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The Mobile Gaming Mavens on why convenience and community are killing game retailers

Brick and mortar or tombstones?
The Mobile Gaming Mavens on why convenience and community are killing game retailers

The Mobile Mavens is our panel of experts drawn from all sectors of the mobile gaming industry.

This week, the UK's game retail sector has been suffering; both HMV and Game have been experiencing troubles and, given the more distant closures of Zavvi and Woolworths, it seems likely that the future of games retail (in the UK and the world) is highly problematic. We asked them:

Is games retail dead? What does this mean for the sellers of boxed consoles and phones?

Dave Castelnuovo

Dave Castelnuovo

Owner at Bolt Creative

Video game retail is just experiencing the kind of slow and painful shrinkage that one might find after skinny dipping in Siberia... The big publishers and console makers have a tough transition ahead of them.

Digital sales are nowhere close to generating the same amount of revenue that retail generates. So they have to prop up game retail until digital fully takes over.

I don't think retail will ever be dead-dead - just a lot smaller and probably transform into something a bit more specialised. I definitely don't think that consumers are completely unaware of the current hot console and buy a console after only stumbling upon it at HMV.

They know what they want and they will find a way to get it, it's just nice to be able to play it a couple times before your purchase.

Sandy Duncan

Sandy Duncan

CEO at YoYo Games

I wouldn't say "games retail is dead" but "crap secondhand games shops" are indeed fast becoming history - hooray!

"Biting the hand that feeds you" by reselling secondhand games, despite the obvious harm this does to the console games ecosystem that the retailer is part of, has bitten Game on the bum big time - so when they needed extended credit lines from publishers they were shown the door. Many people in the industry won't miss them.

I DO feel very sorry for the people who will lose their jobs, but they should be looking to the management of Game and asking them "why?"

If you want to get some feeling for how Game managed to spiral into decline, then you might want to start by looking at their Board. Collectively not a single day's games industry experience between them; booze companies, pubs, TelCos, casinos, funeral parlours (I'm not kidding), merchant bankers... just a bunch of suits collecting non-executive roles like tins of beans.

Looking to the future; hardware is a commodity purchase and doesn't need any specialist retail. Content in the console business has dramatically tipped in favour of triple-A titles - you hardly need advice on which game to buy when there aren't enough credible titles to fill a top 20. In the next two years, we'll all just buy our games online anyway, where thousands of user reviews at point of sale can easily be used to judge if you want a title.

Amazon, Tesco etc will be happy to fill the void. Gamers may win as a result as these types of retailers are fiercely competitive and special offers that create footfall in stores or unique visitors to websites can be run at a direct loss knowing that your visit may result in you leaving your credit card details with them and buying a few (very profitable) eBooks or signing up for a loyalty card, 200 tins of tomato soup and a loaf of bread.

Game is dead, long live games.

Wen Chen

Wen Chen

COO at Coconut Island Studio

Games retail is dying, but not dead yet. It'll die when the average internet speed reaches several Mbps.

When the gamers can't even feel the waiting time before start to play the game, when the world is connected everywhere. However, before all these happen, games retail will survive - but shrink.

Matt 'Mills' Miller

Matt 'Mills' Miller

Co-Founder / CEO at Ustwo games

I am pretty sure Blockbuster in the US just got bought for around $200 million by a video streaming company who only bought it for its brand and online streaming service users. They are now closing the brick and mortar shops...

Joony Koo

Joony Koo

Head of Business Development at Block Crafters

Retail stores are dying for sure. In fact, Blizzard is selling its games through digital distribution at the same price as that of its retail.

This means Blizzard is getting a much better margin for much less cost. For mobile, the introduction of LTE will provide faster download speed, so content on mobile may become larger in size, better in quality and which may be a starting point for real triple A games.

Christopher Kassulke

Christopher Kassulke

CEO at HandyGames

Honestly what experience do you have by buying a retail product nowadays? You get a DVD, that’s it, and you need to update the title online straight after buying it anyway. Last time on my PC, it was over 1GB extra.

In the good old days, it was an experience to unpack a game, read through a printed book, and you received small gimmicks - only in Collector's Editions now.

Nowadays, the experience is like fast food open up, put the DVD in the console or PC and that's it. After that you finish the title within hours. Where the hell is the value for the consumer?

The consumers and the games/content/hardware business has changed. So the distribution and perhaps the price has to change as well.

Jon Hare

Jon Hare

Owner at Tower Studios

My local independent games shop is still going strong. Perhaps the disappearance of the big chains, with their tight margins, will leave more room for the independents again.

Independents are generally run by specialists with a higher amount of knowledge than the average worker in Game.

Chris Hanage

Chris Hanage

General Manager (Europe)

Trust is an issue. Having a physical commodity that the consumer can touch and feel can be reassuring.

