Video Game Retailers to take VAT Rise on the Chin
Vat Rise Will Not Affect Game Retail Prices
A selection of retailers, speaking with games industry website MCV, have expressed their concerns regarding the upcoming hike in VAT, due to be implemented on January 4th next year.
Some of those concerns centre around asking publishers to lower the cost price of games stock bought by the retailers as the VAT rise will reduce their profit margins when it is put into place. The retailers would prefer that the publishers work with them to help keep the price of newly released titles below £40.
Some of the largest publishers in the games industry however, such as EA, 2K, THQ and others, have not offered any comment in regards to whether they intend to lower their prices. The only thing they have clearly communicated so far is that the cost pricing of new titles will stay the same through and beyond the New Year.
This has left buyers of major retail chains with the situation of having to cut the volume of stock they buy from the publishers as they remain quite on any sort of joint strategy to combat the upcoming change in January. Some of the independent games chain stores may have to rely on pre-owned sales only as they consider not stocking new releases if there is no profit to be made.
The boss of Barkman Computers, Nick Elliot, said of the matter that: “There have been some Christmas titles that we are being extra careful on our stocking. The margins we operate on are miniscule.”
The MD of Game On, Matthew Brady, added his thoughts on the situation by sying that: "The issue is with new games – if publishers don’t adjust cost prices it’s pointless to stock them. Customers already think that the RRP is £39.99 and some are calling for it to be dropped further. We would be looking for some form of price movement from publishers.”
An unnamed publisher made light of retailer fears over the VAT increase by stating that: “Stores were more than happy to not change prices when VAT was cut – they surely understand this situation works both ways?”
Seems like a difficult situation for retailers as they call for the aid of publishers over the matter. Do you think the two entitites should work together to maintain their current profit margins? And do you regularly buy from stores anyway or do most of your game purchases come via online means? Any thoughts, feel free to post them down below.
Source: MCV
Some of those concerns centre around asking publishers to lower the cost price of games stock bought by the retailers as the VAT rise will reduce their profit margins when it is put into place. The retailers would prefer that the publishers work with them to help keep the price of newly released titles below £40.
Some of the largest publishers in the games industry however, such as EA, 2K, THQ and others, have not offered any comment in regards to whether they intend to lower their prices. The only thing they have clearly communicated so far is that the cost pricing of new titles will stay the same through and beyond the New Year.
This has left buyers of major retail chains with the situation of having to cut the volume of stock they buy from the publishers as they remain quite on any sort of joint strategy to combat the upcoming change in January. Some of the independent games chain stores may have to rely on pre-owned sales only as they consider not stocking new releases if there is no profit to be made.
The boss of Barkman Computers, Nick Elliot, said of the matter that: “There have been some Christmas titles that we are being extra careful on our stocking. The margins we operate on are miniscule.”
The MD of Game On, Matthew Brady, added his thoughts on the situation by sying that: "The issue is with new games – if publishers don’t adjust cost prices it’s pointless to stock them. Customers already think that the RRP is £39.99 and some are calling for it to be dropped further. We would be looking for some form of price movement from publishers.”
An unnamed publisher made light of retailer fears over the VAT increase by stating that: “Stores were more than happy to not change prices when VAT was cut – they surely understand this situation works both ways?”
Seems like a difficult situation for retailers as they call for the aid of publishers over the matter. Do you think the two entitites should work together to maintain their current profit margins? And do you regularly buy from stores anyway or do most of your game purchases come via online means? Any thoughts, feel free to post them down below.
Source: MCV
Comments
Old Codger 2 Dec 2010 11:20
1/1
I buy my games online mostly but sometimes I can find a decent preowned bargain in Game or Gamestation. It would help if publishers and retailers could work together to keep prices consistent and fair to the consumer ... but I doubt it'll happen anytime soon unfortunately.