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Feature Indies Not Xbox Crazy 10/08/01
Consumer interest is growing for Microsoft's first console, so why haven't all the independent retailers jumped on the wagon?

The release of a new game console always comes with a lot of excitement for all involved. From the customers, to the distributors, to the chains carrying the product, to the independant retailers, the adrenaline can almost be felt and the anticipation can become nearly unbearable. Recently, we have seen it with the Dreamcast and the PS2, and with the impending releases of the Gamecube and the Xbox, we brace ourselves for the same exhilirating ride yet again.

Things are changing though, and not for the better.

There will be many places where you will not find an Xbox, places that have decided to not partake in the launch of MS's bid for videogame supremacy, for good reasons, which I am about to explain.

First of all, I'd like to make clear why independent retailers are important to this industry and ultimately, YOU, the consumer. Independent retailers usually consist of people who themselves are gamers and who are generally more knowledgeable about games then your typical Walmart or EB employee. Often you will be able to find niche games there that are not carried by larger chains, and if you need a particular title, most of them will do their best to locate that title for you. For the gaming industry, they are important because their advice can sway fence-sitters a certain way which, especially early on, can be important to generate a buzz for a console before it is established. They're also relied upon to shift the smaller niche titles which most of the larger retailers refuse to carry. Most console manufacturers acknowledge the importance of independents and for them have special deals through a multitude of independent suppliers who are specialized in dealing with independent stores.

This isn't the case with Microsoft.

Microsoft's conditions for independents are stretching the legal boundaries, if not crossing them altogether. Independent retailers must apply with MS for deals with one of only four distributors. Those distributors are Ingram Entertainment, Jack of All Games, Mecca Electronics, and Pioneer Distributors, and these four are generally seen as the worst wholesale distributors in the US. Of course, Sony and Nintendo might have forced the better distributors not to deal with MS in order to keep their accounts, but even if that was to be the case(we simply don't know at this point, but chances are that Sony and Nintendo did indeed put pressure on wholesale distributors not to carry the Xbox and its games), the demands MS puts on the independent retailers through these distributors is insane and borders on illegal. For instance, independents must choose one of the four distributors from above, and in the event that they're not happy with the one they have selected, must receive permission from MS to switch to another one of the four. Some game companies have their own distribution channels set up(such as Activision, EA or Sega for instance) and do not work through those four distributors. For those games(Madden 2K2, Jet Set Radio Future, Tony Hawk 2+, etc.), MS allows the independents to purchase their wares from those distributors ONLY if they report their purchases and sales data to MS directly. If the independents fail to do so MS will revoke their rights to purchase and sell Xbox software. MS also announced that they would penalize "indies" who acquires hardware and software through other means then the ones they have outlined.

It doesn't end there, though. In order to receive any promotional items for use in store and to be secured an allotment machines during the launch period of the Xbox, the independent retailers are forced to buy a lot of peripherals and software which they have no use for, forcing them to sell the Xbox in overpriced bundles, something which MS, to a lesser extent, is also forcing the larger retailers to do. By the way, those larger retailers get a nice marketing contribution to do so while "indies" are left in the cold. To complete the misery, with the lowering of the amount of consoles MS will have ready for launch, independent retailers, even if they adhere to these draconian rules forced upon them by MS, will not be sure if they will receive hardware at all. They will get the software but what good is software(which has to be paid in advance) if you don't have the hardware to sell it with?

People who have bought an Xbox elsewhere will not buy software at an independent retailer because almost all places are selling the Xbox in bundles including a few software titles. Independent retailers are screwed no matter what actions they take. If they refuse to carry Xbox initially this will reflect badly upon them because they are not carrying it at all. If they choose to carry it, there is no way they will break even on the deal initially, let alone make a profit.

Now, before I'm accused that I'm an MS hater, and that other console manufacturers do this as well, let me tell you that I am looking forward to the Xbox on a personal level. The machine has a lot of great games coming in the coming months and seems to be able to bring something to the games industry which Sega was unable to and Nintendo currently is not willing to bring, COMPETITION. Yes, while Nintendo has done similar things in the past and Sony is no saint either, Sony never has done anything this bad and while Nintendo had during the 80s, it was after having earned its place as a major industry force, something MS has yet to prove. We don't know if they're up to the task they have put upon themselves yet, they do, however, decide to throw weight around which they have not earned yet. MS behaviour, in my opinion, is illegal(the rules they have imposed on the indies are akin to the government allowing you to only buy Hershey bars from Wal-Mart, and in case you want some M&Ms, to write to your local government and tell them where you bought them and when you consumed them) and a serious breach of the rights of retailers.

When the Xbox launches and you notice that your local independent store doesn't carry it, please don't hold it against them. Given the current conditions placed upon them by MS, it is impossible for these guys to carry the products and make a living. If they want just 20 Xbox consoles for launch, they will have to pay around $15,000 upfront for the machines as well as the peripherals and games they are forced to get with them. With those conditions in place, what would YOU do?

··· Ali

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