terms because the seller doesn't want everyone showing up to their door saying so and so gets it for this so give it to me for this.  It's kind of like the BOM that get released on Apple products.  Those get generally accepted as costs for those products, but according to Apple's CEO they are wildly inaccurate.   But then again, he's not legally allowed to correct those reports because his pricing contracts are proprietary. 

You're right, Gamestop DOES have financials publically available!  Which is fantastic, because it showcases the vast difference in profit between used and new items, including software, and makes it easier to differentiate between profit of each (if you dig into the data available).  More importantly, it shows us that the profit margin on "new" software is slightly below 25%.  25% of $60 is $15.  So Gamestop's numbers are actually very in line with the statement made multiple times that the margin on a new game is roughly $15.  The margin on a console, btw, was around 13%.  These margins are considerably higher on used items, which is what leads to the greater overall profit margin when lumped together (tho from their most recent earnings report, New sales rose while used dropped, but that's the Switch for you).  The gross profit margin of 33% is the combination of all items sold (not just consoles and games, though they do make up the bulk - That number actually includes accessories, collectibles, etc.  Anything sold by the company at a profit).  The data supports the assertion that the profit margin on a brand new, $60 game is roughly $15 (give or take a bit, obviously, since the percentage is an average and not a standard).

 

Tho there is another report that gives the profit margin as 21% on new games ($12.60), so there's that.  The profit margin on used is damn near 50%.  You can read the (brief) article and see the chart at https://www.engadget...ful-chart-form/  or dig through the raw data yourself.

 

But at the end of the day, the simple fact is that the profit margin on a game sold with GCU is virtually non-existent, despite claims to the contrary, and depending on which you go by (21% or 25%)  is between a few cents and a couple dollars.

Man, thanks for reminding me I could just look at Gamestop's financials.  Especially since the full earnings data breaks down all the info so well.



#521 Thebacklash   Now Drinking: Four Roses Single Barrel CAGiversary!   1868 Posts   Joined 3.8 Years Ago  

Thebacklash

Posted 20 May 2018 - 01:44 PM

Where do you buy electronics stuff normally?  I have Walmart, Target and BB.  I will buy at which ever has what I want at the best price.  Best Buy has the best selection.  Amazon I guess is also an option as well.  People need to remember BB sells a lot more then Video games.  They are an option for home appliances too.  I would have to think they looked at the numbers and figured out GCU wasn't really that important to their bottom line.  

 

Personally I have bought less from them over the last few years when they nerfed the points for non elite and elite plus people.  The points they give just didn't add up to anything for me to be concerned with.  

 

But if I need something and they have a good price on it I still will buy it there.  I am not going to boycott them over the change in their points system a couple years ago nor am I going to boycott them over discontinuing GCU.   As always I shop for the best deals, availability and convenience. 

 

True.

Most of my non game purchases at BB have been due to convenience though. *most* times I could beat BB's prices on Amazon/walmart etc. But waiting for it to arrive vs just getting it today...

I bought my TV there, but could have saved $40 and had it shipped... and then there's the risk of it being damaged or i'd would have hoped I could get it held at UPS/Fedex store so it wouldn't be left at my door to be stolen.

Bought my dishwasher there also, same model was cheaper online.. but 5+ days to get here. Easier to just go pick it up that day.

 

Also I can avoid tax with Amazon sometimes if its the same price as BB.

When GCU ends i'll probably still look at their website, but actual purchases will be limited.



#522 lionheart059   CAG in Training CAGiversary!   305 Posts   Joined 5.8 Years Ago  

lionheart059

Posted 20 May 2018 - 01:47 PM

True.

Most of my non game purchases at BB have been due to convenience though. *most* times I could beat BB's prices on Amazon/walmart etc. But waiting for it to arrive vs just getting it today...

I bought my TV there, but could have saved $40 and had it shipped... and then there's the risk of it being damaged or i'd would have hoped I could get it held at UPS/Fedex store so it wouldn't be left at my door to be stolen.

