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Retail

GAME Changer: The Impact of the Collapsing High Street

Fri 24 Feb 2012 7:55am GMT / 2:55am EST / 11:55pm PST
BusinessRetail

GAME's troubles inspire fear across the boxed game sector. They're not ready for what comes next

Tipping points are a peculiar thing. They always seem obvious in hindsight - but it's next to impossible to see them coming in advance, or even to recognise them when they actually turn up. Yet almost every market transition - indeed, almost every transition of any description - has its tipping point, a moment where the various factors pushing in a certain direction become inexorable.

Because this is such an alluring concept for journalists, we've got a terrible habit of labelling all sorts of things as being tipping points, when they're almost certainly nothing of the sort. Every decent Android handset that comes out is the "tipping point" that'll swing the mobile market in Google's favour. Every attempt by Microsoft or Sony to appeal to a casual market is a "tipping point" that'll demolish all that Nintendo has wrought. "Is this the tipping point for social games?", we wonder aloud every time Facebook or Zynga makes a pronouncement, never entirely clear what's being tipped or what it's being tipped into.

All of which is a long-winded way of saying - when someone starts banging on about tipping points, unless they're talking in academic hindsight, they're probably best ignored. So, bearing in mind my own admonition on this matter, I'm not going to describe what's happening to UK retail right now as a "tipping point". It's more complex than that, and perhaps more worrying.

Customers who can't find a game they want in GAME will go elsewhere. They may never come back - and so, the decline continues.

For the benefit of those not following the saga, the UK's specialist retailer, GAME, is in trouble. How much trouble it's in depends on who you choose to ask, but after several tough years, the company finally seemed to hit the rocks with its creditors a few weeks ago and found itself unable to secure the lines of credit needed to acquire stock of new releases. After a few deeply uncomfortable days, the situation appeared to be remedied, at least temporarily - but even since then, signs out of the company have been less than encouraging.

This week, GAME held the official launch for Sony's PS Vita - but conspicuous by their absence were Ubisoft's launch titles, which aren't being stocked by the chain. The week before, the chain also failed to stock Nintendo-published 3DS title Tekken 3D Prime Edition, and most recently, customers who had pre-ordered Wii RPG title The Last Story had their money returned to them and pre-orders cancelled.

"We can't stock absolutely everything," was the explanation offered by the chain's marketing director - but pleading a lack of shelf space is unlikely to convince many people, given that this is the company which operates the UK's largest game stores, not to mention that these issues also extend to the firm's online retailing operation, where no such shelf space issues exist.

GAME isn't the only retailer in difficulty, of course. It's fair to say that the entire UK games retail sector is in a fairly sharp decline - far removed from its once legendary ability to grow strongly through a recession, boxed game sales are now dropping off at a startling rate. Even the overall decline in boxed sales doesn't tell the whole story of GAME's problems, since online retailers like Amazon have been grabbing an increasingly large slice of this steadily shrinking pie.

Rather, GAME is emblematic of the decline. The chain plans to shut around 10 per cent of its stores by Christmas this year, plans which will end up being the thin end of the wedge if it can't find a way to resuscitate consumer demand. The problem is that GAME has reached a stage where its decline is only likely to accelerate. Being unable to stock titles from major publishers or fulfil pre-orders is an extremely dangerous state for a specialist retailer to be in, as it draws the store's competence and usefulness into question for consumers. Customers who can't find a game they want in GAME will go elsewhere. They may never come back - and so, the decline continues.

Ten years ago, everyone was terrified of GAME. It was GAME which bullied the industry into accepting the removal of sales data from the weekly charts.

What happens next for GAME is in the lap of the creditors. It could end up bankrupt in a much shorter space of time than people like to imagine. It could find itself heavily stripped down and operating a diminished but profitable business. Equally, it could limp on as good money is thrown after bad, especially if publishers decide to rally around and support the most visible presence video games have on the British high street.

One possibility isn't on the table, though. GAME will never again be the force it once was in the videogames market in this country. Ten years ago, everyone was terrified of GAME. The whim of the retailer could make or break a game launch - anyone in the industry back then will recall, for example, that it was GAME which bullied the industry into accepting the removal of sales data from the weekly software charts.

That's, perhaps, why there's such an unusual mix of emotions among those in the industry I've spoken to about GAME and its present difficulties. Everyone feels for those who are likely to lose their jobs (or who already have) as the retailer downsizes, and nobody likes to see a major part of the games business face such tough times. Yet it's unarguable, if not popular to mention, that there's a certain grim satisfaction in some quarters at seeing the declawing of a firm which has always been so willing to throw its weight around - whether it was over the charts all those years ago, or more recently over the frankly shameless way in which second-hand merchandise was promoted over new products, to the detriment of the entire development and publishing industry.

Any such emotion, however - be it sadness at the potential job loss, or schadenfreude at the declawing of a once-vicious tiger - is overshadowed by the primary response to GAME's decline: fear. The traditional games business is very, very afraid of what's happening at GAME, because it represents an unwelcome acceleration towards a future which they have always accepted as an inevitability, but never quite believed was going to happen just yet.

The traditional games business is very afraid of what's happening at GAME, because it represents an unwelcome acceleration towards a future which they have always accepted as an inevitability, but never quite believed was going to happen just yet.

Digital distribution has never just been about switching from selling boxes to selling downloads, you see. It's got much more far-reaching implications than that. It moves us away from a world where you have huge shop windows on every high street holding posters and other point of sale marketing for your game. It takes away the ability to pay for premium shelf space in a retailer with a certain level of footfall, or the ability to leverage your relationship with a specialist retailer to ensure heavy promotion of a weaker title in order to guarantee first dibs on a bigger game in a few weeks' time. It ends casual browsing by Saturday afternoon shoppers, the culture of someone popping into GAME to pass time while their better half does more boring shopping elsewhere. Maybe these things seem small, but they've been the foundation of boxed game sales culture for decades, and now they're going away.

