US retailer launches attack on games industry

Online retailer DVD Empire has closed its games business and launched a vitriolic attack on the games industry in parting.

"The video game industry only cares about mass merchandisers like Toys-R-Us, Wal-Mart, Best Buy, etc. They completely ignore the needs and wants of the medium to small game retailers," the company said in a statement on its website.

Chief among DVD Empire's allegations are that a lack of price protection coupled with unpredictable changes to the Manufacturer's Standard Retail Price (MSRP) and tiny margins are squeezing all but the biggest retailers out of contention.

The company says that it is "not big enough" to return products, while it receives no compensation when the MSRP - a price that it is forced to observe in its sales to customers - shifts dramatically downwards. "If we buy a bad title, we are stuck on an industry-induced money losing ride through the land of price drops," it says.

The statement also cites an inability to compete with the pre-owned businesses of brick and mortar companies. "Games bring in great foot traffic for physical retailers and they make money elsewhere. EB Games/Gamestop relies heavily on their used business. It is very difficult for online retailers to have an advantage, except for convenience."

Even that is a struggle, the company says, because it is unable to buy direct from the publishers involved. "Since we are not one of the top game retailers we have to buy through a middle man or distributor. First off, this obviously raises the cost of the product, and second, distribution is horrendous for new releases. We get them 3-4 days after street date."

The full statement, distributed to the media this week, is visible on the DVD Empire website. The company has reduced all its game stock by 20 percent to clear inventory.