Bought my dishwasher there also, same model was cheaper online.. but 5+ days to get here. Easier to just go pick it up that day.

 

Also I can avoid tax with Amazon sometimes if its the same price as BB.

When GCU ends i'll probably still look at their website, but actual purchases will be limited.

Buying anything that isn't a game or movie from BB has usually been convenience for me, too.  Like, I'm much more comfortable going to a store and buying a TV than I would be having it shipped.  Same thing for laptops, computer components, etc.  As for anything else (movies, random appliances, etc) that I'm less concerned about... it's always just come down to where it was on sale.



#523 Z-Saber   Dancing is about butts now CAGiversary!   5979 Posts   Joined 13.7 Years Ago  

Posted 20 May 2018 - 01:50 PM

Best thread

#524 suggsisrandom  

suggsisrandom

Posted 20 May 2018 - 02:01 PM

So much for my Best Buy credit card saving me extra.

#525 miyamotorola   I have mild to moderate eczema CAGiversary!   3534 Posts   Joined 5.3 Years Ago  

miyamotorola

Posted 20 May 2018 - 02:13 PM

Without GCU I'm just an overweight virgin in his late 40s with no friends and who pretends to be CW's The Flash while home alone by shaking my hand vigorously.

#526 Confucius   Corporate Shill CAGiversary!   16273 Posts   Joined 10.4 Years Ago  

Posted 20 May 2018 - 02:16 PM

The discount only shows up in cart now.

 

oh that's good.  thanks.



#527 bob101910   Cammy's Cat CAGiversary!   4274 Posts   Joined 7.6 Years Ago  

Posted 20 May 2018 - 02:36 PM

Employee yesterday said that they will let me use it until it expires.

#528 jimbo8574   CAG Veteran CAGiversary!   7603 Posts   Joined 8.9 Years Ago  

Posted 20 May 2018 - 02:36 PM



But a refund how? They can't just put money back on a credit card, the transaction may be years old. Do you make people go to the store to cash it in? How does that work? The logistics behind refunds would be more trouble than it is worth, and the fact that people do have a legitimate claim of "damages". I paid money for the terms of the program for the set period of time and they choose to not honor it. They do have some weasley wording in the terms, but those things are not always enforceable just because they say they are. Many states have laws to prevent things like that. The legal costs, particularly with 50 unique sets of state laws would be astronomical.


I don't think this is that hard. A few months ago Microsoft did away with their streaming music service. They refunded me the points I spent and a small bonus IRC for my "trouble". How many GCU subs run past 2020. The average customer probably didn't buy multiple years like many of did.

Mine expires January 2020. If they left it active through 2019 and sent me a GC for $30 I would be more then fine. I paid less than $30 for a couple of those years anyway.

Outside this forum and one other I don't know anyone with GCU. Let alone anyone with an experiation date well past 2020.

#529 ritchardf  

Posted 20 May 2018 - 02:38 PM

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#530 blackwaltz34   CAGiversary! CAGiversary!   1297 Posts   Joined 12.8 Years Ago  

blackwaltz34

Posted 20 May 2018 - 02:38 PM

FYI - if your GCU expires Before your preorder’s release date - the GCU discount goes away. My GCU expired last year and I had some amibos preordered and when they shipped it was at full retail price. It was a big pain in the ass...

Damn...did not know this. Mine expires late October so I was hoping to use it on the major holiday games.

Edit: I guess I'll start looking in games with Amazon as a backup. How long has Red Dead 2 been de-listed on Amazon and Best Buy?

#531 Zimmy   CAGiversary! CAGiversary!   893 Posts   Joined 14.3 Years Ago  

Posted 20 May 2018 - 02:39 PM

Amazon could not be happier.  Let us see how quick they can cancel their "Prime" saving on new games.



#532 Blaster man  

Blaster man

Posted 20 May 2018 - 03:01 PM

Back when the service was $120 I called it “suckers club unlocked” because a $120 membership was really high. When it came down to 30 bucks I signed up and it’s been great. I didn’t think it would last at that price.