That's frightening, and no amount of conference speeches or editorials like this one pointing out the way that the wind is blowing make any difference to that. Most publishers just aren't ready. Digital distribution of console titles, in particular, is still a joke. Lacking the impetus provided by piracy on the PC, console publishing has rested on its laurels and made nothing but token efforts at online distribution - sticking carefully to price points engineered not to upset retailers, rather than to attract consumers. The death of retail was far off, we were told. It would happen, but not in this decade. Broadband wouldn't be fast enough. People would always want physical product.

Well, that turns out to have been so much nonsense, the smugness of those who uttered it being a cover for their fear and little else. Yes, some people still want physical product - but that's true of every medium, and it hasn't saved CD sales in music, where, hilariously, the music industry is now pointing to an uptick in sales of vinyl as vindication for the "physical stuff matters" claim (it does, but only to a minority group who aren't remotely numerous enough to support a global industry). Yes, broadband is rubbish in some areas, but again, those who can't or won't get a decent connection aren't numerous enough to justify a huge physical product market.

Moreover, it's happening now - not in ten years. Not in five years. Now, and faster than even the most ardent supporters of digital predicted. That's where the real meaning of the word "tipping point" becomes important. It doesn't take the entire country to stop buying physical product for digital to take over. Rather, it just needs a certain percentage to stop buying - a percentage big enough to make big retail chains unviable and to hammer profits from boxed sales of games elsewhere. That might not be a very big percentage. Margins are tight in many chains; a drop of 20 or 30 per cent in their game sales could be enough to make them abandon the sector. Then everyone, the whole 100 per cent, looks elsewhere - some to online retail, some to digital, and some, perhaps, out of the industry entirely.

Publishers can't afford for GAME to fail just yet. They don't all like the company, but they'd like its absence even less.

That can happen, and is happening, with lightning speed - and the fear palpable in the industry right now is an understanding that it's simply not ready for the transition. Many publishers just don't know how to sustain game sales without point of sale marketing. Many are completely deluding themselves about how digital distribution price points will work - and many simply aren't understanding that for all that many consumers are deeply committed to console gaming as a pastime, many others will find their entertainment (including gaming entertainment) elsewhere if the only alternative to a dying retail sector turns out to be a laughably overpriced, uncompetitive and under-serviced digital downloads market.

One consequence of this, though, is that it may well be life support for GAME for at least a while. Publishers can't afford for GAME to fail just yet. They don't all like the company - second hand sales, in particular, rankle - but they'd like its absence even less. The industry will bite its tongue and rally around GAME, because it's just not ready for what happens when GAME, and the rest of the high street retail sector, falls. Rally as it may, though, this is only a stay of execution. Consumers have the final say - and they are speaking in droves. Any company not ready for this transition to happen soon, and quickly, is a company that won't survive it.

53 Comments

Rupert Loman
Founder & CEO

135 14 0.1
Spot on.

Posted:2 years ago

#1

Richard Westmoreland
Game Desginer

140 90 0.6
Great article.

Posted:2 years ago

#2

Bruce Everiss
Marketing Consultant

1,716 598 0.3
The writing was on the wall when the directors sold large shareholdings near the top of the market:

On 25 February 2008, Lisa Morgan, Chief Executive of the Company sold 1,380,302
ordinary shares at an average price of 224.63 pence per Ordinary Share. Of these
shares, 514,851 relate to shares granted pursuant to an LTIP due for expiry in
July 2008 and 865,451 relate to shares acquired as a result of the exercise of
share options with a weighted average exercise price of 75p. Following this
disposal, Lisa Morgan is interested in 201,712 Ordinary Shares representing
0.06% of the current issued share capital of the Company, deferred shares to the
value of £173,937and 1,664,804 share options.

On 25 February 2008, David Thomas, Deputy CEO and Group Finance Director of the
Company sold 1,039,946 ordinary shares at an average price of 224.63 pence per
Ordinary Share. Of these shares, 399,321 relate to shares granted pursuant to an
LTIP due for expiry in July 2008 and 640,625 relate to shares acquired as a
result of the exercise of share options with a weighted average exercise price
of 64p. Following this disposal, David Thomas is interested in 66,322 Ordinary
Shares representing 0.02% of the current issued share capital of the Company,
deferred shares to the value of £154,986 and 808,126 share options.

Posted:2 years ago

#3

Matthew Hill
Head of Recruitment

76 26 0.3
Another excellent article - Yet again Rob Fahey is bang on the money. Sadly....

Posted:2 years ago

#4
I'd say - as a consumer I would like the option of browsing the physical game/hardware/peripheral but with the EXACT same price offered online. Not more, but on par or less - such is the situation

Posted:2 years ago

#5

Sam Brown
Programmer

237 163 0.7
The browsing topic reminds me of the crushing guilt I feel when I use the Amazon app in my local Waterstones. Everyone's so nice in there, I try and buy at least one of the books I've scanned ever time I go in there from them...

Posted:2 years ago

#6

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ Chee

Indeed. Tax loopholes excepted, there's no reason why High Street stores cannot offer the same price as their online counterparts. If the government does close the Channel Islands "thing" then that'll give High Street stores some breathing space. Ultimately, thogh, I think publishers need to accept that their pricing points are old news, and that some games just clearly aren't worth as much as they would like to think. (Gabe Newell said as much in his recent interview with Penny Arcade).

Over-and-above that, perhaps the industry should consider mobile shopping as a concept. Merchandising in a physical store is one thing, but it's obvious that even the largest store isn't going to carry everything. Yet, with the majority of people owning a browser-capable smartphone, it wouldn't be too hard (surely?) to strike a deal with HMV that said "Give us more advertising space, and we'll produce banners saying 'Buy the latest CoD on HMV's website, right now via your phone at HMV.com'".

