Originally Posted by
WCP
Actually, for the biggest retailers, this isn't exactly true if your not named Call of Duty, Halo or God of War, etc, etc. When Wal-Mart and Target and Best Buy place an order on a game like Portal 2, they have a contingency plan built into the deal where they have an "out" so to speak, if the game doesn't sell well.
Basically, it works something like this:
The Wal-Mart buyer will tell Electronic Arts (I'm assuming they published Portal 2, but not sure) that they're willing to purchase say 1 million copies of Portal 2, with a stipulation, that if the game isn't moving off their shelves according to schedule, that they can get a discount proportionate to the discount they are now having to give to get the units to move at a pace they are willing to deal with. This discount, would then equate to credit that the buyer could use on future purchases of EA published games. It's a bit more complicated than that, but that's kindof a basic breakdown of it.
Having said all of that, a small retailer might not get those same kind of terms, and might really be taking full risk if a game doesn't move off shelves. The bigger the retailer, the better the terms. The less hype on a game, the better the terms. The smaller the retailer, the worse the terms, the more hype on a game, the less the terms, etc, etc.