Close
Are you sure? Are you sure you want to report this comment? I understand, report it. Cancel

Retail

Retail isn't going away - Ubisoft digital head

Retail isn't going away - Ubisoft digital head

Wed 14 Aug 2013 2:00pm GMT / 10:00am EDT / 7:00am PDT
BusinessRetail

Chris Early says brick-and-mortar does some things better than digital; Ubi is experimenting with episodic titles

Ubisoft's VP of digital publishing sees a day when the publisher's digital revenues will surpass its retail business, but he also sees a limit to how far the balance between the two will tilt. Early discussed the subject with GamesIndustry International at the Electronic Entertainment Expo.

"The underlying question is, 'Is retail going away?,'" Early said. "No. And maybe that's funny coming from a digital guy, but I think retail's a strong part of our industry and it will continue to be so. Over time, when it goes to 50-50 or maybe beyond, will some stores close? Probably, just like some record stores closed. Maybe the store experience will morph. Maybe you'll see more of an Apple-type experience store where you're able to do things, but I don't think it'll go completely away."

Early said the reasons for that fall into a few different categories, from consumer behavior to technical limitations to one of the biggest hurdles in the digital world: discoverability.

"The physical store is a well-designed mechanism for discovery," Early explained. "You have expert help right there, a wide variety of products you can go through relatively quickly. That's hard to do still on a console or a PC. There's lots of content, but how do you easily discover what's the best thing to do? We haven't solved that."

Of course, digital has a number of advantages over retail, not the least of which is its ability to support non-traditional business models. One such model is episodic gaming, which saw a breakout success recently with Telltale Games's Game of the Year-winning series The Walking Dead.

"I will say we're definitely experimenting down that [episodic] path, but not to necessarily make a half-priced product to start with."

Chris Early

"The episodic model's been talked about for a long time, but the challenge comes to one of investment," Early said. "How much do you invest in the structure of the building and only furnish a floor at a time? We've still built a 60-story building, and if we only deliver three stories, I still have that infrastructure I built. It's solvable at some point. Even look at Telltale, that took them several iterations to get to that place, and some games that didn't work that well helped fund that engine to get to the place they are today."

As for when Ubisoft might embrace episodic gaming, Early suggested that from a certain perspective, it already has.

"I will say we're definitely experimenting down that path, but not to necessarily make a half-priced product to start with," Early said. "Look what we just did with Far Cry 3: Blood Dragon. We took the entire Far Cry 3 engine that we just sold for $60, made a five-hour game and sold it for $15. And it sold like mad. People loved it."

The rise of digital gaming has also given publishers more ways to monetize players. Whether it's with free-to-play games or downloadable content for premium titles, the industry focus is shifting such that the number of boxes a company shipped to stores is telling less and less of the overall story. At the same time, average revenue per user (ARPU) has become an increasingly significant metric as publishers realize some players are willing to go far above and beyond the $60 threshold of the retail space.

1

Ghost Recon Online may be too conservative about monetization, Early suggested.

While Early said Ubisoft pays close attention to ARPU, it has tried to minimize player discontent while doing so. He noted that in the free-to-play Ghost Recon Online, players never need to part with real money to make their way through the game. Those willing to spend money may be able to buy experience boosts and cosmetic changes to their characters, but the developers didn't want to drum up revenues at the expense of player satisfaction.

"We've been very careful to make sure the players don't feel nickel-and-dimed," Early said. "And it's probably resulted in us being a bit conservative on that end."

As for DLC, Early noted that increasing the ARPU on $60 retail games helps to pay for the costs of AAA game development. That's a problem Ubisoft is also addressing from the other end of the transaction, as Early said the company works to keep costs down where it can. For example, its multi-studio development process means a number of the developers for a hit franchise like Assassin's Creed are located in places where they have a lower cost structure than the franchise's lead developer, Ubisoft Montreal.

"One of our designers said it best when I was talking to him the other night. He said, 'We respect our players' gaming time.' And we do that by delivering strong entertainment value," Early said.

Interview conducted by James Brightman.

18 Comments

James Ingrams
Writer

215 85 0.4
If retail ever goes, so goes the AAA games industry. Not because of lost sales, but because lack of exposure. No retail and gaming becomes specialist.

Posted:A year ago

#1

Paul Johnson
Managing Director / Lead code monkey

823 1,061 1.3
It really is going away you know.

Lets leave opinion and politics out of it and look at the state of the high street, at least here in the UK. There are very few shops here now that actually sell retail games. If the platform people or the big AAA pubs want retail to continue, they'd better start buying real estate.

Posted:A year ago

#2

Morville O'Driscoll
Games Blogger & Journalist

1,530 1,330 0.9
There are very few shops here now that actually sell new retail games
Now that's more accurate. Sadly, the economic meltdown in the UK has led to an explosion of places that specialise in second-hand products - Cash Generator/Convertor and CEX, for instance - with fewer places that are selling (or even focussing on) new.

Posted:A year ago

#3

Greg Wilcox
Creator, Destroy All Fanboys!

2,172 1,121 0.5
Maybe that's how it is in the UK, but here in the US, if retail dies, there goes a TON of money down the toilet as you can get new games from TOO many retailers here, large to tiny...

Posted:A year ago

#4

Andrew Goodchild
Studying development

1,236 397 0.3
Tesco, Asda and Sainsbury's all sell games, probably part of the reason that it isn't worth it for many high street stores. But the supermarkets must be selling units or they wouldn't bother.