And that last point is something else. With the decline of Game, publishers now only have HMV as a chain-store High Street presence, and who knows how long they'll last. But it means that both sides *should* look to make themselves stronger - HMV could easily pick-up some of the footfall of Game, increasing profit, whilst the industry may actually have a bargaining chip with regards to second-hand sales in HMV.

Posted:2 years ago

#7

Matthew Hill
Head of Recruitment

76 26 0.3
Some observations....

Cost Base - High Street Stores currently charge higher prices than online stores simply because they have higher costs - think how much it costs to staff, rent and operate a single shop then multiply that across your store count. Online stores have a much more centralised, efficient cost base.

Customer Base - In theory they can sell to ANYONE with an internet connection.

Marketing - Amazon and it's peers have an awesome (some would say frightening) level of customer insight which gives them vastly superior marketing clout - particularly with targetted marketing activity.

Posted:2 years ago

#8

Darren Stewart
Videogame investor

52 17 0.3
Another excellently written article – I really think you’re one of the best gaming journalists around at the moment.

However, while I don’t disagree with anything you said, I’m going to suggest that you haven’t hit the nail on the head with regards to the problems with the video game industry and the recent run of awful sales numbers from across the globe.

I think there’s one UK specific point which is a huge factor and one macro point for the whole industry which is the major issue at the moment.

UK Supermarkets

To start with the UK-specific point I don’t think that you can avoid the fact that supermarket discounting has decimated margins in UK video game retailing to the point where I wonder if it is actually possible to make money selling games in the UK.

In the UK, we are in a unique position globally where we have four massive supermarkets all trying to compete to drive footfall for their core grocery business. Categories like games, music and such like are pretty much only there to drive consumer footfall to the business that makes money, i.e. grocery. Therefore, they’ve been quite happy for many years to out-promote each other on categories such as games to get people in the door.

What has happened over the years is that the effective value of a game (in terms of price) has gradually been eroded in the eyes of the consumer and that has dramatically affected both the size of the market and retail margins.

I <a href=”http://www.bougafer.com/forum/should-publishers-bring-uk-price-controls> have long argued</a> that the publishers are being incredibly short-sighted in allowing this erosion of selling prices because in the short term it didn’t affect them because the retailers took all the pain.

Now, however, they find themselves in a situation where there’s nobody to sell their games and the value of their products in the eyes of the consumer is a fraction of what it should be.

I know that the counter-argument to this is the whole “we’re at the end of the hardware cycle so prices always get deflated” but I would simply say that you need to look across the pond where they don’t have the same cut-throat retail environment and you’ll see selling prices are maintained at levels that UK retail can only dream about.

This is a UK specific problem but one that, I continue to think, the publishers (perhaps with the help of UKIE or ELSPA) should really have sorted out years ago.

Innovation

The main point, though, and the one affecting the whole industry is the lack of a new “thing” over the last few years to drive the industry. The industry has always had innovative new things which has driven sales over and above the baseline but the last few years has seen a total lack of gameplay innovations to catch the imagination of the consumers.

The last two gameplay innovations which drove the industry were Guitar Hero and Wii. I think people forget the impact of Guitar Hero but in one year (I forget which, probably 2008 or 2009) it was over 10% of the entire industry in terms of sales. Like all these things it came and went.

The other great gameplay innovation was the Wii and, more specifically, motion control. I hardly need to explain this but I think it is worth looking at this graph which shows just how important the Wii has been, how far it has dropped off and how poorly (relative to PS2) the PS3 has been.

Which brings me to the main conclusion which is that 2 main consoles (PS3 and to a lesser extent the 360) have performed pretty poorly when you compare them to the previous generation. And I’m not necessarily laying the blame for that at Sony/Microsoft’s door. I’ve always believed that games drive hardware sales and it is clear that this generation just didn’t have anything to excite gamers enough.

It’s the same old, same old games and I think gamers have just gradually had enough. Where’s the next genre of gaming that is going to excite the traditional game player? Where’s the next Command and Conquer? The next Doom? The next Tomb Raider? The next GTA3? The next game which is the genesis of an exciting new genre which can drive meaningful sales in the industry?

Well, nobody knows. It could be just around the corner or it could be years away. But what seems inevitable from the sales numbers of last year and early this year is that the industry needs it. Badly.



http://www.bougafer.com – investing in video games

Edited 3 times. Last edit by Darren Stewart on 24th February 2012 12:26pm

Posted:2 years ago

#9

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ Darren

"What has happened over the years is that the effective value of a game (in terms of price) has gradually been eroded in the eyes of the consumer and that has dramatically affected both the size of the market and retail margins."

This isn't just the supermarkets fault. If anything, Game and Gamestation have helped this. Case in point:

Last year, I considered picking up Dungeon Siege 3 for the PC. On release, Gamestation on the High Street was selling it for £35. Not even 4 weeks later, that price had dropped to £20. That wasn't a sale price, btw, that was a standard price. On sale, just before Christmas, it was £15.

The consumer (and it's not just me here) is getting wise to how quickly the original RRP on products is disregarded. One of the forums I frequent had someone saying "Why pay $40 for the new Syndicate now? I'll wait until it's half that in a couple of month's time." Games are valued very weirdly and that's... I think an issue with publishers.

Edited 1 times. Last edit by Morville O'Driscoll on 24th February 2012 11:37am

Posted:2 years ago

#10

Nick Ferguson
Senior Producer

48 9 0.2
Rapid price erosion does seem to be a very UK-specific thing, though. New games seem to hold their prices a lot better on continental Europe and in the US. Based purely on my own anecdotal observations, I should add.

