Editor's Choice

Editor's Choice
Indie Game Store

Kyle Orland | 20 Nov 2007 12:47
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The comic book and videogame industries are pretty similar. Both rely on niche support from big-spending, highly dedicated fans. Both are slowly expanding in the mainstream market. Both have been revolutionized by the internet and are struggling to find a business model that includes digital downloads.

Yet while independently owned specialty shops dominate the brick-and-mortar comic book business, the videogame retail space has increasingly become synonymous with one name: GameStop. The slow conglomeration of mini-chains like Babbage's, Software Etc. and FuncoLand came to its monolithic conclusion in 2005 when GameStop's merger with EBGames gave them a full 25 percent of the videogame market (a share that's surely increased with the chain's nonstop expansion in the years since). The remainder is almost entirely taken up by big box retailers that sell videogames alongside unrelated products like electronics and home supplies. For most consumers, the small, mom-and-pop game shop is a thing of the past, if it was ever a thing at all.

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"Independent retailers are definitely decreasing," says Kevin Halligan of game distributor Mecca Electronics. "In my five years I've seen a lot of independent guys go out of business. ... It's really hard to compete against GameStop, because GameStop is everywhere, in every neighborhood."

The competition is that much harder because it's not really a fair fight for independent stores. "The No. 1 disadvantage for independent retailers is the whole industry of price protection," Halligan said. Big retailers can order games directly from the publishers and get a refund when those publishers inevitably lower a game's asking price. Independent stores, which overwhelmingly get product from distributors or wholesalers, are out of luck when the price drops come, and they tend to come faster and faster these days. "[This year's] PS2 Madden, EA dropped the price in four weeks," Halligan said. "That was a game where people were confident, they had no problem buying 120 pieces on day one; they figure it's definitely not going to drop because this is Madden. A lot of places really got burned on that."

Even if the price doesn't drop, the margins on new games are so low - around 15 percent - it's nearly impossible for an independent shop to stay in business without trading in more profitable used games. But that doesn't mean you can just ignore the new games, either. "The only two [independent stores] that I've known that have not succeeded did not carry new merchandise to the extent that people would trust that they would have the new games," said Jason Graham, owner of Brockport, New York's Game Players Unlimited. "I seriously spend so much money on new games that I don't make any money on new stuff. But it brings in the trade-ins. How am I gonna get NHL '07 if I don't have NHL '08?"

Just because you sell a company's games, though, doesn't mean they'll help you out with promotion. "Even little things like getting point-of-purchase promotions, [publishers] don't want to send that stuff to us," says Doug Demotta, owner of Reading, Pennsylvania's MicroPlay. "A little poster is a big deal to us. Our competition will get big, thousand-dollar displays of systems, consoles they can put on the floor, and people can try and play. We don't get anything like that."

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