Why $60 Isn't Really $60 For Video Game Publishers

This article in the LA Times breaks down the cost of a $60 video game. While the publisher takes in around $27, you might be surprised to learn that $7 goes to cover the cost of returns... that is, games that didn't sell. This shows just how much slack there is in game pricing. If publishers could sell their games directly, they could price them at $30 and still make just as much per unit... and I'd venture that sales would increase if the cost were halved. It might even be that sales would increase even more at $20, enough to cover the lesser amount of revenue per title. When you don't have to worry about retail margins and cost of goods, those are the experiments you can try. This is the logic of digital distribution, and it's inexorable. The only question is how long it will be before it takes over the lion's share of game sales, not whether or not it will.

It's not going to be an easy transition for Gamestop; I see no clear strategy for them to thrive in a world ruled by digital distribution. What happens to the used game market when there are fewer and fewer used games for sale, because people were buying them digitally? What does Gamestop sell if people aren't interested so much in buying a physical copy, and there aren't any used games? Do they just become a retailer for action figures and card games?