The EA Store?

I really don’t think the big game publishers would get into retail any time soon because they need to focus on making games that sell, but I do think it’s a potentially interesting strategic direction. And when I say strategic, I mean “money-makin’, money money-makin’”.

I offer two reasons why.

For one, current retailers like GameStop and Best Buy take about 20% of the retail price. So out of your $60, they make $12. Well, if you had your own retail store, guess what? You take that $12 for yourself! That’s a real bump to your profit margin. Heck, you could even try to price your titles a few dollars cheaper than GameStop, and still improve upon your existing margins. But, nobody likes a price war so let’s stick with $60 like everyone else.

Reason two: become a player in the bountiful used games market. Currently, GameStop is the place for buying and selling used games, and they’re pretty much running a racket. They buy your used game for an insulting amount, say $12 for a brand new title, and then sell it in their enormous Used section for $55. (FYI, GameStop gets 100% of that revenue) Sounds crazy, right? But they do that because they can, and no one is providing any other options for game sellers (this just in: Amazon is making a run at this market). Let’s say you’re EA. You could pay “just a little bit more” for used EA games to get people in the store, but then could sell more EA games to them, used AND new! That’s a lot of sales just for EA.

And the timing might be right to do this soon. Commercial real estate is not in the best shape, so you could get a lot of retail space for not a whole lot of cash.

Who could actually do this? I think only EA and Activision could pull this off. They have large game libraries, and their brands are pretty well-known. The rest of the publishers either have smaller libraries or are in rough financial shape so it would be a difficult task.

Of course, it wouldn’t be easy for EA or Activision either. Launching a retail store is an expensive and complicated exercise, but maybe there will come a time, when the “business needs to grow”, and retail becomes an attractive option.