Posted:2 years ago

#11

Massimo Guarini
Founding Director and CEO

26 18 0.7
@Darren: couldn't agree more.

Posted:2 years ago

#12

Darren Stewart
Videogame investor

52 17 0.3
@Morville, I think GAME have just been reacting to what the supermarkets have been doing and what consumers have now been allowed to think is "normal". GAME have had to compete with the supermarket price points even if it meant them selling at unsustainable margins.

This doesn't happen in the US and (as far as I'm aware) is much less prevalent in Europe. In the UK we live in a unique retail environment.

Ironically, MCV have just put up a piece about suicidal game prices which is here

That's a UK retail problem but I think the major problem for the industry is my second point above about lack of anything to excite traditional gamers.

www.bougafer.com - investing in video games

Edited 1 times. Last edit by Darren Stewart on 24th February 2012 12:24pm

Posted:2 years ago

#13

Tom Pickard
Lead Environment Artist - Campaign Map

308 382 1.2
@ Darren -


"I have long argued that the publishers are being incredibly short-sighted in allowing this erosion of selling prices because in the short term it didn’t affect them because the retailers took all the pain. "

How are they "allowing" supermarkets to undercut people, they offer units to all retailers at the rate that is going for the ammount you order, they then tell them a reccommended selling price which is not binding at all... telling them what to charge would be price fixing.... also as supermarkets buy in massive bulk you can't make them pay more than stores that buy small quantitys... so you can't push up the base product cost. The only thing you could do is not sell to supermarkets which would be counter productive seeing the footfall they get and the quantitys they order.

Edited 1 times. Last edit by Tom Pickard on 24th February 2012 12:32pm

Posted:2 years ago

#14

Darren Stewart
Videogame investor

52 17 0.3
@Tom

Yes, this point has been argued here but, in summary, all I will say is Apple and iphone. Try and get a discounted iphone from Tesco (and the like) and, of course, you can't.

So, while it is technically illegal to price fix, you can do it if you want to. I'm not exactly sure what Apple do but my guess is that they simply won't supply you if you don't agree to their selling prices.

Of course, the publishers wouldn't dream of doing that in the beginning when it first started happening because they got lots of extra sales and the discount was all taken on by the retailers.

Now look what's happened!

http://www.bougafer.com - investing in video games

Posted:2 years ago

#15

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ Darren

Perhaps. Though 2 things

1) Who takes the hit when a game is marked down so much? The retailer, yes? Tescos drop the price on games to attract customers, who end up buying so many groceries that it covers the loss on the game, and then they clear a profit. So, when Game/Gamestation don't have any other products to sell, surely it's gross stupidity to try and equal the supermarket's prices when they don't have anything else to sell to cover the loss they're making, let-alone turn a profit? Moreover, it becomes a self-fulfilling prophecy - Game try to equal the supermarket prices, which in turn devalues the product in the eyes of the customer, who in turn expect all future games to cost nothing.

2) Personally, I think the power of supermarkets to devalue games is questionable. The times that I've gone into Tescos/Asda/Sainsburys to look for cheap games, I've noticed only a small difference in prices as compared to Amazon (who in turn are considerably cheaper than Game).

Regarding innovation - well, yes and no. Were there a great deal of innovative games on the SNES/Megadrive? Most games were just iterations of previous genres done exceptionally well (Super Mario Kart and Sonic, for example), yet money was made. I don't think it's "innovation" so much as quality and genres that have been ignored due to publishers chasing dollars. I'm not the only one who would've bought the new Syndicate if it were a isometric strategy game like the original. The fact that EA/StarBreeze produced a FPS (oh, how original) that looks like a Deus Ex clone means that a lot of people aren't even bothering to pirate it (from what I've read).

Edited 1 times. Last edit by Morville O'Driscoll on 24th February 2012 12:54pm

Posted:2 years ago

#16

Terence Gage
Freelance writer

1,288 120 0.1
I'd say online stores do more to devalue the perceived retail price of games than the supermarkets - I mean, with the big four supermarkets they'll probably do some special offers on the big releases at the end of the year (I got Uncharted 3 for £25 from Sainsbury's when I bought £25 of PSN credit, and they had the same offer with Battlefield 3), whereas frequently online stores like Zavvi drop relatively new releases to £25 or £18 within weeks of release. Because of this I think publishers should look at more varied price points for certain releases - a perfect recent example being Asura's Wrath. I'm sure it's a great and unique experience, but for something which reportedly lasts about 6 hours and less than a third of that is time when you're actually playing, launching with an RRP of £50 is - in my opinion - tantamount to taking the piss.

Anyway, as for the decline of GAME - it's sad, but perhaps inevitable. They need to massively downsize the business (as is often noted, this practice of having 2 or 3 stores in most towns is hugely wasteful) and probably give serious consideration to becoming an internet-only business in the longer term. It's sad that they're closing down Gameplay.com - that was one of the first internet shopping websites I ever used, and I think it may be how I found Eurogamer, as they used to publish EG reviews. If Rupert's about, have you given any consideration to buying Gameplay, and adding it to the EG empire?! :)

Troubling times for the UK market. I'm sure supermarkets will try to pick up some of the slack if GAME go under, but it's unlikely they'll give shelf space to anything but the most mainstream of titles. I would probably do most of my browsing in Blockbuster, as my local store has a pretty decent selection, but then that's hardly the most stable of businesses in recent years either. Ditto HMV. Troubling for the wider high street, even if GAME being in such a luxury market are being hit harder than most stores.

Posted:2 years ago

#17
I suppose whilst we are here, one should debate the actual fair pricing of the core game RRP

I believe £20-25 is a fair RRP that will allow most folks to purchase a console title, and digital titles should have a RRP of £8-10. Long term, with minimal price displacement this can be good value in the whole long run (i.e because the RRP already is at a minimum profitable rate, there should be no margin for middle men i.e retailers or supermarkets to offer discounts and as such have a more stable pricing long term)

please correct me if this view is too out of sync

Posted:2 years ago

#18

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ Chee

The disparity between console and digital begs a question: What happens when the same titles is sold digitally and physically? Whilst console games don't have to deal with that particularly right now, PC games do.

