Sony says to retailers: “You’re allowed to make $1 on the sale of each PlayStation 3.” Consequently, there is no variation in console pricing between big box stores and little independent retailers; Sony has tight control over the market. (As of this writing in Canada it is $299.99 for the 120GB Slim model and $349.99 for the 250GB one.)
Around here, occasionally we’ll get some flea market guy selling a brand-new 120GB PS3 for $250 and not charging any tax. This is something beyond Sony’s control and it smells a bit like a “five-finger discount” to me. From the little research I have done, it seems the other big console manufacturers (Nintendo and Microsoft) orchestrate a similar situation.
Once the “ecosystem” is in place, the retailers theoretically make their money on after-market accessories and the sale of the games themselves. Since piracy has not affected the console market as much as the PC software market, this kind of profit-shifting still makes sense. For my family, we shop at a local small-chain retailer (Microplay in Newmarket) because they offer very strong customer service. I cross my fingers that they are making enough money to stay in business.
Like the movie business, where theaters make their money from concession sales more than box office, I see a day when console gaming retailers make their money from something completely ancillary to the actual gaming activity. Of course, that will be the day when brick and mortar retailing in this space is completely unnecessary and the value-add will be something in the digital domain.