Gaming the Tax System
We see the same phenomenon in the computer games market as we've seen in the other sectors that we've covered in this 'Alternatives to Amazon' series. The high street is dying with online and supermarkets taking over and, of course, the prevalence of corporate structures that strongly suggest tax avoidance.
Now new entrants to the market appear to be building tax avoidance into their models from the start. The two leading examples of this are thatsentertainment.co.uk and Capitex the new owners of GAME.
The former has its trading arm registered in the tax haven of Guernsey but has its head office in Macclesfield. The latter was recently the subject of a buyout from a private equity group, Capitex, whose holding company, like Amazon.co.uk, is registered in the tax haven of Luxembourg. Both companies score a worst rating for likely use of tax havens in our ratings system. (You can see how the other companies rated on tax below.)
In the gaming industry there is a lot of revenue to avoid tax on. In 2011 it became the UK's biggest entertainment sector (by revenues) netting sales of £1.93bn compared to film sales of £1.80bn, and music sales of £1.07bn. As market segments games had 40.2%, film 37.6% and music 22.2%. 
However despite these huge sales, last year GAME Group, the once-leading high street chain of gaming shops, entered administration until it was later rescued by an investment group (see tax avoidance section below). While a 2012 report from PwC and the Local Data Company, estimates that 45% of the UK’s video games retailers closed down last year. 
Among those companies replacing traditional outlets are the supermarkets (namely Asda, Tesco, Morrisons and Sainsbury's). Together they are now the UK's leading retailers of video games, selling more than Game or even Amazon.
Earlier this year, in the first three days of sales, Grand Theft Auto V racked up £495.5 million worth of revenue and Tesco was reported by the Grocer magazine to have taken a third of these receipts.
Supermarkets have grown their sales in this sector by offering huge discounts and running cross promotions with other products. Tesco offered leading title Black Ops 2 for just £25 (RRP £44.99) when bought with Microsoft Points, an Xbox LIVE Gold subscription or PlayStation Network cards. Sainsbury's, offered the game for £32.99 when you spent £30 or more on other goods.
What about the ethics?
Despite being challenged over graphic violence and even sexual content video game retailers are without doubt lagging behind other retail sectors when it comes to showing signs of corporate social responsibility.
As you can see from the score table, none of the small-to-middle sized companies we looked at had environmental reports or any commitments to workers' rights in their supply chains. This was despite the fact that, in addition to software, many of them selling games consoles which contain conflict minerals and toxic materials.
Sadly there is also no emerging ethical market in this sector as we've seen, for example, in the music industry with the Fairshare music project. Perhaps this type of charitable donations site is an obvious next step for the games sector.
How the companies score on Ethical Consumer's likely use of tax avoidance schemes category:
Middle rating – Nintendo, Microsoft, Morrisons
Worst rating – Amazon, Apple, Argos, Asda, Sony (Playstation), Play.com, GAME, Zavvi, Currys, PC World, Electronic Arts, Gamestop, ebay, half.com, Google, thatsentertainment.co.uk, Tesco, Sainsbury's
Companies selling directly to UK consumers through tax havens include:
Steam, through the subsidiary Valve S.a.r.l. registered in Luxembourg.
Base.com, through the subsidiary Online Commerce GmbH in Switzerland.
Origin (EA), through its Swiss subsidiary EA Swiss Sàrl .
thatsentertainment.co.uk, through its Channel Island subsidiary MMGuernsey.
Sega is a large computer games designer and manufacturer famous for their Sonic the Hedgehog character. Although they no longer produce games consoles; they are a huge company that Ethical Consumer would expect to be producing sound environmental reporting and have robust supply chain management policies.
Gamestop is a large US chain with an online UK presence. It fails on the policy front but also scores badly in the anti-social finance category for tax avoidance and excessive remuneration with two directors paid over $5,000,000 in 2012. 
Currys and PC World are both owned by Dixons Group. They score amongst the best for their supply chain management (receiving a middle rating) for putting in place a proper reporting standard in this area. However they still scored worst for environmental reporting and also lost marks for failing to have a proper policy on toxics despite producing own brand electronics.
Origin is the shop front for the world's largest games designer, Electronic Arts. In addition to a complete lack of social reporting the company also scored badly in the Anti-Social Finance category for tax avoidance and excessive directors' pay. In 2012 it paid three directors in excess of $5,000,000 dollars including over $15,000,000 to CEO John S. Riccitiello. 
Nintendo produces both games and games consoles. Despite their complex supply chains, they score worst for supply-chain management. In 2012 it was accused by China Labour Watch of having employed children in its Foxconn supplier factories. The company also scores worst in Ethical Consumer's environmental reporting category and the bottom ranking in Greenpeace's Guide to Greener Electronics.
For more company profiles see our previous Amazon alternatives guides.
7 Capitex Annual Accounts 2012 (download from Companies House)
9 Gamestop Annual Report 2013
10 Electronic Arts Annual Report 2012