The consumer in me would like there to be a "hours per game/price" ratio, with an upper limit. That would mean less "blockbuster" titles that last only 6 or 7 hours, and which are in development for ages, and cost £30 (Darkness 2, Syndicate, I'm looking at you). Unlikely, I know.

There's also the question of how much cut the middleman/retailer takes, with regards to final pricing in digital. Valve apparently only take about a 30% cut of the final price for games on Steam, yet they consistently tend towards the pricier end of things. Which means publishers (I assume) are harvesting a hell of a lot of money from Steam sales.

Edited 1 times. Last edit by Morville O'Driscoll on 24th February 2012 1:43pm

Posted:2 years ago

#19

Helen Simm
GUI Artist

9 0 0.0
Apart from all the very valid comments posted here, I would mention that there is one factor in which GAME has failed: Online.
A few months ago they updated their website, or should I say attempted to.
What followed was a debaucle of badly managed account transparency, cancellation of pre-orders, or simple non deliveries, customers unable to cancel pre-orders or view orders in progress and of course the kicker: Incredibly bad customer service and the way they handled their online persona in general was poor to say the least.

We all want the games, but with the emergence of more and more online retailers (amazon, shopto.net, play.com), GAME no longer had the edge, we had a choice.

It still infuriates me to this day that I was forced to buy the collectors edition of ME3 from GAME and Gamestation...


Posted:2 years ago

#20
@ Helen - same here. I had to buy ME3 from Game. but the reality probably is the retailer payed/offered a substantive secret handshake deal for such a offering. curses!

Posted:2 years ago

#21

Terence Gage
Freelance writer

1,288 120 0.1
I agree with your point Chee, but then I don't think every game should have the same RRP - Dark Souls or Skyrim being two examples with so much depth and content that they could easily justify a £40 retail price. Similarly, I think a game like Binary Domain would do much better were it selling for £25 or £30 as standard, as it's entering a very competitive field and I think Sega should price it attractively to entice as large an audience as they can. Then you've got something like Rayman Origins on Vita, which has an RRP of £35, which seems a bit steep for a port of a game which came out 4 (?) months ago which has reduced features.

But I definitely think that Sony, MS and other publishers should take digital pricing much more seriously -- I'd think a discount of 15-20% over the typical retail price would be adequate at launch. I mean, I know I won't ever trade in Uncharted 3, so I would have gladly paid £34 for a digital copy, and Sony gets the extra security in knowing that copy will never be sold on. Similarly (again using Sony as an example because I know of a lot of their first/second-party output), I don't understand why they don't shove games like Resistance: FOM, Uncharted: DF, Heavenly Sword, Folklore etc on the PS Store for £6 or £8 a pop and try to get some digital sales from them, considering they must be dead at retail by now. Or, for instance, the other week before The Darkness II came out - I thought 2K really missed a trick by not putting The Darkness up digitally for about £5, as a special offer and to try and generate some interest in the brand before its sequel was released a few weeks later. It just seems that the platforms to deliver this content with dynamic pricing is in place, but no real effort is made to take advantage of it.

Posted:2 years ago

#22

Andrew Goodchild
Studying development

1,199 317 0.3
Helen, re the website relaunch, you missed out charging customers multiple times for the same items. Being charged 3 times for one game and 2 for another, and spending two forty minute phone calls on a premium rate customer services number (which I did manage to get rebated as a voucher at least) has pretty much guarenteed I won't shop online with game using a credit/debit card in the near future, especially as one girl who answered was surprisingly candid enough to tell me it had happened quite a lot recently.

Posted:2 years ago

#23

Chris Wilks
PR

3 0 0.0
I think that most people underestimate the average gaming consumer.
They are savvy and well informed about their choice in purchase, with a large amount of time spent on the net.

£40 is not a throw away purchase so Game should have offered a lot more to tempt the customer rather than remain complacent, dwindle and ultimately die a hurried death!

A recent example I saw was a new copy of Viva Pinata selling for £5 LESS than the used version. When I questioned this with the store manager he didn't have a clue how to reply.

Sorry GAME but you won't be missed!!

Posted:2 years ago

#24

Steven Pick
Lead Graphic Designer

70 14 0.2
"We can't stock absolutely everything."

Get rid of some of that preowned stock then.

Posted:2 years ago

#25

James Ingrams
Writer

208 72 0.3
I predicted the PC games recession in the early 90's. It didn't take a genius to see that not enough gamers were going to buy CD-Rom PC's to play all these CD only games. They didn't. It's been a slow decline since at retail since the games market went to smaller and smaller DVD cases. Especially on PC games. It's interesting that there are still independent games stores in the U.S. where they still bring out games,PC and console, in bigger boxes. Up until the change when the "next-gen multiformat market" came along in 2005 you still had a wide range of PC genres, you still had PC only games, and they were still coming in big boxes like they had for 15 years.

If course, our cow-towing media had no complaints or debate, when the industry decided to move to DVD cases, and by extension, 12 page manuals. This meant, in the space of just a year or so, PC games sales practically disappeared from stores like GAME, as could be seen for ever dwindling PC games shelf space. Today only 25% of the AAA market might be PC now, but that's 24% that isn't been sold through GAME, etc.

I have said before and i'll say it again, where the PC games market goes, so the whole games market goes. Throughout the 90's the consoles copied from PC games, not the other way around. I don't see much hope for video gaming in general, when a 200 hour sophisticated RPG like Kingdoms of Amalur: Reckoning, with many sophisticated roleplaying features, comes with no manual at all, and a minimal tutorial and on-screen manual. On top of all this the game has overbearing DRM that totally turns of honest gamers. This is about penny-pinching, greed and an out of touch industry and a media and retail sector that doesn't stand up to them.

