I work for a small manufacturer of Night Vision in the UK. Our company started up 5 years ago, from a small 'built in the shed' operation to an exporter which supplies 36 different countries around the world, and is still growing. My job is to keep all of our distributors, and all of our retailers sweet. I have to hammer them when they misbehave, reward them when they are good, support them in any way I can and to keep a close eye on what is happening in their particular market.

When we first started as a lowly, unknown manufacturer... we sold directly to the public as well as to the retailer. Naturally, the retailers accepted this since we were young and needed the cash... just so long as I kept my promise and never discounted from the RRP. Just so long as the retailer keeps the competetive edge... then they are cool.

Sound familiar? This is what is happening on every console based digital storefront right now. MGSV for £59.99 on PSN... and just £39.99 in Gamestop... and similar numbers apply to every other game. Stick with me...I am going somewhere with this...

About 2 years after launch the retailers were doing such a fantastic job, that I made the decision to never sell direct again. Did the rest of the board like it? NO! Why? 'MONEY BITCHES MONEY!' We made huge margins selling directly... surely I went insane! No I didn't... I just knew what would motivate the retailer, and it worked. With the entire market theirs they have shown fantastic growth year on year. 90% of my international distributors recognize the importance of keeping the retailer happy and also do not sell direct. Sure, the profit per product isn't as great, but our products reach every corner of the market and the retailers love us. We are at the front of every store, they commit to large volume orders, hell - they even pay us for point of sale!

So why drone on about this and why does it apply to Gamestop and other retailers? Well the real truth is that in the videogame space... no one side is innocent, but the retailers really need to get a grip. I want you to forget your personal feelings about Gamestop and the way they do business, because at the end of the day the outcome of what happens is going to seriously affect your 'Mom and Pop' shops... and probably even Amazon.

The digital age is coming - FACT. Cry all you want about how much you love discs, want to share with your friends, DRM... its kind of already here. Very few people buy PC discs anymore because steam went all in... said 'FUCK YOU GAMESTOP' and proved that digital retail worked. And continues to work, and improve - and thanks to that gamble they now have a Monopoly on the PC gaming market. GOG and others can barely keep up. Publishers LOVE this... Why? I hear you ask... isn't it obvious?

Manufacturing discs, pushing them out into a distribution network, which then sells them to a distributor for that country, who then sells them to the retailer, who then sticks the final price on the box is BLOODY EXPENSIVE! The Distributor(s... sometimes there is more than one in a country especially in the good old USofA) want a margin... they got sales teams to pay (Comission, Company Car, Fuel... it ain't pretty)! Then you have the retailer who wants their standard 25% - The publisher is literally giving money away, just to get product on the shelves. The only reason Sony bailed on bringing in a new 'Digital age' is because

A) They need to sell consoles

B) They knew Microsoft were going all-in, and really really wanted to hurt them

But I'm getting a little ahead of myself. The PS3/360 era saw the first digital storefronts, run directly by Microsoft and Sony. This was done due to the success of Steam, and how awesome the profit projections looked for both them and the Publishers (Don't think they weren't in on this...) but they were still worried about upsetting the retailers. So what did they do? Exactly what I did on day 1 of opening our business... agree to sell at FULL RRP - and not a penny under. In this case, naturally there are sales e.t.c - but they aren't selling anything the retailer hasn't already had a chance to shift, or doesn't have 1000 pre-owned copies of. All was well in the world... well... kind of.

In 2008 everyone started feeling the effects of an economic crisis - people couldn't afford brand new games anymore - console sales suffered and people only wanted one thing... Pre-owned games. Oh and we got our wish! Worldwide the 'New games' section of every retailer was shunted to the back of the store... the 'Gondola ends' (the end of an aisle in a store... your prime selling real estate) no longer had this weeks hottest game on it... but pre-owned copies of whatever was hot the week before! All the love for the Publishers and Platform manufacturers was gone - survival and profit margins replaced it.

The focus on Pre-owned sales began way before this, but suddenly it became every video game retailers core business model. And that still continues today. I walked into 'Game' to pick up Bloodborne on release day and was greeted at the till with all the usual up-sells. No problem - I encourage this behaviour in my retailers and think it is good business. What I didn't expect was the following statement.

'Are you sure you don't want to pre-order Fallout 4? We are only ordering in what people pre-order so there won't be many spare copies'.

WHAT!!! I almost went nuts... I asked for the manager and got him to confirm it for me - and it was true. The retailers, the economic climate and the way we like to buy games has driven the retailers to this - a world where unless you pre-order, they won't stock it for you. This is happening in your country. Today - all because we wanted the best price for games, and the current 'distribution chain' couldn't squeeze another penny out of the cost.

Naturally Sony, Microsoft, and the publishers are PISSED! Then retailers aren't ordering as much as they used to, new copies of games just aren't selling - and all the while they have a £59.99 price next to MGSV which they can't lower because the retailers insist on protecting their Margin's on New games - which they aren't even selling.

@austin_walker nailed it when he said the retailer has to evolve. And they do...right now they are in a downward spiral where people prefer to buy new games in disc format online and they refuse to try beyond the tried and tested 'pre-order now' method at the counter. I know... I can hear you now saying 'Well what are they supposed to do' well I can tell you now the answer is TONS OF STUFF. If they cut down on the amount of store space they dedicated to pre-owned gear and made the store more appealing to visit - I for one would start going in more often. Aside from crappy 'demo disk' PS4's and XB1 POS there is literally no interactivity, the video game retail store is one of the most boring places to visit on the highstreet. Its all 'Yellow Stickers' and boring boxes.

Insisting on 'Hard' copies of the game bundled with consoles is definately a desperate move. And pathetic. Also the threat of 'We will go directly to the publishers' is pathetically hollow. Its so, so, so much cheaper and in the publishers interest to package in a digital copy. Why?

1) It can't be re-sold = More new copies sold

2) Going to the printers for a bit of card is a lot cheaper for them than Manufacturing, shipping and packaging a disc = More profit

3) In the long run... they want you to have a digital copy of everything they make - this plants the seed and makes it clear to newcomers that 'Hey... there is a digital storefront and it can be convenient'.

So... if the retailer won't pull their finger out - and according to @austin_walkers fantastic article they are just continuing to bite the hand that feeds, what is the solution? What are the 'big boys' going to do?

My speculation is that this generation we will begin to see more respectable prices on the Digital storefront's. Launch titles will be much closer to the RRP that the retailers offer, and more money will be pushed into 'Buy Digital' marketing. Next generation (and yes... there will be a next generation...) Sony will not back down and Digital will be so heavily promoted that Disc copies will barely get a look in. Disc's will quickly become 'Super awesome extra legendary premium editions' and will be made in small volumes. Due to the small volumes - they will be sold through some dedicated online retailers... and at a premium price.

Unless... the High street stores and the 'Big Boys' all decide to get along, and work to change the way we perceive buying games 'New'. Or the high street stores fight for the ability to sell digital content, in their own in-store app on the console... a slim possibility, but probably their best chance for long term survival.

I won't drop the Mic because I understand my opinion is incredibly flawed. I don't have raw data to prove it and without seeing directly into the mind of the Gamestop executives, Sony & co aswell as the publishers, I can never know for sure what is really going on in those boardrooms.

But one thing is for sure - Digital will eventually win... the math on the profit margins involved is already proved by Steam. Gamestop and friends need to decide if they will continue fighting it, keep discs relevant outside of pre-owned sales, prove a way that digital can never work or find a way to get on the right side of the fence. Either way... they have a little time but not as much as they think.