Why do game manufacturers use 3rd party retailers?

[Gemini-Phoenix]

A bizarre thought just came to me: Why do game / console manufacturers use 3rd party retailers to sell their wares?

Example: Car manufacturers all have their own unique showrooms. Sony and Panasonic and many other electrical manufacturers all have their specific stores (Ie, Sony Centre). Mobile Phone networks all have their own high street stores as well (Ie, Vodafone shop; O2 shop Etc)

But, these all also use 3rd party dealers. Ie, Sony will also have it's products for sale in Comet / Dixons; Ford will also have it's cars for sale in private showrooms; And Vodafone will have it's products for sale in Carphone Warehouse / Phones 4U Etc...


So, why do Sony / Nintendo / MicroSoft all use retailers (Such as GAME / GameSation) to shift their products? Why is there no "Sony PlayStation Shop" or "Nintendo Store"?

I can understand software being made available in most high street stores such as argos; Woolies; WH Smith; Virgin; HMV etc, but why do they not have their own stores as well? Why is GAME / GameStation the first place we all go to if we want a new Xbox for example? Why can I not go straight to a "MicroSoft Xbox Shop"?


Especially nowadays that each of the three main competitors has enough of a pedigree to do such a thing. Sony currently has three consoles available (Plus variations), as well as a new one on it's way. Likewise, Nintendo has three consoles (Plus variations) on the go as wii speak... After all, Nintendo obviously think Pokemon warrants a store of it's own, so why not one to sell Nintendo only products?


After-thought: Although Sony do have their own stores (Sony Centre), you cannot buy a PlayStation from there. for some reason they do not stock them anymore. Same goes for Sony branded mobile phones.

[JJNova]

You seriously think it's a wise decision to only sell your product at your store, instead of WalMart where someone might pick it up on a whim or be able to compare it to the competition without having to drive between all the stores? As a consumer, driving from the Sony store to the Panasonic store just to compare DVD players is such a hassle, I'd just buy it from the Panasonic store, because it's one block from my house.

[Happy_Dude]

I'v often wondered this. wouldn't it make the product cheaper because
the stores don't have to buy from wholesalers?

[ubikuberalles]

Atari tried to have their own retail stores when they bought the Federated line of stores. It was a total disater. It was mostly a disaster because Atari was sold a bill of goods (Federated was headed for bankruptcy but they disguised their losses in the books). However, during the time Atari ran the stores they tried to sell Atari computers at the stores. They didn't do so well. The salesman at the stores didn't know the product very well and did a poor job pushing it. I remember going to a Federated store when it opened in Albuquerque and I was not impressed. Although the display of computers was excellant (just about every model of Atari computer currently made was on display) the sales people were pathetic. They weren't interested in selling the computers and, when I asked simple questions about the computers, they didn't know the answers. I left the store bewildered and annoyed. All my future Atari purchases were made at either a local independent or mail order.

BTW, the Federated store in town shut down less than a year later when the whole Federated line of stores closed business. Good riddance, I'd say.

[Gemini-Phoenix]

Didn't Commodore have a chain of stores inside other department stores, where they sold Amiga stuff around about the time teh CD32 came out? Specialist chain where the clerks knew what they were talking about... Unlike GAME or GameStation...

[crazyjackcsa]

I think a lot of it has to do with logistics. A company that makes only one product (or family of) Like Microsoft or Nintendo (Sony is a little different) doesn't have the infrastructure is ship, set up staff and basically run a chain of stores, also, why go to a just a game store that only sells say Nintendo games, when you could go to another store than sells them all. It be like shopping for groceries by going to a dozen different stores: The dairy, The butcher, the baker, one location is just easier. A car dealership is different I think only in the fact that it is a big ticket item and these companies from the get go set up the buisines like that.

[Gemini-Phoenix]

But surely if you were, say, Sony, and have a store full of PlayStation games, then everyone who buys a game is putting money into your pocket one way or another. If you compare this to how things are now, you only stand a one in three chance of that money coming your way. Especially if a game is available on all three platforms.