Edited 1 times. Last edit by James Ingrams on 24th February 2012 5:01pm

Posted:2 years ago

#26

Dave Morris
designer

4 0 0.0
It's not just games, it's the whole high street retail model for games, books, music, movies...

If I were GAME I'd try something like this: http://bit.ly/qgNfpI which is how Tesco managed to shoulder a space in the passing trade market in South Korea, even though there was no physical space for them on the street. Renting an entire store may not be financially worthwhile, but that doesn't mean you can't have a shop window.

Posted:2 years ago

#27

Dean Bennett
Producer

2 0 0.0
Fear is exactly the right term that Rob uses. I fear the future. A future with no high street gaming presence at all. Where to find a game physically I need to go to a supermarket, where a small collection of chart hits reside. A retail environment that is not effectively marketable coupled with a financially burdened consumer who sees what she considers overpriced products. To me these are not good signs at all. And I don't see any real movement from anyone to do something about it. It feels like we are blindly running into a (car) crash.

Perhaps the only thing left will be Steam?

Posted:2 years ago

#28

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ James

I'm confused. What does the disappearance of manuals and big-boxes have to do with the shrinking of a market? PC games have disappeared from Game (to an extent, since they are still sold there) because, I would argue, they're a one-time purchase that can't be turned over multiple times through second-hand sales. A second reason might be the fact that Game have tried to appeal to the casual market, which the PC market generally isn't.

In any event, I think your assertion of there being no hope for the video game market because "a 200 hour sophisticated RPG like Kingdoms of Amalur: Reckoning, with many sophisticated roleplaying features, comes with no manual at all, and a minimal tutorial and on-screen manual" has little evidence to back it up when Skyrim, Dragon Age, Mass Effect and Deus Ex: HR have sold so well across multiple platforms. In addition, Amalur has almost no DRM. And, with regards to manuals, any game bought through Steam has a pdf manual available (of varying length, depending upon game).

Edit:

More generally, Fear? I Live in Sheffield. When Game disappears, there'll be HMV, a CEX and two indies (one actually on the High Street). Give it a few months and no doubt another one will open somewhere. Want to know why? The presumption that just because Game fails means there's no money to be made in High Street gaming stores is foolish. Of course there's money to be made. It's just a badly run company with too many stores, too high prices, and not enough variety is obviously going to lose money.

Final final edit: (honest :) )

Perhaps people should study Waterstones as an example of a chain that can survive, and profit, even against deep-discounting from supermarkets and Amazon.

Edited 2 times. Last edit by Morville O'Driscoll on 24th February 2012 5:46pm

Posted:2 years ago

#29

Preet D Bass
student

93 13 0.1
@Steven Pick Hilarious comment

Posted:2 years ago

#30

Preet D Bass
student

93 13 0.1
With all GAMEs high pricing etc, I knew this was going to happen. What not just game but everyone in retail didnt realises the power of the internet and when they did, Amazon, Apple and ebay (just to name a few) dominated the online market. If Apple can make profit this goes to show that retail is not appealing to consumers, there can be many things. But in gaming publishers destroyed games, the experience from them everything. From DLCs to many versions of the same game through. There is only so much shit consumers can smell before they know its rotten and back away.

Posted:2 years ago

#31

Nick Parker
Consultant

264 124 0.5
Yes, excellent article. One element missing in the debate. A significant population of 12 to 18 year olds (once the core games market) have left the packaged goods sector and turned to social network and other cheap or free gaming experiences or, worse still, they don't play anything as they have adopted a lifestyle of constant online communication with their friends plus watching more TV. There used to be casual gamers who spent £20 to £30 on a game in the high street, toyed with the game, never finished it and waited a few months to buy another. They've disappeared to online and mobile where they can get the same experience for next to nothing.

Posted:2 years ago

#32
@ Morville - you could always ask the sheffield space centre to get more into games (perhaps)
http://www.space-centre.co.uk/store/

Posted:2 years ago

#33

Paul Gheran
Scrum Master

129 27 0.2
The tipping point was Counter Strike being added to Steam in 2003. That this conversation is even relevant now just tells me how much business knowledge is missing from our industry.

When I read your views on the marketing opportunities of physical stores, all I hear is reasons why games cost too much for our customers. Explain why the digital versions with few of these product costs still have the same price, now THAT would be a good read.

I'm not interested in funding retailers, I'm interested in supporting developers. Digital lets this happen. Entities which attempt to insert themselves into the value chain where they provide negligible benefit (ratings boards? retailers? what is this, a joke the world is playing on me?) will eventually be exposed and shed as they deserve.

Posted:2 years ago

#34

Lee Hewes

10 9 0.9
I have to disagree and say that this conversation is actually very relevant. With regards to the UK market, the fact that it is rapidly declining as shown by the recent events involving GAME show that the market is most likely going to go through a massive shake up and unless new strategies and innovative ways of enticing people back in to the market, areas such as boxed console games will decline.

While the digital market does support developers more especially with regard to companies using second hand games, the money made isn't directly associated with the UK market. If the games industry in the UK isn't making a great deal of money then why would the government be interested in investing into this industry especially when confidence in all sectors is poor.

Stores such as GAME, Gamestation etc were there to allow the consumer to feel like they have a more informed choice in the product they are buying. It's similar to package holidays, you can book one online and it'll be cheaper but a lot of consumers still like to visit their travel agent as there is the physical reassurance that the product you’re buying is a decent product.

The problem really is prices being uncompetitive as well as many consumers feeling that the company is actually damaging to the industry with some of its previous marketing ploys as well as the lack of a gaming community associated with them.

