SimplyGames.com director Neil Muspratt discusses retail strategy and explains why price slashing by supermarkets is a problem
Founded in 1998 as an online-only videogame retailer, SimplyGames.com has grown to become a major independent player. Taking the helm in late 2006 Neil Muspratt, company director, set about re-establishing the site's authority by further improving its online reputation and focusing on converting site traffic in to paying customers. The site was redesigned earlier this year to aid in this goal by ensuring as clean and uncluttered an aesthetic as possible.
GamesIndustry.biz recently caught up with Neil to discuss the site's progress, 'intelligent retailing', how Modern Warfare 2 could herald the introduction of 'sensible Q4 release schedules' and the confusing effect that FIFA 10's launch day price-slashing could have on consumers.
Q: Could you give us an overview of SimplyGames.com, where it is at the moment and how have you established brand identity in a cluttered online environment?
Neil Muspratt: When I took over the site my main aim was to try to re-establish the authority that SimplyGames.com had in its early days. The online arena is a fairly tough place to trade, it's tough because it's competitive, mostly when you're dealing with price but it's also an environment that has a number of very, very good operators. In addition to the big boys there are a lot of sites that do the job very well. I hope and I believe that we are now considered to be what I'd describe as the best of the rest of those operating just underneath the Goliaths.
[The aesthetic of the site] is something that we've invested a lot of money and a lot of time in. In the early part of this year we identified our site traffic conversion rate as a key part of our strategy and so we had the site re-designed with the key objective to ensure that our site was absolutely clear, clean and easy to navigate - and we use this as very deliberate differentiator from other sites selling games.
A lot of our traffic arrives from other sites such as price comparison sites or stock-finding sites, and when that traffic arrives we have a tiny chance to convert it in to a sale. In my mind clarity is key in keeping those customers and when they arrive we need their experience to be an easy one; we try not to make our customers think too much!
Q: How have the recent console price reductions affected business and what does the RRP increase of a software title like Modern Warfare 2 say to you about the future of the retail pricing model?
Neil Muspratt: The price reduction of hardware is excellent news and so far it's certainly had a profound effect on our sales. I see this as being one of the key Christmases in the lifecycle of the consoles - especially Xbox and PlayStation as, arguably, Nintendo's installed user base is already further on than those guys, so the price reductions of hardware is excellent news for the industry.
With regards to software pricing it's early days as we're only just in to Q4 but do I see higher RRP prices in terms of software a sign of things to come? Yes I do. As a retailer I have some concerns though because I don't know that those higher trade prices will be properly reflected in the ultimate selling price. The stupidity with [the aggressive price slashing of] FIFA 10 is perhaps also a sign of things to come and shows that retailers still believe that this particular entertainment format is ripe for crazy discounting.
Q: On that note some indie retailers reported that it was cheaper for them to source stock of FIFA 10 from supermarket shelves than to order it through official distribution channels, is such a practice sustainable in the long term?
Neil Muspratt: I don't think that there are many independents that do that on a massive scale. I think those quoted as saying that have really been making the point that it is quite ridiculous that they could go out to supermarket and buy this title far cheaper than they can from the official distributor.
There's absolutely nothing anybody can do to control that. Nobody can set prices as that's illegal, and no publisher is going to limit the planned day one numbers in order to control price. We just have to have to hope that the big players can recognise and respect the importance of what they do regarding price and also recognise that it is important that we send out fairly consistent messages to consumers.
Selling this title for GBP 25 or less when in a few weeks the year's biggest game [Modern Warfare 2] is coming out at double that price cannot, in anybody's mind, be seen to be a consistent message to consumers.
Q: You think that there's the potential for consumer confusion then?
Neil Muspratt: Absolutely. It's a fairly lazy excuse that by slashing the prices of games the retailers are giving the customer what they want. Of course they are in the short term, but what it means is that same customer is going to be very disappointed when they turn up two or three weeks later to buy the next big game and it's up to twice the price.
Q: Can the physical and virtual high street co-exist with digital distribution?
Neil Muspratt: Well, SimplyGames.com doesn't have a bricks-and-mortar high street presence but I sincerely hope that traditional bricks-and-mortar retail model remains in place for many years as is possible. The specialist chains out there, the independent stores out there, do our industry proud.
I myself still enjoy going to specialist retailers to enjoy the experience of being surrounded by videogames and consoles and I enjoy the retail environment that those stores create so I sincerely hope that for the sake of the industry the high street retail specialists remain around for as long as is effective.
Q: Should high street and online retailers make more of what differentiates them from digital distribution, such as Collector's Edition SKUs?
Neil Muspratt: Without a doubt there is a market for these added value Collector's Edition SKUs. Typically, and I accept that it's generalising somewhat, it'll be the more hardcore games for a hardcore audience that you'll see these packages for - but they do add value.
Beauty is in the eye of the beholder of course, but I absolutely agree that they are a good idea and are an example of intelligent retailing. Unfortunately the distribution of these SKUs is strange to put it mildly and they are very difficult to get hold of, as their availability is usually scaled entirely to the volume of the normal SKU that you've purchased.
It does mean sometimes that a sensible business practice that dictates the volume that you're buying is consequently going to restrict the volume of these special editions that independent retailers are going to be able to get hold of. It's a process that can probably be managed better.
Q: There has been much talk of publishers 'running scared' of Modern Warfare 2 and delaying the release of certain high profile titles until Q1 2010, do you think that this might have the positive effect of helping to illustrate that not all of the high profile games have to be released in Q4 to be successful?
Neil Muspratt: I sincerely hope so. This quarter's release schedule is one of the most sensibly divided up I've seen in nearly 20 years of buying videogames. I'm not sure why it's happened but I think the short answer is that it's Modern Warfare 2 and everyone is running scared of that - but I also hope that publishers are seeing that this quarter will be such an important one for the increase in the installed user base because of the reduction in price of the consoles.
This is going to be a massive console selling period and in the early part of next year, and indeed the rest of 2010, there will be a wider audience for software - I think it's important for all retailers that we go in to 2010 with some fantastic releases ahead of us. We're all used to seeing good number of good games squashed to the point of insignificance into a quarter that is just too crowded.
I can remember the VHS industry in 1991 when the home film industry used to run scared of the summer, in 1991 Home Alone and Ghost were released in the middle of June, traditionally was one of the quietest months of the year, and guess what happened? You bring great products out and they'll sell through regardless.
Q: Microsoft's Natal, Sony's 'Wand' motion controller and Wii HD are rumoured for release in 2010. Care to offer any predictions for the retail significance of these products?
Neil Muspratt: I think all of those products are highly innovative and this industry needs innovation. The Wii is a good example of that and if you take last year's sales of the Wii when there were real killer applications in things like Mario Kart and Wii Fit we saw periods of fantastic hardware sales. In contrast the periods where there weren't such innovative titles lower sales of the hardware reflected that.
I think that these products show that as hardware manufacturers have to invest more and more in each piece of new technology they are looking to get a longer life out of each and it means that [for this hardware generation] we could ultimately have a ten year stint.
Neil Muspratt is director of SimplyGames.com. Interview by Stace Harman.