I believe this is why there are so many LE PS2 games out there for games on 3 platforms. The latest being Tomb Raider Legend, which has a HMV LE available for the PS2 version, but no other. Sony are obviously pouring good money into making sure that consumers choose the PlayStation version over the clearly superior competition.

[c0ldb33r]

I'v often wondered this. wouldn't it make the product cheaper because
the stores don't have to buy from wholesalers?
There's a "Sony store" (maybe it's called "The sony store") near me. It only sells Sony electronics.

I find their prices higher than most other places. Much higher than walmart or walmart-ish alternatives. Plus the sales guys are all on commission and they're pushy about it so it's really a pain to go there :roll:

[crazyjackcsa]

But surely if you were, say, Sony, and have a store full of PlayStation games, then everyone who buys a game is putting money into your pocket one way or another. If you compare this to how things are now, you only stand a one in three chance of that money coming your way. Especially if a game is available on all three platforms.

I believe this is why there are so many LE PS2 games out there for games on 3 platforms. The latest being Tomb Raider Legend, which has a HMV LE available for the PS2 version, but no other. Sony are obviously pouring good money into making sure that consumers choose the PlayStation version over the clearly superior competition.

Right, but my point (which I didn't make clear enough ) is this. These companies aren't set up to sell products to the consumer, they are set up to produce them. The Time and money spent to research and set up the infrastructure required would be massive. Shipping, leasing stores, setting up a national chain, staffing, training, depreciation costs all add up. Then you factor into the economy of scale and you probably would have to sell for more than a walmart could anyway. Look at it like this. You sell walmart a game for 20 dollars. It cost you ten dollars to make and you made ten dollars. Walmart sells it for 30 and makes 10 dollars. You ship 1 million copies to Walmart at a very small cost per game. From there you are done. that's it. Now if you open up your own chain of stores, you have to ship country wide, smaller shipments to each store at a higher cost per game to ship, you have to factor in paying the lease, the utilites the wages and everything else and by the time all is said and done, by the time the game goes out the door with the customer, you spent 20 dollars to get it to them. 10 for the actual making of the game, and the rest is built into the cost of keeping the storefront. So you actually made the same profit, but it just cost a bunch more. Sales at your store are lower anyway, because you only sell one product and very few people will go to a store that is that specialized. Why bother? Furthermore, ask any EB employee, the real money is in used games anyway, and the Sony store wouldn't take Microsoft trade ins now would they?

To go back to the car dealership comparison, most dealership money is made on service and financing. Not original sales, leasing alters that a little bit but not a lot. The aren't selling cars, they are selling the service and the financing. The car is just the "vehicle" in which they use to sell the service and financing. Much like Best Buy. They make next to nothing on selling the product itself, but make a ton on their credit department.

[Jibbajaba]

By your logic, why doesn't every brand that manufactures anything that is sold in large quantities have their own store?

Chris

[Kid Ice]

Since this is a gaming thing I'm going to move it on over to modern gaming.

[crazyjackcsa]

By your logic, why doesn't every brand that manufactures anything that is sold in large quantities have their own store?

Chris

Would you go to a store that only sold toilet paper? My logic isn't that things sold in large quantities should have it's own store, I'm saying big box stores can do it cheaper than the Manufacturer could.

I'm trying to make two points here.

The first one: The cost to set up a national chain of stores is difficult and expensive to do. And once it is set up, the cost of operating the chain is higher than dealing with the established chains due to their tremendous buying power.

The second one: People don't want to go to the specialty store to buy things. They want to go to one place, it was that idea that started stores like Wal-Mart. One stop shopping, sure the idea has fragmented into large specialty chains, like Best Buy, or The Gap or whatever. But to fragment it even further into the Nintendo store, the Microsoft Store, the LG store, the Sega Store, the Toshiba Store. Doesn't make sense. Look around where you sit right now. Now imagine driving to a different store to get every item with a different brand name on it? Would you? Could you? ESPECIALLY if the same product was available somewhere else where more products you wanted or needed were?

[playgeneration]

i think it would make sense for Sony to have its own playstation shops, probably not as viable for nintendo or microsoft. There are a massive amount of ps2 games avaliable, but how many of them can you buy in the normal game shops?, they probably only have a selection of 100 different games. Now if there was a playstation shop, they could stock every ps2 game ever made. It would be better for developers who wouldnt have to worry about making all thier profit in the two weeks of shelf space they would normally have to pay a fortune for.

