Citing increasing small profit margins, DVD Empire has pulled out of the video game selling business. In an article on Gamespot, the online retailer claimed that it made only five dollars on every sale of a game (approximately 8% gross margin) or console (< 1% gross margin). As if that were not enough, the five dollars doesnt take into account the expenses of the business, so profit is actually less. I am no expert in business, but if what they say is true, it looks like the small time retailers will go extinct soon...
The Fall of the (now) Wholly DVD Empire
I wonder why the smaller retailers are not allowed to return stock? Come to think of it, I have no idea who acts as the middle man between the retailers and publishers. Is there a middle man? I always the lament the exit of a smaller player. It seems f*ed that the bigger guys squeeze them like this, but at least the David in this case slung back:
"Of course, if the video game industry produced quality games, we wouldn't have this issue."