Distribution

Distribution is the wholesale layer that connects publishers to retailers. A distributor buys games from publishers in bulk, warehouses them, and sells them on to hundreds or thousands of game stores through a catalog and a sales team. The hobby game industry mostly runs on this three-tier system: publisher to distributor to retailer to player.

The value a distributor provides is reach and logistics. A store owner cannot place orders with five hundred separate publishers, so they order from two or three distributors who each carry thousands of titles. When your game is in distribution, any store in the country can restock it with a line on their regular weekly order. No amount of individual store outreach replicates that.

The cost is margin. Distributors typically buy at around 40 percent of MSRP, sometimes as low as 35 percent for smaller publishers. On a 40 dollar game you receive roughly 16 dollars per copy, out of which you must cover manufacturing, freight, and overhead, and still have profit left. This is why the pricing rule of thumb says your MSRP needs to be at least five times your landed cost per unit. A game that costs 8 dollars landed can survive at a 40 dollar MSRP in distribution. A game that costs 15 dollars landed cannot.

Distribution is also not a sales engine. Distributors stock and ship what stores ask for, they do not create demand for your game. Marketing, reviews, and demand generation remain your job. Games placed into distribution with no audience behind them mostly sit in the warehouse until they are returned or remaindered.