[jdc]

Well, in a perfect world it WOULD be awesome to be able to walk into a shop and buy a launch title from your favorite console but software does indeed have a shelf life. It's the consumers who decide that they don't "want" a title on the market anymore, shown by the ebb in sales. It just doesn't make good business sense to have cost tied up in inventory that doesn't move.

Believe me, there were days that I'd look at my Gamecube inventory and wish that Nintendo would take it all back for credit!! LOL

[SirDrexl]

Yeah, in some smaller towns all they have is Wal-Mart when it comes to buying games. In my town, it's just WM, Kmart, and Blockbuster. The closest game-only store is 30 miles or so away. If some places can't even support a gaming store, imagine how a store that splintered that concept even more by only offering one brand of games would do. Hell, the game-only stores only stay in business because they make the bulk of their money from used games.

Also, it isn't just general consumer products that are going under one roof. Nowadays, Wal-Marts can have a bank, a hairstylist, a vision care center, and a McDonald's right there in the store. During tax season, Jackson-Hewitt sets up shop so people can even do their taxes there.

[Gemini-Phoenix]

Does anyone ever wonder what the high street would be like if we had company specific game stores? If Microsoft, Sony, Nintendo, and some of the third parties such as Ubisoft, EA, THQ, and Activision all had their own stores... Imagine what a Square Enix store could be like... In reality, I know this isn't a realistic possibility, with the exception of maybe a handful of dedicated stores in just the biggest of towns / cities (Ie, London, Manchester, Birmingham, Cardiff etc) ~ It works in Japan for Pokemon...

[Push Upstairs]

I'm pretty sure Nintendo had their own stores in malls, they were called "Captron" I believe.

[j_factor]

There is one Playstation Store, in San Francisco. And Nintendo has their own store in New York City.

I actually think it wouldn't be a bad idea for Sony, Nintendo, and MS to have their own chains. It's not really any different in concept from, say, the Apple store. All three certainly have enough products to fill a whole store.

[Gentlegamer]

I believe a more realistic thing would be for the console manufacturers to lease out retail space inside large retail stores in the electronics section. I believe this is what Nintendo did with their old "Nintendo World" set ups in K-Mart, etc back in the NES era.

[walrusmonger]

The Nintendo World Store is a good example of why these chains wouldnt work. Yes, there is a lot of great stuff you couldn't find anywhere else, but as far as game selection, you can get it all a few blocks away at the Toys R Us in Times Square. They also charge $5 more per game on some titles, for some crazy reason.

MS doesn't really have the loads of licensed products to fill a store, so the only way I could imagine an "Xbox" store is if it had all of Microsoft's computer parts, software, Xbox stuff and games.

The Sony Stores in the USA do have PS2 and PS3 systems/games for sale, but their selection is on the crappy side. The stores are really slick, but I don't see too many people going into them.

[jcalder8]

I've honestly never thought about this at all, mostly because it doesn't make economic sense and it would cost too much and everyone would lose money and probably half a dozen other things I can't think of right now.

It doesn't make economic sense because then MS, Nintendo and Sony would have to start paying rent and employees to hock their wares instead of letting those costs go to someone else. Also then there is the fact that each of them would want exclusive deals. So that would be a MS in one mall, a Nintendo store in another and then Sony would be in a third mall. Look at Coke and Pepsi you can't buy both at the same restaurant. Then we move on to the fact that it doesn't make any sense from a developers stand point. As it stands right now I could walk into any store and think man that PS3 game looks so good I'm going to buy the system and then the game. But if I had to go into a Sony store to do this I wouldn't bother because I don't own a PS3.

[Rob2600]

The Nintendo World Store is a good example of why these chains wouldnt work. Yes, there is a lot of great stuff you couldn't find anywhere else, but as far as game selection, you can get it all a few blocks away at the Toys R Us in Times Square.

Yes, Nintendo already has its own store: Nintendo World in NYC. It isn't a chain though. I go there sometimes to buy shirts and other gifts, but not games.