Kevin below posted a story on how Wal-Mart isn't the low price leader for video games. Here's the report in its near entirety:
Consumer
Game Pricing At Retail; Confession Time For WMT
KEY POINTS:
RETAIL PRICING SURVEY: We surveyed seven leading retailers of video game software for best pricing practices and included a count on used game software. We picked 30 video game software products to price including a mix of new and older games for various hardware platforms. Below we highlight the pricing results for the "basket of video game software" by retailer.
Total Price - All 30
Games
% Over
Low Price
#1. Amazon.com $1,134.51
#2. Best Buy $1,164.70 2.7%
#3. Target $1,179.70 4.0%
#4. GameStop $1,189.70 4.9%
#5. Electronic Boutique $1,204.70 6.2%
#6. ToysRus $1,212.69 6.9%
#7. WalMart $1,231.76 8.6%
Average $1,188.25
Electronic Boutique
(used)
$995.70 -12.2%
GameStop (used) $983.70 -13.3%
WALMART IS THE MOST EXPENSIVE RETAILER: We continue to be surprised that retailers generally do not break minimum advertised price (MAP) levels in the video game software category. Much to our surprise, WalMart was the most expensive retailer of video game software according to our survey, boasting an average price point 9% higher than Amazon.com, and 6% higher than Best Buy. Moms, dads, and kids know that GameStop and Electronic Boutique are the video game destination of choice as they accept games on trade-in, have a huge selection, and sell used video games at significant discounts to new. On average, used video game software price points were 13% below the lowest priced retailer of new games and more than 16% lower than the average retail selling price of new games.
GOOD NEWS FOR VIDEO GAME PUBLISHERS: The good news for game publishers is that pricing is holding up very well on new games with no retailer pressuring ASPs. According to our survey, retailers pick their spots and mark down very few games. With a retail mark-up of only 20-23%, retailers appear unwilling to sacrifice profits on video game software...yet.
THE USED VIDEO GAME MARKET IS HUGE: We calculate the size of the used video game market (ELBO and GME) in the U.S. between $630 and $790 million for 2004. We estimate that well over 10% of console software dollar sales at retail come from used video game software (not in NPD). We estimate that over 8% of all video game sales in the U.S. are used games (console, handheld, PC). At some point we think video game publishers like Activision and EA could stick their hand out to share in the profits from used game sales. To date, the importance of the publisher's relationship with specialty retailer outweighs lost sales and profits.
Posted by Bob on May, 10 2004 at 10:03 AM
