WalMart, Other Retailers Slash Game Prices for Holiday

Reuters ran a story last night reporting that retailer Wal-Mart is pursuing an aggressive pricing strategy for console titles this holiday season, which started with sales last week on Black Friday. Left 4 Dead 2 and a number of other titles sold for $50 USD, with indications that these markdowns will continue for the holiday season in order to drive sales traffic through their stores and web portal. Other large retailers, such as Best Buy, Target and Amazon, responded in kind. While discounts during the holiday season are typical, this year in particular appears to be seeing prominent cuts and bundles for each of the big three console manufacturers.

The question then becomes, is this pricing flexibility a signal that retailers are looking to more aggressively price major games more quickly during the rest of the year? According to Wedbush Morgan analyst Michael Pachter, this doesn’t appear to be the case. “Note that Wal-Mart said 'top 25 games,' but didn't include CoDMW2, Assassin's Creed 2 or New Super Mario Bros. Wii, so I think the top 25 claim is questionable,” said Pachter. “If they don't include the top 3 games, I'm not sure it will drive a lot of people to pass five GameStops in order to drive to Wal-Mart instead.”

DFC analyst David Cole expressed a similar sentiment, saying “Games are a great way to drive store traffic and really it is more an indication of their overall popularity as a consumer product… [this promotion] was more about aggressive pricing on some of the most popular items to drive traffic in hopes that it lifts sales of other products.” Cole does believe this may be evidence of retailers testing the waters for more flexible pricing on less important titles during the rest of the year, however, claiming that “I do eventually see a trend towards more aggressive pricing to drive sales of products that are not part of the Triple AAA best sellers.” This is borne out by the quick discounting of many titles this year through online retailers like Amazon.com. Essentially, Triple AAA titles will continue at their $60 price point, while other lower-profile games will be at the mercy of market demand.

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