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Retail

HMV may cut back video game sales

Tue 10 Jan 2012 8:02am GMT / 3:02am EST / 12:02am PST
BusinessRetail

Fox considers dropping older titles following poor Xmas performance

Entertainment retail chain HMV has said that it may cut back on the number of video games it sells, dropping support for older software.

Yesterday it revealed that sales over the Christmas period were down by 16 per cent, with chief exec Simon Fox admitting the company lost share in games to supermarkets and online rivals.

According to a report by The Telegraph, video games make up 20 per cent of the retailers offering, but Fox said that "one of the things we will do is look at what percentage of games should make up as part of the mix."

Abandoning "the long tail of older software" HMV could just focus on new releases, said Fox.

The retailer has 160 million worth of debt. It has made headway in new sales by introducing technology product to its stores, with sales up 51 per cent, primarily due to the trade in headphones.

9 Comments

Morville O'Driscoll Blogger & Critic

1,611 1,473 0.9
Urgh? Really? Well, to be fair, it could be worse; he could've said that they'd focus more on second-hand sales. Though that is probably also going to happen.

Posted:2 years ago

#1
The tricky thing is brand image, what would one go to HMV to purchase. DVDs? blu rays? music? games? its not exactly determinate....

Posted:2 years ago

#2

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
I agree to some degree, but then tescos isnt really a game retailer as a first thought either. I think people will go wherever the the price, and the time delay to actually getting it in your hands is right. Cheaper boxed product online with a bit of a wait for postage is also fine for some depending on their mood. Even cheaper as a download and on your hard drive in five minutes is obviously becoming the preferred option now though. Only places you go for other stuff, like supermarkets, will compete with online, and that will probably be impulse buys and when they are running offers at launch to get you in for groceries. Also, HMV tend to be positioned on high streets. High streets are a hassle to get too alot of the time.

Posted:2 years ago

#3

Tommy Thompson Studying Artificial Intelligence (PhD), University of Strathclyde

110 0 0.0
Perhaps instead of abandoning "the long tail of older software", try cutting the prices on them. I found myself on the high street just after xmas and checked out their clearance sale. It was pathetic. Games that were nearly 2 years old still sitting with a 20-30 price tag. All the while they hope someone will buy Assassins Creed, Battlefield or Arkham City at 45, while even round the corner at GAME they provide better deals. When you can't even compete with GAME's awful pricing then you know you're doing something wrong.

Posted:2 years ago

#4

John Bye Senior Game Designer, Future Games of London

484 455 0.9
So you're losing market share to supermarkets, and you respond by .. doing exactly the same thing most supermarkets do (only stocking a small selection of new titles and chart hits) but charging more for them, and in a less convenient location. Good luck with that.

Posted:2 years ago

#5
Maybe there can be a case for a games (designer outlet) whereby older titles can be had for a cheaper price?

Posted:2 years ago

#6

Kingman Cheng Illustrator and Animator

955 184 0.2
I agree with you there Tommy, I mean I've walked into Game before and they even sell old second hand games for that kind of price. I might as well buy an old game that's new from Amazon, sealed condition.

Having just had a look at Game's site at the preowned games section, looks like they're selling them considerably cheaper now as they're on sale, not sure what that'll look after after the sales are gone. I was considering buying another PS3 controller over the holidays, walked in and it was like 42...no.

Posted:2 years ago

#7

Stuart Lean Supervisor - HMV Guernsey, HMV

3 0 0.0
Without going into a long explanation of obsolescence and the activity surrounding it (something that the games distributors and producers are loathe to fund to allow a markdown of the sort you would like to see for a game that is past it's peak release timeframe too often, yet is something DVD distributors do to continue shifting older catalogue).

Basically, in order to sell it cheap, retailers have to be able to buy it cheap in the first place. Lots of negotiation takes place between buying teams to try to get a sensible price on a product. Simple math dictates that selling something for close to, or less than you paid for it (I.e low margin) is not sustainable business practice. So instead of bitching at HMV or GAME for their prices being too high (itself an indicator that people expect prices to be much lower than they actually should be.... Prices for games havnt really changed much since the days of forking out 40 for megaman 3 on the NES, yet DVD prices were around he 20 mark when the format first came out, much like Blu-ray is now) instead you should be bitching at producers such as Activision, who brazenly and openly stated they were going to charge in excess of 45 RRP for Call of Duty titles simply because they knew people would buy it regardless.

Pre-owned prices have gotten a lot more sensible than when they first started. Back in the heady days of small business run by games-adoring geeks with beards, when titles were priced more on how good the game was/how hard it was to get it mint, they would charge whatever they could. It is only now competition is so much more prevalent, with the Internet making being too lazy to get out to the shops a viable option for the consumer that prices are viewed as needing to be 'cheap' in order to sell. The supermarkets do not help this. Their soul method of beating heir competition is to go to war with prices, tempting people to compare their entire months food, clothes and everything else shop between the giants to see which one saves them the most money. The problem for specialist retailers here is they don't sell spuds, or clothes (seriously, if you want to complain about prices, do some instigation into how much you are actually paying the company you just bought that new shirt from as a gross percentage of its cost to them and you'll probably feel sympathetic to the plight of your friendly neighbourhood games and DVD retailer afterwards!)