When my laptop crashed died taking my iTunes collection with it I was seriously disturbed by how much time it took me to get my purchases back from Apple. Now I often buy CDs and sideload; for me it's another form of back-up.

But I do buy those CDs from Amazon so that wouldn't help the high street anyhow.

Oli Christie

Oli Christie

CEO at Neon Play

Game retailers may not be totally dead yet, but surely this is the beginning of the end for specialist retailers, and the same will apply for music and DVDs too, as has been seen with the decline of high street giants like Virgin, Our Price, Woolworths, HMV, etc over the years.

The supermarkets will just clean up in the retail sector and everyone else will end up online - hopefully with the games companies reducing prices as their distribution costs disappear.

The question also is how long will console actually last, especially with the high prices people are paying, when compared with the cheap, fairly deep and visually stunning games on iPad and the advent of smart TVs. How long will it be before someone dares to take console goes down the freemium route?

Will Luton

Will Luton

Founder/CPO Village Studio Games

Physical retail is over. It's just a question of how long and awkward its death is. Even if Game survives on the high street, it will end up in the same situation again.

Also, what's happening in the UK will happen all over the world. Consoles are already in freemium with Free Realms and PlayStation Home. I hear more is coming, but suspect paymium is more its bag and it's been doing that for a long time.

David Thomson

David Thomson

Founder at Ludometrics

Look at the difference between how Game have handled the changing market versus GameStop: GameStop went out and bought Kongregate and Impulse and, as far as I can tell, have continued to invest in them.

Will it save them? I have no idea, I haven't looked into how it's changed their business, but at least they're trying. As Sandy pointed out, Game have refused to deal with it in any way, shape or form.

But, it probably all goes back further than that - whatever the Monopolies and Merger Commission is called these days should probably have stopped Game buying GameStation.

That's not to say either of them wouldn't still find themselves in the same situation, but it might at least have kept one or both of them on their toes a bit more instead of becoming fat and lazy and susceptible to a fatal illness.

John Ozimek

John Ozimek

Co-founder at Big Games Machine

The failure of a business does not mean the failure of the business model. While lots of people like the idea of a digital-only games industry, I suspect that's more to do with stopping the massive loss of value publishers suffer from the second hand business that - ironically - Game was very aggressive in building in the UK.

In my humble opinion, Game has never been an especially great retailer - the staff I've dealt with have been OK but not great; the stores themselves are a bit dull, they tend to be expensive, and most crucially, they have a piss poor web retail experience.

And let's not forget that the massive expansion of stores has been funded by significant debt, taken on pre-recession.

As a couple of other people have noted, Game has ignored ways to build a differentiated retail presence.

I remember years ago when video game shops were about trying the games, getting excited about new releases, and then spending my pocket money on what I liked the most. Instead, today's retail is just about shelves and shelves of games, and whether I want to buy new or second hand.

The only differentiation becomes price - which means that physical retail will always lose to online. It becomes about volume and margins. I'd like to think that there's still room for a retailer to focus on the whole experience of games in-store - it's meant to be about fun!

In reply to Christopher, while I do agree that there's not much to most physical games these days beyond the box, the rise of the 'special edition' packaging has become something retailers have used well to drive sales. And also, in the UK at least, physical retail does very well at Christmas, when non-gamers buy games as gifts.

Charles Chapman

Charles Chapman

Director / Owner at First Touch Games

What Joony says is true. There also used to be a community/social element with independent/specialist retailers.

Back in my early teens - i.e. 20+ years ago - I remember spending a couple of hours or more in our local specialist retailer each Saturday afternoon playing games, talking to the staff, and other regulars. It was like the record shop in High Fidelity, but for games, and even more geeky.

That community element has been replaced by online communities now I guess, as with music and record shops, so the decline in retail is probably no big loss from that point of view.

Volker Hirsch

Volker Hirsch

Co-Founder / Board Member at Blue Beck

David raises a good and important point here: GameStop is making moves to transition. It has not only acquired Kongregate, but also Spawn (streaming) and Impulse (online distribution).

The question is - of course - if and to what extent it will succeed in transitioning it. I think that their biggest strength might well be their customer base and their brand. GameStop has incorporated a fairly extensive customer loyalty programme and is working this quite aggressively, with a big focus on transitioning this into the digital realm.

Games retailing has traditionally actually been at least as much about real estate management and good old sales per square foot as about games; you could actually say that the stock itself just happens to be video games.

This part of the business is, in my honest opinion, certainly going to suffer. If you want to succeed selling something that people can buy elsewhere, and more conveniently and often cheaper at that, then your only USP is to provide a superior overall experience: if there is perceived added value in shopping with you on the high street, be it through goodies, free posters, gadgets or plain old expert customer service, then you might very well have a niche because you deliver value - as opposed to mere revenue.

However, those are fickle beasts and it might not be as easy to scale this as much as in the days when there were no alternatives to high street retail.