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Retail

GAME's long-term vision is to sell contracts, not hardware

Fri 11 Nov 2011 2:48pm GMT / 9:48am EST / 6:48am PST
RetailOnline

CEO intends to model retail business on Carphone Warehouse, says consultant

High Street retailer GAME eventually sees itself as a broker between digital technology companies and consumers, selling contracts to customers rather than physical hardware and software.

That's the vision of CEO Ian Shepherd, according to consultant Nick Parker, who said the video game specialist intends to model itself on the Carphone Warehouse business.

"With OnLive and GAME it's no coincidence that they're going into business. I sat down with Ian Shepherd a couple of weeks ago and his vision is seeing GAME like Carphone Warehouse, whereby Carphone Warehouse doesn't actually sell anything at all, no product, no hardware, it just sells contracts," he told the London Games Conference.

"And they see themselves doing the same thing - selling contracts for OnLive or any other technology provider or source of games and then hardware can eventually be offered for free."

GAME became the first retailer to partner with US firm OnLive, selling its consoles in-store when it launched in the UK this year. And like multiple games retailers, it already has a credible business in selling pre-paid credit and games cards to consumers.

It's not just GAME that is following this business model, said Parker, companies like Amazon, LoveFilm and GameStop are on a similar path and partnering with new entrants like Gaikai and OnLive.

"Online retailers are already trialling technologies and providing brokering services for those companies," he offered.

While new entrants to the market are pushing cloud-based gaming technology, Parker predicts that the older console manufacturers will still play a significant role in the new digital games ecosystem, offering hardware as a token gesture to retail and delivering content online.

"These guys are already developing compression technologies - you may say they are the old console guys - but they still have an installed base."

"It could be a hybrid expansion of their current core processing technology with some internet connectivity, perhaps not disc-based but certainly with a disc as an add-on peripheral. So there's something to sell at retail. They are certainly going to be big players and 2014 is the tipping point when these consoles will be out," he added.

Publishers will also adapt to digital markets, with EA's Origin a recent example of connecting directly with the consumer.

"The publishers want to be everywhere, wherever there is a touch point with the consumer and they are not going to be proud about that," he said. "They will develop their own means to do it."

Update: Nick Parker has contacted GamesIndustry.biz to suggest that Ian Shepherd's remarks were not a definitive statement of GAME Group strategy, and that his conversation with the CEO was part of a wider debate about how games retail could evolve.

10 Comments

Graham Simpson
Tea boy

219 7 0.0
Who is this person "consultant Nick Parker". Is this not pure conjecture and totally unsubstantiated. Any comment from GAME? How can you just publish something like this? Listed companies like GAME have a duty to report to their markets and their shareholders not 'some' consultant of a material change in their business model.

Posted:2 years ago

#1
Nick Parker runs Parker Consulting, is hugely respected and works for multiple games and technology companies http://www.parkerconsulting.biz/ourclien... If he says he's sat down with the CEO of GAME I have no reason to doubt it.

Posted:2 years ago

#2

Terence Gage
Freelance writer

1,288 120 0.1
Seems like a good idea in principal; while we're moving toward a digital-centric future, retailers are going to be necessary to hardware manufacturers and publishers for a long time yet, so the likes of Game should be embracing this movement.

Plus, from a consumer perspective, it means you can still trade in your old console against new ones or online credit. I think that's still going to be important for a lot of people.

Posted:2 years ago

#3

Nick Parker
Consultant

280 143 0.5
What I actually said is that Ian Shepherd suggested that this could perhaps be a route to go for Game Group now that companies like OnLive are executing strategic relationships with retailers. Our discussion was about ideas not about expected changes to Game Groups business model. I appreciate your concern Graham and would have been as astonished; in fact I am surprised at the way this has been reported.

Posted:2 years ago

#4
You described it as the CEO's vision, not a suggestion that it's a route the company might go down.

Posted:2 years ago

#5

C Fletcher

4 0 0.0
I hope the conversation was recorded. That way there is no confusion who said what. Either way this is pretty interesting.

Posted:2 years ago

#6
An intriguing concept indeed, and not unrealistic. physical media is dying out.

even though this is a vision I would comment that out of three different Game stores I visited recently none of the staff knew that GAME had a relationship With On Live.was thinking of picking up a second controller and they looked at me and thought I was talking about Xbox live

Posted:2 years ago

#7

Peter Howell
Studying Ph.D Research Programme - Computer Games Technology

8 0 0.0
Not that I shop much in GAME anyway as they are usually one of the most expensive, but this seems an odd aim - physical media is at no risk of 'dying out' any time soon. Yes digital is on the increase, but with current tech limitations it isn't a practical solution for 100% of content. Plus, there is a not insignificant amount of people, myself included, that will almost always purchase physical products over digital ones for the sense of proper ownership. In 5 or 10 years time, it is going to be much more viable to live online, store everything online, and stream everything as needed, but I just can't see that yet. Maybe I'm wrong but hey!

Also, likewise to Niall, I have asked in multiple GAME stores about info on OnLive to see if they knew their stuff, and not a single shop assistant has had the faintest clue what I'm on about. If this is the vision for the chain they should probably firstly make sure they train their staff in product knowledge!

Posted:2 years ago

#8

Phil Elliott
Project Leader, Collective; Head of Community (Live Team)

163 29 0.2
The comparison to Carphone Warehouse is particularly interesting, given the Best Buy acquisition - while BB's more traditional stores didn't prove successful, it must be intriguing for them to read that their biggest UK competitor is looking at a business model for a company that they own.

Posted:2 years ago

#9

Mike Wells
Writer

61 28 0.5
Selling contracts doesn't require a store network: once a customer is subscribed that's it. Carphone Warehouse (and its competitors) need stores because the contracts are linked to physical devices that are replaced every 18 months to 2 years; there are many devices to (try out and) choose from at any one time and there is (some) competition between providers and a lot (deliberately) of complexity in contracts/tariffs. None of that applies with OnLive and I doubt it will for cloud gaming in general. I'm not saying GAME shouldn't try to make a buck from an OnLive partnership, but to see it as a strategic direction is, sadly, yet another pipe dream (no pun intended).

Posted:2 years ago

#10

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