Posted:2 years ago

#35

Jonathan Tilbrook
Studying Games Design

5 2 0.4
Very eloquent writing. You make it seem so easy, Rob.

Although you did use the word 'declawing' twice in the space of sixty or so words.
Sorry, just saying.

Edited 2 times. Last edit by Jonathan Tilbrook on 24th February 2012 9:50pm

Posted:2 years ago

#36

Daniel Garraway
Functionality Tester

4 0 0.0
This most certainly isn't helping GAME's situation: http://i.imgur.com/TQEmx.jpg (do the math)

Posted:2 years ago

#37

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ Lee and Paul

Indeed. I'm all for digital distro - from everything I've read, Steam is a godsend for developers. But retail can be anything from a necessary evil (getting your game seen by the public) to something amazing (let's not forget that Steam is a retail distribution platform, as well as everything else). It is required so long as the publisher/developer dynamic exists, but that doesn't mean that either publishers or retail stores have to take all the profit from a sale. As I noted above, Steam apparently has a 30%-or-so take on sales - that means that digital prices are as expensive as physical (because publishers want to keep their prices uniform across all media), and that 70%-odd profit is given by Steam to publishers (and possibly developers?). Both the digital and physical retail pricing dynamic for larger publishers seem skewed towards the more expensive end of things, when a lot of games do not seem to warrant such prices.

Interestingly, whilst the headlines regarding Gabe Newell's recent Penny Arcade interview all focused on the "We can build hardware" line, for me the more important remarks were regarding DRM and pricing. I'll quote some of the latter here:

"Pricing is one of those things where a lot of people are still approaching it in almost a pre-Internet fashion instead of seeing that there’s actually an opportunity to do a better job of delivering the right stuff to the right customer for the right combination of pieces [typo? this makes more sense with 'prices']"

Posted:2 years ago

#38

Aleksi Ranta
Product Manager - Hardware

246 96 0.4
"I'd say - as a consumer I would like the option of browsing the physical game/hardware/peripheral but with the EXACT same price offered online. Not more, but on par or less - such is the situation "

There are cost involved in moving physical goods, hence there will never be parity between online and physical retail products. If there ever is the online part is skimming pretty heavily off the top.

Posted:2 years ago

#39

Klaus Preisinger
Freelance Writing

953 804 0.8
Ten years ago, when you decided to buy a game, it still took you time to go out there and make the purchase. Today, the moment of decision has become the moment of purchase, courtesy of the internet.

When the music industry was moaning about losses, it were the retailers, distributors and the labels who got wiped. Why should the gaming industry be any different? If all you do is to resell at a higher price, then do not expect to last long. Apple shows how retail is done today and there is no room for profit margins not belonging to Apple.

Posted:2 years ago

#40

Neel Thakerar
Studying Law

1 0 0.0
I agree, the supermarkets are really screwing over retail outlets like GAME and HMV.
I picked up Final Fantasy XIII-2 from my local sainsbury's for £25.
GAME and HMV are selling the game for £37.99 and £39.99 respectively.
More importantly though, whenever I visit a GAME store, the general feeling I get from the staff is that they are quite ignorant and don't really know much.

Great article by the way!

Posted:2 years ago

#41

Dominic Jakube
Student

92 13 0.1
In Australia the retail games sector seems to be doing fine, exept for GAME stores.In Australia when a new game comes out you have 3 options.
1) Pay full price $100~ at GAME or EBgames(gamestop)
2)Pay $80~ most department stores and nationial eleltronic retailers dicount on release
3)Pay $50-60~ online from UK sites like Zavvi and Amazon Etc.
With the high Aussie dollar which has been hovering above the $US for about a year now means that buying online can save you as much as 50%.However the local game retailers are doing fine exept for GAME who are closing a small number of shops.Every time I go into a games retailer they seem busy and money is changing hands.
I don't know why our local retailers are doing fine when UK ones are collapsing considering the cheap cost of games on the global market.Games in Australia have always been overpriced. now more than ever but the most of the public seems fine with paying $100 which has been the price sine the 16 bit console days.

Posted:2 years ago

#42

Tony Johns

520 12 0.0
Oh no.

I got Catherine from GAME in Australia on Wednesday and I thought that everything seemed fine.

However the next day I saw the information of GAME in the uk not being able to stock new released games into their shops.

And now, yesterday I went into GAME because I had The Last Story pre-ordered, and they told me that they had a message saying that the Last Story orders were taking longer than expected to come in.

Now reading this, I feel like if the situation has also spread to the Australian GAME stores, I am thinking of checking into JB HIFI and get a copy of The Last Story before that game dissapears from the shelves.

Posted:2 years ago

#43

James Ingrams
Writer

208 72 0.3
@Morville. The fact is, when PC games came in large boxes, with maps and 40 page manuals, etc, there was a reason to go to the store to "browse and buy". Once it went to DVD cases, you couldn't read the recommended system requirements, make any sense of the screenshots, and not enough space to describe the game. This meant you had to start going to the web and checking out forums, trailers, etc. This natural move to the web was brought about by this change from big box to DVD, and gaming for many PC gamers went from being a hobby to a throwaway pastime. I think this is the reason for piracy too.

As regards Steam, just wait and see what will happen to prices when Steam is all that's left! And by then,the market will be so small, the industry won't be tenable. For example, to use the same game again, in retail sales Kingdoms of Amalur: Reckoning never got above No.8 in retail sales. I was No.1 for a couple weeks on Steam. And as long as we get no sales numbers from Steam, I don;t think anyone can say what impact Steam has?!

