Online Discounting of Games—One Year Later

Mayfair Using Supreme Court Decision to Control Pricing

Roughly a year after the Supreme Court decision allowing companies to control the prices at which retailers sell their products under certain circumstances (see “Supreme Court Drops Ban on Vertical Pricing”), one game company that we’re aware of, Mayfair Games, has used the decision aggressively to control the prices at which its products are sold.  

Mayfair has instituted a policy, the Mayfair Authorized Retailer Program, that restricts discounts above 20% off retail on its games.  VP-Sales Bob Carty talked about the status of the program in the Future of the Hobby Channel panel at Gen Con Trade Day (see “The Future of the Hobby Channel”).  “We're in the process of the second stage of enforcement,” he told the audience.  “We’ve gone from 113 retailers discounting product in November… when we started releasing Third Edition [of Settlers of Catan]; we now have between six and 11 in any given week.  And I think that's a big step.  Six of them are habitual and on the blacklist but they're still getting product, and we know where, and we're going to deal with them very shortly.”

One other game company, WizKids Games, has made significant efforts to reduce Internet discounting by controlling sales to Internet-only retailers (it began this strategy prior to the Leegin decision, see “Joe Hauck, WizKids EVP on Internet Retailing”), although it is not using price controls based on Leegin to our knowledge. 

The Wall Street Journal recently revisited the issue and talked to retailers and manufacturers about their strategies.  It quoted one Internet retailer, BabyAge.com, that said that nearly 100 of its 465 suppliers were now specifying minimum prices at which products could be sold, and that it had been cut off by nearly a dozen over pricing issues. 

Whether other game companies, who can easily argue that they need to control pricing to support stores that provide organized play, demos, and other support, will follow Mayfair’s lead is yet to be seen, but it appears that in some other industries at least (WSJ listed baby goods, consumer electronics, home furnishings and pet food as categories most affected), the Leegin decision is starting to have a major impact.