We’ve recently been asked about what we thought about Minimum Advertised Policies in general. I was working on a reply and then the comment was deleted. Since I had a reply, I thought I’d just post it here.
Let me start with a very important point which is – any publisher has the right to choose the price / Minimum Advertised Price Policy they want. It’s their products and so long as it’s legal (and I believe policies like these are legal in most jurisdiction), they have the right to make their decision on this. These thoughts are more to do with the general affect about these policies in general, not the right of a publisher to make such a decision. In addition, note that I’m talking from the viewpoint of a retailer in the games industry which deals with physical products that generally have a high cost of shipping and a minimum physical component that must be shipped.
It’s a given fact that with the introduction of board games and the addition of a slew of Internet retailers, the prices of games have dropped. This is a good thing for the consumer since they are able to purchase the game at a cheaper price than before. MAP policies generally are set higher than the cut-throat prices we see on the Internet, so these policies generally dictate an increase in prices for customers.
On the other hand, a MAP policy could also encourage less ‘shopping around’ by customers. If you know that a product (e.g. Lego / Louis Vutton handbags) are always going to be much the same price whichever retailer you go to, then you can start making decisions on purchasing using other factors than price – convenience and service being major examples.
On a retailer level, which is where we are, the MAP policy depends on the type of policy and the MAP price. For example, the Lion Rampant Fantasy Flight MAP policy is actually relatively reasonable. It floors at about 70% of MSRP as they have considered what the MSRP should be, so it gives both online retailers and B&M stores a good variance while upping the margin overall. It also allows a retailer (online or B&M) to run sales if they need to with a decent degree of latitude about the price without needing to get specific authorisation.
On the other hand, the recently released Mayfair Games MAP sets it at 90% of MSRP. That creates a huge burden on retailers if they want to run any sale as 90% is too high a level for any useful discount level. In addition, it certainly makes it more difficult for online stores to compete as we have to deal with the cost of shipping to the customers. Not impossible of course, just more difficult.
Additionally, what MAP policies do is reduce the desire by retailers to fully or deeply stock a publisher’s products. This is more noticeable on an online store level rather than a physical game store level since most online stores have the ability to carry more board games than physical stores (see the issue about shelf space). For example, it makes it much less likely we’d want to take risks of new games that we might (or might not) be allowed to discount further to remove from inventory if it does not sell. Even if we wanted to bring a game in, we’d likely reduce our initial & subsequent stocking position on those games.
Why wouldn’t we be allowed to discount a game? Well, not every successful game will do well in all stores. A game might do generally well, but still be a bad game for a specific store. Without the ability to sell that game off, the store must then ‘eat’ the cost of the game, accepting the loss. When you realise that a successful game in this business is 4 games sold a year, being forced to ‘keep’ one bad game that doesn’t sell is a major reduction in profit.
Of course, the other side of the argument is that having an MAP policy ensures that we get a better margin on the product, so there’s more likelihood that a retailer will actually stock these games. In the short-term, when
On an industry level, it’s worth noting that enforcement is an unequal matter. Mass market retailers regularly break MAP policies and see very little in terms of enforcement / penalties because of their size. I would be interested to know if they even have to sign the same policies as we do. On the other hand, B&M retailers can break MAP policies and run little risk of being caught due to the fact that there is no way to ascertain if they are breaking the policy other than local ‘snitches’.
The often quoted reason for having MAP Policies is to protect B&M stores by providing higher margins for products. This is great,
Lastly, it’s worth noting that MAP policies inadvertently