Posted:A year ago

#5

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Grasping at straws.
Bricks and mortar retail selling plastic and cardboard as an IP distribution mechanic is ridiculous in every way. This is why only a minute percentage of games are now using this business model. Soon it will be none.

Posted:A year ago

#6

Christian Keichel
Journalist

669 916 1.4
@ Paul
It really is going away you know.

Lets leave opinion and politics out of it and look at the state of the high street, at least here in the UK. There are very few shops here now that actually sell retail games. If the platform people or the big AAA pubs want retail to continue, they'd better start buying real estate.
The problem in the UK may be more the shrinking economy in general and the crashing video games industry in particular (down 17.4% in 2012).

http://www.bbc.co.uk/news/business-21193525
http://www.mcvuk.com/news/read/overall-uk-games-market-down-17-4-in-2012/0108783

Edited 1 times. Last edit by Christian Keichel on 15th August 2013 12:40pm

Posted:A year ago

#7

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@ Christian Keichel

1) The UK economy is not shrinking. It is growing.
2) The market for physical games is collapsing. It is impossible to measure the market for digital games.

Posted:A year ago

#8

Keldon Alleyne
Handheld Developer

439 410 0.9
Popular Comment
@Bruce: are you both talking about the same timeframes?

Over the last year, yes, the UK economy has "grown" by 0.6%. Still 3% down from the start of the recession, and I'd hardly call minor recovery a growth.

Short term growth is not that important as it is the longer term that is truly relevant. The more vague your description the more room you leave for bias, misunderstanding and misinformation.

For example I can assert truth in both statements by missing out key information:
- average income has risen since the Conservatives came into power: because the number on their paycheque is higher
- average income has fallen since the Conservatives came into power: because the cost of living has increased greater than the number of their paycheque

Posted:A year ago

#9

Paul Johnson
Managing Director / Lead code monkey

823 1,061 1.3
I'm sure the general malaise in the economy has a lot to do with it. But it doesn't matter the cause, the shops are just as gone whatever you attribute it to.

Posted:A year ago

#10

Christian Keichel
Journalist

669 916 1.4
@ Bruce Everiss
The market for physical games is collapsing. It is impossible to measure the market for digital games.
if this would the case,then I don't understand how you can argue constantly that digital revenues and profits are overtaking physical revenues and profits.

@ Paul
But it doesn't matter the cause, the shops are just as gone whatever you attribute it to.
It does matter, why the shops are going away, If the reason is UK specific, a company has to adjust their business in the UK, if it's a development in the whole world, the same company has to overthink it's product.

Edited 1 times. Last edit by Christian Keichel on 15th August 2013 2:14pm

Posted:A year ago

#11

Paul Johnson
Managing Director / Lead code monkey

823 1,061 1.3
@Christian, I didn't say they were going, I said they were gone. That's not a subtle difference.

GAME
HMV
Woolworths
Couple of indie comic book kinda places

They were the main games stockists in my area. All gone - thats 100%. (While most HMV's around the country are closed, ours is actually still open but its empty of both stock and customers, so won't be for much longer)

Posted:A year ago

#12

Morville O'Driscoll
Games Blogger & Journalist

1,530 1,330 0.9
@ Paul

That's surprising. May I ask where you are? In Sheffield, there's an HMV (albeit with a rapidly shrinking games section), a Game, and an indie shop, all on the main high street. Though, that being said, Sheffield's a fairly large city, with 2 universities, so perhaps there's enough students with disposable income that gaming on the High Street can (just!) survive here.

Edited 1 times. Last edit by Morville O'Driscoll on 15th August 2013 6:38pm

Posted:A year ago

#13

Paul Johnson
Managing Director / Lead code monkey

823 1,061 1.3
We're on the Isle of Wight. Pretty rural place but we used to have one of everything. Now we mostly have zero of everything.

I thought the whole GAME chain had gone?

(I spent a lot of time in Sheffield in earlier years, loved it.)

Posted:A year ago

#14

Morville O'Driscoll
Games Blogger & Journalist

1,530 1,330 0.9
Nah, Game is out of administration and... seem to be doing okay? I applied for a Christmas temp position there a couple weeks back, and they have new stock in and everything. :D (Though their PC section is mostly just disappearing into a mass of dirt-cheap titles from years back, and Steam Wallet adverts.)

(And, yeah, Sheffield's great - came here just to go to uni, and stuck about after graduation. Coming up to my 11th year here. :o )

Posted:A year ago

#15

Andrew Goodchild
Studying development

1,236 397 0.3
Can't cite exact source, but a current affairs thing on radio four mentioned that across the board, the UK is has one of the highest (I think it may have been the highest) percentages of physical goods bought online in the world, so it wouldn't be surprising if retail here was in worse shape than elsewhere.

Posted:A year ago

#16

Paul Johnson
Managing Director / Lead code monkey

823 1,061 1.3
@Morille I guess that's something. It won't be resurfacing here, I think a charity shop moved in.

Posted:A year ago

#17

Rogier Voet
Editor / Content Manager

70 31 0.4
In the Netherlands you see the same trend, with a lot of retail closing. The only dedicated gaming chains are GameMania and the much smaller Nedgame. Most games are actually sold by Electronic Giants like MediaMarkt (also active in Germany) and the traditional toy stores. But the recession is really not done in The Netherlands and with the poorest goverment in place ever I don't light at the end of the tunnel.

Digital is picking up fast in the Netherlands because the ease of use and the fast internet connections available. The mobile 4G-networks are getting there. But it will take some time before adapation levels have grown (important for mobile gaming),

Posted:A year ago

#18

Login or register to post

Take part in the GamesIndustry community

Register now