Edited 1 times. Last edit by James Ingrams on 25th February 2012 2:13pm

Posted:2 years ago

#44

Eliot Lloyd
Studying Computer Games Design and Production

23 0 0.0
All this means is that when Game goes down, all the other physical games retailers such as HMV and Gamestation (I know that they're owned by the same company as Game, is it the larger company that's going down or just Game?) are going to be picking up all the customers that did shop at Game. Pretty sure that'd count for something surely? Definitely means they'll be raking in a lot more sales.

Posted:2 years ago

#45

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ James

Speaking as a PC gamer, none of the things you've mentioned re: big boxes have ever affected me. Perhaps because I've always read magazines and visited forums to find out if my hard-earned cash is going to be wasted. Like a lot of other people. Though I'll concede that what you say might affect casual/impulse purchases.

As regards sales? Well, you only have to look at the number of developers/publishers who are pushing Steam to know how much of an effect they have. Here:

[link url=http://digitalmindsoft.eu/?fi=9883
]http://digitalmindsoft.eu/?fi=9883
[/link]

[link url=http://www.vg247.com/2012/01/17/q-u-b-e-hits-12000-sales-in-first-four-days/
]http://www.vg247.com/2012/01/17/q-u-b-e-...[/link]

[link url=http://indie-fund.com/2012/02/dear-esther-has-reached-profitability-it-took-5-hours-30-minutes/
]http://indie-fund.com/2012/02/dear-esthe...[/link]

(yes, I know Q.U.B.E was through other digital distros as well, but my point still stands I think).

To be honest, what you're saying seems to me a variation of "the PC market is dead/will be dead". Something that the success of Steam in-and-of-itself would say otherwise.

Posted:2 years ago

#46

Craig Page
Programmer

381 216 0.6
@Dominic

Wow $100 per game sucks, that was the price in Canada for NES games when our dollar was worth 65 cents US. But every game has dropped to $60 for the last few years since the Canadian and US dollars are worth the same.

I guess the threat of cross border shopping and ordering directly from US stores helped lower our prices.

Posted:2 years ago

#47

Jonathan Tilbrook
Studying Games Design

5 2 0.4
It's a good article on the whole, but I still think it's very alarmist and too quick to read retail as a whole its last rites. I believe digital distribution being the accepted norm is still years away.

Most of the story here is probably rooted in Game's greed. Which wasn't mentioned in the article. Full price RRP on all titles versus (however slight) discounts online on all titles. I'm pretty sure I saw FIFA 12 for £54.99 in my local Game a couple of days after release. And on top of that, pre-owned titles marked down by a couple of quid is just typical of their grabbing.

People are more likely just sticking Soul Calibur V in with their weekly shop. I won't be the only one buying most of their games at the supermarket these days.

Edited 1 times. Last edit by Jonathan Tilbrook on 25th February 2012 10:54pm

Posted:2 years ago

#48
Great article and brilliant news....maybe they would make more money if they didn't charge so much for used games!

Mario 3D land £30 new or £27 used? they make all their money off used games, drop that used title down by an extra £10 and you'd see profits soar. We're in a consumer driven industry and luckily the British public has been voting with their wallets. How PC world hasn't managed to hit this low yet I have no idea.

Also high-street markets need to understand how much they actually ARE completing with digital distribution now, at least with used titles.

Posted:2 years ago

#49

Dominic Jakube
Student

92 13 0.1
When a company like GAME is in trouble it has a snowball effect.Customers who have in-store credit or gift cards will hurry to redeem them, fearing they might be worthless if the company enters recievership.It's a bit like banks during the great depression when fear of banks closing would cause customers to withdrawl or their funds leading to the banks running out of cash.
With GAME it also appears that some companies are not risking giving them stock on credit.It might be a downward spiral they can't escape from.

Posted:2 years ago

#50

Private
Industry

1,187 185 0.2
Not surprises I went into Game today and F1 for vita was 50 euro compared to 40 euro at gamestop or hmv and 35 digital download. Also funny bought the vita starter kit and it has a sticker saying "property of sony. Dont remove from the store untill sold to customer"

Posted:2 years ago

#51

James Ingrams
Writer

208 72 0.3
@Morville. This is what always happens. Links to show 10,000 £10 indie sales here and 20,000 there. You think Steam can survive with a dozen 20,000 selling $10 games? You think the gaming sites would carry on covering PC games? Would there be a car industry if I gave you a link showing how the latest electric car has shipped 60,000 units?

Posted:2 years ago

#52

Morville O'Driscoll
Games Blogger & Journalist

1,374 1,020 0.7
@ James

I think, if Steam were the only player in town, Gabe Newell's comments about pricing ("Pricing is one of those things where a lot of people are still approaching it in almost a pre-Internet fashion") would actually be acted upon. You say that lots of smaller games selling for 10 and 20 bucks wouldn't save the PC industry. I agree. But, equally, games are being priced now that just aren't worth what publishers think they are - Need For Speed: The Run is £35 on the Origin store - and that isn't going to save the industry. Has that game even recouped its costs? Even pirates don't want to touch it.

To use your car industry analogy - there's plenty of cars priced all across the spectrum, so why doesn't gaming do the same? If the gaming industry wants to stamp down on second hand sales, then it's going to have to acknowledge the value of its own games, and price them accordingly.

But this is purely academic, because, honestly, Steam isn't going to be the only player in town - Origin sucks, but it's not going to go away anytime soon. Amazon/Play/Zavvi on the internet. HMV (for now) on the High Street. Independent retailers will fill the vacuum that Game leaves behind on the High Street. The market may contract, but if it adapts its prices and marketing budgets then it's not leaving the High Street.

Edit: Btw, that Men of War game I reference in my previous comment (the Digitalmindsoft link)? The GoTY edition is priced at £30. Not actually a small indie game retailing at 20 bucks, that.

Edited 2 times. Last edit by Morville O'Driscoll on 28th February 2012 11:55am

Posted:2 years ago

#53

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