Don’t worry though, I have faith that Best Buy will either let you ride out the rest of your membership or make good on it. I bought the first HD-DVD player from Best Buy when it was released. Years later when blu ray won and HD-DVD was discontinued, Best Buy sent me a $50 gift card as an apology/compensation. They didn’t even have to do that, it wasn’t their fault. I’m sure they’ll handle the discontinuation of GCU in a way that doesn’t push customers away.

#533 Joe Fongul   Slave to the Grind.. CAGiversary!   1236 Posts   Joined 14.9 Years Ago  

Posted 20 May 2018 - 03:02 PM

Just like the end of the coupons at K-Mart, GCU will be missed. Lately, I haven't used my membership as much due to easy flips at GS, but I always rely on ordering niche games at a discount.

I would not be surprised if BB announced something new during E3 regarding a new program. They have in the past put out press releases during E3 & made changes to GCU during that time (like the time they dropped the membership price to $30)

#534 Bleedingwickedly   CAG CAGiversary!   2716 Posts   Joined 7.2 Years Ago  

Bleedingwickedly

Posted 20 May 2018 - 03:04 PM

While I haven’t read the full thread. Maybe they don’t want the new subscribers, that way in 2 years, they can quit selling games? CD sales are ending this summer (I’m surprised it took this long). While CDs and games are different, it’s still physical media. Could let everyone have it until theirs expires. And the people with more that 2 years remaining will be dealt with case by case. Mine doesn’t run out until March 2020, so if they honor most of that I’d be happy. While I’ve enjoyed GCU, and never understood while some people didn’t, I’ll end up saving money from not making a purchase because it’s cheap.

Regardless going to use my B.B. CC to Pre-Order anything I’m interested in no matter how far out. Just in case they pull the plug sooner. I can always cancel if something happens. I haven’t did many preorders with my B.B. card, does it put a hold on the card until release? Or does it drop off like a normal card?

I’ve never had an issue with BB, they’ve had great deals and great service. It just doesn’t sit right with me that they got rid of it without a statement or announcement. They didn’t mention it until multiple people called them out on it.

#535 kelo360   CAGiversary! CAGiversary!   1705 Posts   Joined 8.6 Years Ago  

Posted 20 May 2018 - 03:12 PM

So you can preorder games while your GCU is still active and get the discount if GCU is expired on the games release date?

#536 The Questyen   Guess I'll just stumble on home to my cats CAGiversary!   2435 Posts   Joined 12.3 Years Ago  

The Questyen

Posted 20 May 2018 - 03:20 PM

Back when the service was $120 I called it “suckers club unlocked” 

Do you have a netflix special? Because you are hilarious. 



#537 DannyEndurance  

DannyEndurance

Posted 20 May 2018 - 03:22 PM

So you can preorder games while your GCU is still active and get the discount if GCU is expired on the games release date?

Yes, sir.



#538 skiizim   CAGiversary! CAGiversary!   9886 Posts   Joined 10.0 Years Ago  

Posted 20 May 2018 - 03:24 PM

I feel like I just left the beach rummaging through this thread.... geez

 

a3c744087ed46cf4d6979b078758c8ea--comic-



#539 kelo360   CAGiversary! CAGiversary!   1705 Posts   Joined 8.6 Years Ago  

Posted 20 May 2018 - 03:28 PM

Yes, sir.


Thanks. Hoping they add Battlefield V to the $10 cert club after E3.

#540 chibuki   μ's Music Start! CAGiversary!   53 Posts   Joined 7.9 Years Ago  

Posted 20 May 2018 - 03:35 PM

In addition to GCU being scrapped and seeing Amazon is also making it hard to preorder new physical games, I have a feeling publishers forced their hands to stop selling new games below the suggested retail price. Case and point, Red Dead Redemption 2 physical copy is still available at Gamestop, Target, Wal-Mart, all of which are retailers who don't do 20% off on game preorders.