Richard Hescox'artwork for Master Lu
Two Riddles for Sierra collectors

The Riddle of the Pinholes

The second riddle is that some Sierra game boxes have pinholes in the bottom, and as it didn't appear to be an incident, it seemed that this was a kind of factory defect. Here are two examples: A KingĀ“s Quest III box (1987), and even a box of a much later date, Freddy Pharkas (1994), has a similar pinhole (to the left of the bar code).

However, the assumption that the pinholes were a factory defect was mistaken: the pinholes were made on purpose by Sierra! So in a way the pinholes are "authentic defects," or a special kind of "company seals" so to speak. Here's the solve to the riddle.

What is the pinhole?

In short: it was a way that Sierra (and a few other software companies including Accolade) used to mark products that were not allowed to be returned for credit.

In the US retail market, all of the big retailers and wholesalers only pay for products that have been sold. It is not technically consignment because there are invoices for all sales; but in practice it really is consignment. Until a wholesaler or retailer A) needs more product, or B) can return unsold product; the software publisher does not get paid.

So if Sierra sold Best Buy 1,000 copies of Space Quest, and Best Buy needed more; then Best Buy would pay the invoice. But if Best Buy still had 400 copies in stock, then they would tell Sierra that they would not pay the invoice until they got a credit for returning the 400 that were not sold.

When Space Quest first came out, everyone who could order enough to buy direct was paying about $22.49 per copy. But in a world where software publishers do not get paid sometimes up to 6 months after shipping the product, there is a lot of temptation to cut deals for companies that will pay cash. As a smaller wholesaler, you could go to Sierra and say "I'll take 1,000 copies and pay up front if I can have them for $18.99." If this is 6 months after Space Quest came out and now copies are sitting on shelves (so Sierra knows it is a long time before they are going to get paid) they might say "Yes!".

This works great if the small wholesaler then sells the copies to their regular customers. But what started happening is the smaller wholesalers started selling to the bigger retailers, so:

Electronics Boutique would buy 1,000 copies of Space Quest from Sierra for $22.49. Sierra is not expecting to get paid for months. Electronics Boutique sells 800 copies and wants more. They find our that they can get them from the small wholesaler for $19.99; so they buy 1,000 from the small wholesaler. When Sierra wants to get paid, Electronics Boutique says "We are not paying, we still have 1,000 in stock!"

Of course this makes Sierra very angry because they are expecting to get paid something. Now they will either have to take product back or wait much longer to get paid.

Master carton filled with boxes with pinholes

So to stop this, Sierra started marking the software sold for cash with pinholes. When Electronics Boutique would say they had 1,000 in stock, then Sierra would call their bluff and say "return them." If they had pinholes then Sierra would not accept the return because it was not the product they sold Electronics Boutique.

So the idea is simply to mark goods that can not be returned for credit. The technique has been used for a long time in the music and book businesses. In music, they are called "cut-outs": usually the jewel case is notched or a hole is punched through the UPC. In books they are called "remainders," and usually the books is marked with permanent marker on one of the edges.

That is the story of boxes with pinholes.

(c), July 2006, with thanks to the anonymous retailer for his explanations and illustrations.

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