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UK Retail: Looking Back

Key execs offer their thoughts on a crucial year for games

Take a look at the financial results for most publishers and retailers towards the end of 2007 and it's clear that last year was a significant twelve months for the games industry.

With all three of the next-generation consoles finally out in the marketplace in the UK, and the blossoming new audiences brought in by accessible and casual-friendly Wii and DS titles, the games industry bucked the wider trend towards economic slowdown.

In the first of a two-part feature, GamesIndustry.biz canvasses the opinions of a variety of UK-based retailers to see how the business was perceived at the sharp end of things. Next week we'll look at their hopes and predictions for 2008.

--On the major successes or failures

Tricia Brennan, commercial director, GAME

"2007 was clearly a fantastic year in the UK for hardware thanks to five popular formats being available on the market.

"This has enabled us to satisfy the demand of a wide range of customers with different needs, some of whom were buying consoles for the first time.

"The range and innovation now available in the market is phenomenal, and customers are delighted by the choices now available to them."

Patrick Kelly, head of games, Zavvi

"2007 was the true start of 'next generation' gaming, with three amazing consoles, a stellar line up of software and two great handhelds which gave consumers greater choice than ever before.

"The whole industry from developers, to publishers to retail did a fantastic job in growing the market, but the industry cannot get complacent and must continue to innovate and capture consumers imagination - as there are more options for consumers to spend their entertainment pounds than ever before."

Gian Luzio, head games buyer, Play.com

"The launch of PS3 was a fantastic success with hardware available from day one, something that rarely happens in this industry. Xbox 360 continued to grow with some strong exclusive games releases."

Marc Dean, home entertainment buyer, Morrisons

"Most successful were the Wii and DS (although they could have been even greater if not let down by supply).

"In terms of what exceeded expectation, the PlayStation3 40GB version really took off - at a more realistic price point than the 60GB version.

"And the underachiever was the PlayStation Portable, due to poor software supply."

Matt Holland, tgrav.com

"Our successes were Nintendo Wii, Xbox 360 and Nintendo DS, while the disappointment was PlayStation 2."

Tim Ellis, head of games, HMV

"All formats exceeded targets in 2007 so overall it was hugely successful."


--What's your evaluation of the software releases?

Tricia Brennan, commercial director, GAME

"In 2007, there was a huge range of titles available to cater for every audience and our customers have been thrilled to have so much choice, both on title selection and format.

"A consistent release of high-quality franchises including Call of Duty, Pro Evolution Soccer and Halo, have satisfied the core gamers whilst mass market titles such as Cooking Mama, Super Mario Galaxy and More Brain Training entertained the more casual gamers"

Patrick Kelly, head of games, Zavvi

"Software sales were strong throughout 2007, which reflected the growth in the market - games appealing to a more mainstream audience and publishers staggering their release schedule rather than just in Q4."

Gian Luzio, head games buyer, Play.com

"Expectations for 2007 were high with Halo 3, Assassin's Creed and Call of Duty 4 delivering on this in terms of both quality and sales.

"The release schedule definitely felt less congested this Christmas which gave many more titles the opportunity to achieve their potential.

"It was great to see new titles such as Kane & Lynch and Uncharted: Drake's Fortune performing so well against established brands."

Marc Dean, home entertainment buyer, Morrisons

"We thought the release schedule was excellent but let down by the supply of key titles, particularly from Nintendo."

Matt Holland, tgrav.com

"2007 delivered some great titles for us, supply has been another issue. There were some titles that took us by surprise and some that failed to deliver.

"It's a shame to have to markdown great titles that were launched too late or had too much competition."

Tim Ellis, head of games, HMV

"We thought the release schedule was very strong. Again, in a growing market, sales exceeded expectation on many lines.

"There were some truly outstanding sellers such as Call of Duty 4, Assassin's Creed, Mario & Sonic, Guitar Hero 3 and FIFA. Generally, sales reflected the similarly outstanding quality of content."


--Should price points be dropped?

Patrick Kelly, head of games, Zavvi

"Ultimately consumers will pay for what they think a product is worth — however we believe there is an opportunity to drive further sales and prolong the life of the PlayStation 2 if the pricing was looked into."

Gian Luzio, head games buyer, Play.com

"Not to the detriment of future games development.

"Dropping price points may sell more units but if there isn't any revenue to put back into creating products then innovation will eventually be stifled."

Matt Holland, tgrav.com

"No, prices are always coming down and we need to add value to the consumer offer. It's all about perceived value and above all a great customer service!"

Tim Ellis, head of games, HMV

"Price drops always stimulate sales but certain formats do not need it at the moment as supply continues to lag behind demand."


--How did videogames perform against other areas of the business?

Patrick Kelly, head of games, Zavvi

"Games are a major focus for Zavvi — the business experienced an overall 10.2 per cent like-for-like increase in sales on the previous year when trading as Virgin Megastores (in the four week trading period ending January 5, 2008), with games growing an exceptional 62.7 per cent like-for-like in the same period."

Gian Luzio, head games buyer, Play.com

"Games performed very well against other areas of the business with growth of well over 40 per cent against the previous year."

Marc Dean, home entertainment buyer, Morrisons

"Way ahead of CDs which are on the decline, and 20 per cent up in volume over DVDs."

Matt Holland, tgrav.com

"Games represent approximately 60 per cent of our business."

Tim Ellis, head of games, HMV

"As our recent trading update shows, games continue to be a star performer for us."


--How has discounting affected sales?

Patrick Kelly, head of games, Zavvi

"Retail pricing has been pretty stable for the past 12 months, which is really positive — allowing the industry as a whole to make money."

Gian Luzio, head games buyer, Play.com

"Discounting can extend the shelf life of a game if it's done at the right time.

"Slashing the price on new releases by a few pennies can result in a mixed message to consumers and lower perceived value of games."

Matt Holland, tgrav.com

"This will always be an issue for every retailer and we all have to look for other ways to attract and keep our customer.

"Where there has been an aggressive tactic from a retailer we have reduced our intake for the title, this will always affect the publisher and us.

"However, we have to concentrate on other areas."


--How have third party accessories and peripherals been selling in comparison to first party ones?

Gian Luzio, head games buyer, Play.com

"Third party peripherals perform very well as they offer consumers choice and variety.

"Products such as the Wii Charging Stand and DS protector cases compliment the first party products and are consistently top sellers."

Matt Holland, tgrav.com

"Very well, in many cases even better than the first party products."

Tim Ellis, head of games, HMV

"There are some companies offering great 3rd party products that continue are regularly best sellers."


--Do you feel that reducing SKU count is good for the consumer, bearing in mind the different types of consumers and hardcore fans not having the choice they used to have? Does removing 'browser' sections in store mean that the bigger publishers get bigger while the smaller and independent publishers get pushed out of retail?

Patrick Kelly, head of games, Zavvi

"We believe in offering our customers choice, but that choice has to be quality and consumers are more savvy then ever on what they will spend their entertainment pound on.

"There is always room for titles from what could be described as âsmaller publishersâ, titles such as Cooking Mama and No More Heroes are examples of quality product that have or will sell well.

"The emphasis must be on quality."

Matt Holland, tgrav.com

"We concentrate on the very best peripherals in the market, we don't just offer everything and confuse the consumer.

"They are confident that when they come to our site they will only be offered, what we believe, to the best product.

"As for games, we are fortunate to be able to display every game, from the latest title to back catalogue.

"Depending on publisher support we can and will give extra space, but only where we can give value to the consumer."


GamesIndustry.biz would like to thank all of the retail representatives that took part in this feature, and Adam Hartley.

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