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UK retail is too impatient, says 2K boss

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UK retail is too impatient, says 2K boss

Publisher’s Christoph Hartmann believes UK game stores are ‘making same mistakes as the music business’

Global president of 2K Games Christoph Hartmann believes that UK retail is the best in the world at creating an ‘event’ for key new products – but its impatience is putting it in danger of losing out to digital distribution.

Speaking exclusively to MCV, Hartmann, whose label has had great recent success with BioShock, said that the UK industry was making the same mistakes that drove music consumers online.

He warned against the temptation to slash prices on month-old software in order to make room for new, triple-A releases – something he said UK retailers have been particularly guilty of in 2008.

“The best thing about UK retail is also the worst,” he told MCV.

“There is nowhere else in the world where games are presented as well as at UK retail. Your guys really understand how to create a buzz and an event around a product – even compared to the US. But by the same token, they’re willing to take less and less risk over what that product is.”

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Hartmann added that the UK High Street is too keen to make money in the early stage of a game’s lifespan, rather than waiting for the consistent income available from back catalogue products.

“UK retail slashes prices if something’s not quite hitting its numbers,” he said, “I’m not talking about a big gap – I’m talking about expecting to sell 1,000 and selling 950.

At that level, they call it a failure and want to de-price massively.

“That attitude to some degree killed the music business. By concentrating on the highlights, they up their revenue short-term – but they’re driving certain important customers away.”

2K’s 2009 line-up includes BioShock 2 and Borderlands.

Erm...

posted by arctic360 Dec 30, 2008 at 4:27 pm
1

Does this man not know how retail works? New stuff sells in it's 1000s, back catalog in it's 10s. The industry concentrates on the new because the customers concentrate on the new.

I also think that it's the fact that downloading an album takes 5 minutes as apposed to an hour long trip to the shops that has pushed people to downloads. That and it costs a hell of a lot less.

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agree

posted by man with moobs Dec 30, 2008 at 4:35 pm
2
man with moobs

i think he is making sense but as soon as the supermarkets take hold the discounting starts straight away.

why not set something up like apple has in place and have authorised dealers, this way keep the item at the price it deserves for everyone to make money.

games should be displayed on HD screens with special promo events at each store for big new releases.

as an indie store owner we would happily get involved.

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Pre-owned

posted by deftangel Dec 30, 2008 at 4:58 pm
3
deftangel

I would suggest Mr. Hartmann is being polite as another major factor in the effect he's talking about is pre-owned. Moving swiftly on to the next big thing keeps the high spending customers coming back, trading in and getting the next best thing which drives Pre-Owned sales.

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Some fair points..

posted by Ken Barnes Dec 30, 2008 at 5:14 pm
4
Ken Barnes

Indeed. But when between them, publishers are releasing hundreds of titles a year, it isn't particularly surprising. Take a look at GAME's sale this year, where there are almost 150 Nintendo DS titles reduced and the majority of them were released in the last twelve months. There isn't a single "big" title in there and most of them are utter, utter rubbish.

The retailers HAVE to hit their numbers to be able to afford to stock the masses and masses of absolute tosh that gets released each year. Perhaps if publishers were more selective about what they vomited out to retail, retail would have to promote the high-profile titles for longer and not relegate them to "back catalogue" status after a fortnight. Seriously - games about owning animals, dressing animals up, babysitting animals and babysitting...well..babies....and MORE THAN ONE OF EACH? I don't think the fault lies with retail.

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Re: Some fair points..

posted by Onehunglow Dec 31, 2008 at 12:06 pm
5

Interesting stuff. Personally, I think retail feel that the sooner they can push a triple A title into the preowned market, the bigger margins they can make.

Both Gamestation/Game offer better trade-in prices within the first 30 days for preowned games. However, the digital age is coming and it is going to be very interesting to see how retail adapts.

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Re: Re: Some fair points..

posted by Ryan Jan 01, 2009 at 2:53 am
6
Ryan

I thought the music industry made far bigger margins with digital distribution? Lower overheads including packaging, shipping etc. Mr Hartmann seems to be implying that by slashing prices in the shops, retailers and driving customers to purchase online?
I suspect hes more interested in the resale and trade in's market but then that makes little sense to me either. Its not like you can trade in a game you bought digitally.

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Re: Re: Re: Some fair points..

posted by SHPieman Jan 02, 2009 at 9:32 am
7
SHPieman

Ryan, retailers used to purchase most CDs for around £8 and then sell for £10 - £13 (not strictly true as new releases were often bought in bulk or for example discounted the first week to reach a higher chart position). iTunes is £8 an album now? It shows why EUK has gone, selling their stock to the retailers at the same price a consumer can download it for. I personally think the game retailers are selling themselves short but at the same time, especially with people's attitudes towards spending at the moment, they simply won't sell as many games if they leave them at full price. People will not pay £45 for a 10 hour first person shooter. That's £4.50 an hour. Might as well go to an arcade for that sort of money!

