Friday, October 26, 2007

The Sky Is Falling! The Sky Is Falling!

Okay, not really. But Mayfair Games recently announced that they are requiring a 20% cap on discounts for their games.

Retailers who sell below that line will suffer "sanctions" and may be cut off from their supply. It'll hurt online retailers more than brick-and-mortar

Tom of Boards and Bits broke the news here. There's some good discussion mixed in with the ranting.

Here are my scattered thoughts:

It's not new to gaming. Games Workshop has done this for a while. They even go after eBay sellers.

It's legal - there was a recent U.S. Supreme Court ruling on this that didn't change the law, it adjusted the interpretation of the law which put more more power in the hands of manufacturers.

This sort of price control has been going for a long while in other industries.

I currently work in car audio. Various manufacturers have "Authorized Retailers." If you buy product from a non-Authorized retailer, then you don't have warranty coverage. MTX Audio has a page all about it: MTX - Unauthorized Resellers.

In order to become an Authorized Retailer, you get to jump through all kinds of hoops and sign a number of contracts. One of these contracts concerns "MAP" - depending on who you talk to, MAP is "Manufacturer Authorized Pricing" or "Minimum Advertised Price."

This gives the car audio-buying public a choice: Buy a speaker without a warranty and hope it doesn't die, or more and get a warranty backed by the manufacturer.

And there are ways around it:

1) Buy Product X, and we'll throw in Product Y.
2) Here's a Coupon Code for X% off your entire order.
3) Free shipping for all orders over $X
4) Buy Product X, save $Y on Product Z

So why would Mayfair do this?

1) It supports the FLGS. Internet retail is hurting the FLGS. I've ranted about this before. This levels the playing field a bit.
2) They can. Mayfair is the US publisher for The Settlers of Catan, arguably the best-selling Eurogame of all time.
3) It won't hurt internet retailers as badly as people think it will, because it means higher profit margins on Mayfair items (and because of the numerous ways around it).

There was discussion a few months ago about game companies possibly doing something like this. A ICV2 interviewed a few industry insiders:
Jay Tummelson of Rio Grande Games
Joe Hauck of WizKids
Loren Greenwood of Wizards of the Coast

... and that's all I have time to say.

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