Sure, digital distribution removes a lot of the issues that generate cost for a company, namely transportation and production of the goods themselves on physical media, but it just doesn't have the same reach, or tactile feel that a physical product has. A lot (no, seriously, A LOT) of the customers we have over Christmas would never even think of buying a digital download as a gift, even if that is the only way to play that game, because it can't be gift wrapped and physically given. If you want another way of looking at ibis, look at the (frankly stupid) sales volume of a title like Just Dance (3/10 from official Nintendo mag.... Classy!). This would only have been possible thanks to a solid marketing campaign and a physical product to buy by the games key demographic.... Women and children. Had this been download only title, it would have bombed (and probably had more derogatory comments underneath it about shoddy controls than downloads!), because the average person doesn't think like we do, doesn't buy like we do and doesn't want to sit at a computer and wait for something to be downloaded to their hard drive so their kids can play on christmas day.
We like to think that the future is digital, that the future is now and hat digital distribution is going to solve everything tomorrow.... But it won't. Continue to fail supporting your high street and you will only see a general downturn for everybody else. A completely digital future is too far away yet to rely on it, and while we can't knock successes like Angry Birds, neither can we say that they are the standard for our industry right here and now. hilariously, the issue of price seems to not affect retailers, yet if you cared to look for a download of something like Blood Bowl on Xbox live you'll be asked to pay something like 24.99, for a game you could likely pick up a boxed copy for half that, if not less. Sometimes even the very currency used to buy games online is cheaper when bought as a scratch card in a shop compared to when bought using a credit card on the download service itself. I'll tell you one thing that annoys me on this... It shouldn't be more expensive to buy game time or credit online than in a retailer, it should be the same damn price!

The announcement from Simon Fox shouldn't really shock anyone. Games from as little as 6months ago can be annoyingly had to get a hold of in any quantity due to some suppliers stopping distribution of them. Not the retailers fault, nor is it really the producers for not wanting to spend the money on making something that has already sold as much as it iis really going to sell, statistically. 6 months down the line, Homefront was just the forgotten blip in a bare patch of new releases, not something people rushed out to buy anymore. There was an article in MCV about the top 20 games that will save Christmas, and sadly that is the way it goes. All Simon is telling us in the above article is that we will only support the triple A releases going forwards, which sounds tragic, but really isnt much more than sensible business practice we've been doing or years anyway. In order to sell 'old', it needs to be cheap enough to entice the consumer. In order to get it cheap in store it needs to be bought cheap from the supplier, and that usually men's bought in bulk. If there is one thing gamers are not very good at, it's buying old games in sufficient quantity and regularity to make it as viable as, say, DVD catalogue, a medium which an easily support budget prices and multi-buy deals.

The only place games back catalogue has really ever existed was PC budget ranges like White Label or Explosive. Sure, some high profile series (Pokemon, world of Warcraft. Sims, Mario) enjoy healthy sales and long shelf lives, but they are a desperate minority. You can read reviews in retro gamer, or pick up an of copy of Edge or Official 360 or whatever and find a lost gem, but chances are you'll only see it in retail as a second hand traded in copy, simply because Sony, Microsoft, Nintendo, Ubisoft, Activision etc stopped making it years ago. Here is where digital distribution will shine, but only for popular titles and the recent-nostalgia scene, not for people wondering if FIFA 08 was better than FIFA 12.

The big problem, and the big priority for retailers, is that the people who 'care' about gaming like we do, the people for whom nirvana is the idea of downloading the game we want to play in seconds, from the comfort of our bedrooms, on our Alienware pcs is that, not being funny, we are an almost insignificant percentage of the whole market scene. Joe Schmo on the high street, popping in to buy 'that gun game' for his kid, or Little Billy coming in to buy World of Warcraft time cards with his pocket money after school, those are the people that buy the most games overall. They aren't screaming fanboys, they probably don't even know websites like this even exist, but these are the predominant customers. Sure, there are always the core gamers to fall back on, but even for them, hard copy is preferable at the moment. iOS, Xbox live arcade, psn minis are all awesome fun and great variety, but are not yet a business model the giants can solely rely on without physical boxed product to back it up. If it was, Sony wouldn't be announcing their next generation console as still using physical media.

Posted:2 years ago

#8

Stuart Lean Supervisor - HMV Guernsey, HMV

3 0 0.0
Oh, and in reply to that comment abou HMV not being determinate.... We've kinda been around a while mate, don't know if you noticed us, we've won a few industry awards in our time. Just saying, most shoppers know what we sell.

Posted:2 years ago

#9

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