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i disagree

posted by cyber akuma Jan 02, 2009 at 3:07 pm
8
cyber akuma

of course a publisher is upset at prices being slashed quicker since the stores are more interested in preowned as they have control of the buyin price per unit more so that with new products so once all new products are sold they cut out their over heads completely to the distributors for that title and just keep buying and selling the second hand goods which is great for retailer and great for the customer as the customer gets better prices on the games they want and they get a fair price for the games they sell back to the store its only the distributor which is cut out of the share after the inital units are sold
budget titles saw the distributors recouping on this in the past but with distributors wanting to make as much as they can off the title they usually wait to long to release a budget version of the title or don't release one at all
it is at this point retail has seen the advantage they see the customers desire for a title fade way before the distributor does as the distributor sees sales by hundreds or thousands of units to shops to sell unfortunately thats it they basically see the number of units shipped to a store not the number of units the store has sold the two are usually completely different figures
sure its possible to blame downloads for some loss of revenue but its retail that will be hit by that not the developers in fact as said developers will make more profit since they cut back on unit manufacturing costs
the only drawback to all this is that both retail and distributors are forgetting the collectors market
these titles that some stores don't sell well are at times quite highly desirable games to a collector as there are less released of them by the distributor sometimes shops only ever having two copies of the game and some towns only having one game shop that means there are customers that are desperately trying to find that game and can't
downloads allow them to play and that is similarly what has killed retail for music less people are hunting down the albums they want and can't find in the shops when they can download it (even if its near the same price as a physical copy) as the stock never runs out
this doesn't kill the collectors market even with music there are still record collectors paying way more for a record than what the .mp3's would cost them to download as its the record the packaging and everything else that draws the collector in
this is the same with the games industry just look at castlevania symphony of the night for the ps1 it still sells for near £100 a copy when the game has been rereleased on the psp for cheaper (and has more on it) and also as a download on the xbox 360 for far less
if distributors and retailers want to make more money they need to get a better setup of re-releases, budget titles, re-issues and back catalogue orders
hell if all the consumer is interested in is the brand new titles and then thats it then why would sites like ebay exist please this attempt at market analysis is pathetic
just look at japanese games retail there is your shining light shops like game/gamestation and many indies have used the japanese as a business model by stocking promotional merchandise and older retro systems
but if you look closer at the japanese market they are often selling reissues and re-releases of retro products (how many different versions of the NES/famicom have been released in japan now? and they still release games for it) not to mention more titles released at pocket money prices by homebrew programers we have even seen some of these released over here selling in morrisons for £8 or less and being passed over for larger stocks in all game and gamestation stores which then saw copies of the game sell for £80+ on the internet
so really feel free to sit back and argue over whether the internet is killing your business or not as eventually you will be proven right and you will have driven all your sales to the internet for collector's items and downloads despite all three of the big online consoles allowing you to sell points for these downloads in their stores (how much help do you want to stay afloat?)
so look at your own businesses and see where your money is disappearing maybe its staff that know nothing about the products they are selling or have no passion to know about them (this is definately true of supermarkets and game/gamestation and woolworths is already dead because of it) all you see in shops are trained monkeys on tills is that really going to get anything off your shelf other than what is playing on the tvs or brandished over the posters
marketing is your tool try using it and you will sell more talking to your customers for one and finding out what they want having friendly staff its amazing that homeless people on the street selling the big issue have better customer service/sales skills than you will find with the staff in almost every games store in the country
yes a large part of the custom for shops are parents buying gifts and don't know or want to know anything about them they will go for price and will go to the supermarkets so why aren't you drawing their kids in their parents have to follow them and parents give in to incesant cries of "buy me this buy me this" and see your new stuff at competitive prices too then they become regulars your bread and butter
it disgusts me that shops are whingeing that they can't compete with the internet when the internet in the u.k. has slow connections, long download times, viruses, parents afraid of their children getting hold of pornography, countless technical issues and if ordering a physical product delays from delivery
all that makes walking into your shop and buying what you want there and then and being able to play it as soon as you get home sound the simplest option
there are far more pressing concerns about stores lack of sales than competition for downloads
a) sort your stock out
b) sort your staff out
c) sort your displays out
d) sort your customer relations out
e) sort your marketing out
f) get some product knowledge (if a customer knows more than your staff about a game why the hell is that, and if a customer knows more about games in general than a member of your staff why the hell are you still paying them)
quit complaining until you quit throwing your own money away

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Re: i disagree

posted by MrJolly Jan 02, 2009 at 4:25 pm
9

Too many games released at the same time of year and infact too many mediocre games released all round. Every year Ubisoft releases another price of persia and every year it's halved in price after a week - does anyone ever learn from this? How come years after their release so many Nintendo games keep their value? Good quality + good retail management + not flooding the market + high = high used value and therefore the new price stays high.
and it's not just nintendo, consider left for dead. Online title + great game + customer hanging on to the title + not flodded the market (supermarkets didn't stock it) = the one 360 and PC game I've not seen discounted at retail this xmas.

Maybe it's time people in Retail and at the publishers did their job instead of continualy moaning and placing the blame elsewhere for their poor stocking and releasing decisions. don't release loads of mediocre rubbish and don't release all your quality games at xmas where they flood the market and kick off a price war.

Surely some of the games released pre-xmas could have been released a day or two after xmas to capture gift money or held over until Easter but I suspect that most publishers have no cash, need to "organise the books" and want to push the title out as early as possible.

Used is here to stay, if it you kill it at retail then it'll go to Ebay and Amazon at which point all that money will go out of the mainstream shops and into the hands of small specialists.

On second thoughs....

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MCV is the leading trade news and community site for all professionals working within the UK and international video games market. It reaches everyone from store manager to CEO, covering the entire industry. MCV is published by Intent Media, which specialises in entertainment, leisure and technology markets

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