Is the age of discounts over?

[Felix]

Why would publishers care about the retail price? They get paid the same amount by the retailer, and make the same profits.

Assume:

Hobby stores grow the market demographic.
Discount retailers do not grow the market demographic.​

The publisher would care about the retail price because its future revenue growth is ensured by a growing market demographic. The publisher might get paid the same amount per book sold by the retailer, but if they can form contracts that keep their product out of retailers that don't grow the market, they funnel revenue through retailers that will grow the market. In the long run the market will grow, and the publisher will have higher revenues from retailers ordering more inventory for the growing market.

They expect to lose the customers who purchased only discounted material; they hope to gain new customers that will enter the hobby stores, who would not have been gamers had the hobby store gone out of business. This is predicated upon how accurate those assumptions are. I imagine publishers have put some time into finding out if they're true.


EDIT:

In other words, any producer stupid enough to do this is almost too stupid to deal with anyway, and has probably got a history of thunderous stupidity.

Heh. I agree with you completely, but I've seen companies do dumber things for the short term dollar chasing. I'm just-a speculatin'

My analysis suggests that this strategy is a long-term, not a short-term one. They don't mind that large-scale or internet retailers can reduce fixed costs to sell cheaper; they care that this industry is nurtured best in a small scale FLGS environment.

 

[Festivus]

It will be interesting to see what effect this has in the long run. I like Amazon for the discount but I do still go to the FLGS and drop money for stuff too. Overall, if prices rise at Amazon I will likely not spend any more at the FLGS, but will just buy less all around. Things are only getting more expensive, this won't help my budget any.

 

[Delta]

Felix has it. That's why Mr. Delancey put "And the publishers already know that the full-service retail model is the best way to grow their businesses" in boldface. That's the whole crux of it, that all publishers are absolutely totally convinced of those assumptions already, and have been for years.

 

[Schmoe]

After this decision, if they want to force everyone to sell at X + Y, and not at a discount (X + Y - Z), all they're really accomplishing is that a lot of retailers (who use the discounts as a way to get people in the virtual door) like RPGShop or Amazon will just say "nah, call us when you come to your senses" and they'll be back to just selling their products on their own site with the same visibility problems.

This is the farmers killing the goose that laid the golden eggs because they wanted ALL the gold all at once, instead of having the foresight to see that a steady stream of a smaller amount would net them more in the long run.

In other words, any producer stupid enough to do this is almost too stupid to deal with anyway, and has probably got a history of thunderous stupidity.

I strongly disagree. A retailer is unlikely to refuse to carry an in-demand item that makes money just because they can't discount it past a certain point. That's shooting themselves in the foot. Once a product is established, most retailers have a strong incentive to subject themselves to the publishers' restrictions.

With a new product, the publisher cares more about market exposure and less about retail price, and is therefore less likely to impose any sort of discounting restrictions.

I also find it hard to believe that publishers/producers will flat-out prevent items from being sold at any less than SRP. More likely they will restrict the level of discount, thereby still allowing for some sort of sale, at the retailer's discretion.

So whether the product is new or established, retailers will still want to carry the product. If it's new product, the publishers won't have any restrictions, so the retailer can discount it as much as they want. If it's established product, the retailers will want a slice of the pie, regardless of any publisher-imposed limitations on retail price.

 

[Storminator]

My take, which reading Dancey reinforced, was that this is going to be a great thing for publishers. They're going to gain a lot more control over their market, and control is always good (some of them will no doubt make a hash of their new powers...).

Over the long run it should prop up publishers and keep more designers in game design jobs instead of quiting the business.

I expect it will take a long time before this makes widespread changes in the gaming industry.

PS

 

[Storminator]

It will be interesting to see what effect this has in the long run. I like Amazon for the discount but I do still go to the FLGS and drop money for stuff too. Overall, if prices rise at Amazon I will likely not spend any more at the FLGS, but will just buy less all around. Things are only getting more expensive, this won't help my budget any.

If the prices at the FLGS are unchanged, and the prices at Amazon rise, and you stop buying things from Amazon, won't you have more money left over?

If your gaming budget stays constant, won't you go to the FLGS with the money you didn't spend at Amazon?

PS

 

[Pyrex]

On the other hand, it encourages marketplace diversity by making it more difficult for a very large retailer (say, Wal-mart, Borders, Amazon, etc.) to squeeze out smaller retailers by selling product at a loss. That's good for small retailers (FLGS).

Not really. Every time I walk into Borders to buy something I've got a 20% or 30% off one item coupon in my pocket.

There's still a full-price price tag on the book, and I still walk out the door having paid 30% less for the book.

 

[kigmatzomat]

Ummm, no. I'll only have more money left over if I forgo buying things on Amazon.

Let's say the LGS has Book of Groovy for $15. Amazon has it for $10+$2/shipping. I save $3. Now we apply the new judgement where the publisher says the product has to be sold for at least $13. The LGS sells it for $15 or I could buy it from Amazon for $13+2/shipping=$15. I'll buy at the LGS for immediate gratification but also be out $3.

I'm not a big Amazon shopper, I prefer to shop at my FLGS; I know the guys at and have gamed with some of them. But I like that amazon is there. If my LGS became not so F, I'd gladly send my money to Amazon.

All this means is that Amazon will come up with some discount or rebate program to get around the minimum sale price.

 

[Felix]

Not really. Every time I walk into Borders to buy something I've got a 20% or 30% off one item coupon in my pocket.

There's still a full-price price tag on the book, and I still walk out the door having paid 30% less for the book.

Larger retailers have a full-price which is a discount of the SRP, and they offer a 30% off coupon.

Larger retailers contractually sell the book at SRP, and they offer a 30% off coupon.​

You suggest that the second case does not make it more difficult than the first for large retailers to bring customers into the store based on price discounts?

 

[Felix]

Ummm, no. I'll only have more money left over if I forgo buying things on Amazon.

Let's say the LGS has Book of Groovy for $15. Amazon has it for $10+$2/shipping. I save $3. Now we apply the new judgement where the publisher says the product has to be sold for at least $13. The LGS sells it for $15 or I could buy it from Amazon for $13+2/shipping=$15. I'll buy at the LGS for immediate gratification but also be out $3.

I'm not a big Amazon shopper, I prefer to shop at my FLGS; I know the guys at and have gamed with some of them. But I like that amazon is there. If my LGS became not so F, I'd gladly send my money to Amazon.

All this means is that Amazon will come up with some discount or rebate program to get around the minimum sale price.

The publishers don't care as much about your individual purchases as they do about growing the hobby. They're confident that while you may not buy the Book of Groovy, they're sure Amazon won't grow the hobby. They are trying to encourage more people to buy books, even if that means that each person who already games buys one less book per year.