Games prices frozen despite VAT hike

Publishers must lower the cost of games, retailers have warned – or they will cut back buying new stock when VAT rises in 2011.

Buyers and store bosses are fearful that they’ll have to swallow next year’s 2.5 per cent tax rise in order to remain competitive – and want suppliers to help them keep prices below 40.

But the games industry’s biggest publishers – including EA, Ubisoft, 2K, THQ and others – won’t comment on whether they will lower prices.

And the platform holders have all told MCV that cost pricing will remain unchanged in the New Year.

Retailers are dismayed at this alleged lack of support, with one senior buyer telling MCV it well force them to cut back spending for 2011.

Other big chains have told MCV supplier silence has left them without a strategy, even though VAT goes up in just 30 days.

Indies say they will suffer, too – and this could be the last straw for them. Now some of the most successful small chains say they could drop new games altogether.

I am concerned about the effect it will have in the short term,” said Barkman Computers boss Nick Elliot.

There have been some Christmas titles that we are being extra careful on our stocking. The margins we operate on are miniscule.”

Game On MD Matthew Brady added: The issue is with new games – if publishers don’t adjust cost prices it’s pointless to stock them. Customers already think that the RRP is 39.99 and some are calling for it to be dropped further. We would be looking for some form of price movement from publishers.”

Disks & Discs director Andrew Rawlinson said: I think it will be interesting to see if the publishers help. Or has got to the stage where they don’t need indies?”

But one publisher shrugged off the retailer fears as ‘panic’, saying: Stores were more than happy to not change prices when VAT was cut – they surely understand this situation works both ways?”