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Technology > Personal Tech
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Who has the cheapest video games?
Retail survey says you'll pay the most at Wal-Mart.
May 11, 2004: 8:39 AM EDT
By Chris Morris, CNN/Money staff writer

NEW YORK (CNN/Money) - More people buy video games at Wal-Mart than any other store in the country, but according to a new Piper Jaffray retail survey, they're paying more than they have to.

In a pricing survey among seven key game retailers, Wal-Mart's prices were the highest, coming in 9 percent higher -- nearly $100 for a basket of 30 games -- than Amazon.com and 6 percent higher than Best Buy, according to Piper Jaffray analyst Tony Gikas.

"Retailers generally do not break minimum advertised price levels in ... video game software," Gikas wrote.

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Piper Jaffray priced 30 software titles, mixing recent and older games from all platforms (with the exception of the PC). Amazon (AMZN: Research, Estimates) reported the lowest prices, with a total of $1,1134.51. Among brick and mortar retailers, Best Buy (BBY: Research, Estimates) was the least expensive, charging $1,164.70. Wal-Mart's price for the games was $1,231.76.

"We haven't had ample opportunity to review this survey, however as a company that brought $12 billion in Rollback savings to our customers last year alone, we find this hard to believe," said Wal-Mart (WMT: Research, Estimates) spokesperson Karen Burk in a written statement. "But given our pledge to everyday low prices, we'll look into this."

Specialty retailers Gamestop (GME: Research, Estimates) and Electronics Boutique (ELBO: Research, Estimates) fell in the mid-range of the spectrum on new games, but both also sell used games, which cost 12 percent to 13 percent less than the best prices on new games.

The used game market has quietly been growing for the past several years and Gikas now estimates that more than 8 percent of all games sold in the U.S. are used games. Exact tracking is difficult, since the NPD Group, which reports game sales figures, does not keep statistics on used games. Gikas, however, said he expected the market to be worth anywhere from $630 million to $790 million this year.

The survey indicated retail prices seem to be holding up as the current generation of consoles hits middle-age. Traditionally, after video game machines have been on the market for a few years (and a more casual gamer becomes the target buyer), average retail prices fall. (Casual gamers are less likely to pay $40 or $50 for a video game.)

Part of the reason retailers are holding prices steady might be the relatively small profit margin they collect from game sales. Gikas said the average retail mark-up is only 20-23 percent.

Other analysts, though, say retailers they've talked to indicate while prices have not fallen much, the demand for games at higher price points is not as strong as it was a year ago.

"Opening price points are still where they were," said John Taylor, an analyst with Arcadia Research. "In other words, you still launch at $49, but after a few weeks go by, demand dries up. So you're not seeing games hold the price point as long."  Top of page




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