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UK games industry slams price cutting

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UK games industry slams price cutting

Discounting is ‘unnecessary and worrying’ say publishers and retailers; Do we  need Europe-style RRP restrictions?

The prosperity of the entire UK  trade has been placed in danger by the supermarket price cutting that has led to FIFA 10 and Operation Flashpoint: Dragon Rising going on sale for under £30.

That’s according to leading publishers and retailers, who have today hit out at “unnecessary and worrying” discounting in MCV.

Top trade execs have even asked if the UK needs to adopt a French-style law, where Government restricts in-store price slashing.

Tesco led the way on FIFA 10, selling the title – which broke sales records this week to hit No.1 in the All Formats Chart – for just £24.97.

And MCV revealed this morning that ASDA is to sell Codemasters’ Operation Flashpoint: Dragon Rising for just £27 from midnight tonight.

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Konami UK  boss Peter Stone told MCV: “It appears that FIFA has been used as a spearhead in a fresh market-share battle between the supermarkets, and this can only lead to similar retaliation with other key titles. It is our understanding that retail sets these prices, and they are unnecessary and worrying.”

Bethesda CEO  Sean Brennan added: “Clearly no publisher likes its brand to be devalued like this. I suspect it only moves market share around rather than generates additional sales. The alternative is something like the French model where the state dictates minimum retail pricing in video games.”

A head buyer at a top UK national entertainment retail chain added: “The relentless discounting policies of the supermarkets have done so much to devalue products that were once considered highly aspirational, including DVDs and CDs.

“The industry has to guard against the same being done to games – once the public has an expectation of significantly lower prices, there won't be any going back.”

Theres nothing wrong with a bargin

posted by Dale Oct 08, 2009 at 4:22 pm
1
Dale

"once the public has an expectation of significantly lower prices, there won't be any going back.”

So lets keep all prices set at a sometimes ridiculous RRP because heaven forbid the public try to find similar bargins rather than forking out outrageous amounts of our very hard earned cash.

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Stop it now

posted by Warick Hunt Oct 08, 2009 at 4:29 pm
2
Warick Hunt

The implications are greater for the industry.

The ridiculous RRP's are set by the publisher, not the retailer. The Cost price reflects this.

Supermarkets sell at a loss, the customer then assumes that everyones making a killing selling at £39.99. This isn't the case.

Eventually this will harm the publisher/developer.

Short term gains, great bargains, long term damage to the industry.

This isn't my opinion. Its a fact

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State price fixing?!

posted by KB Oct 08, 2009 at 5:01 pm
3
KB

I have every sympathy for the indie trade in this - it's impossible to compete with the Supermarkets because the playing field just isn't level. But to suggest that the solution is for the state to fix minimum prices!? I'm no expert in all this, but isn't that against European competition law?

The problem gaming faces is that RRPs are set at unrealistic levels in the first place. Most consumers would, I suggest, be happy to spend a standard £29.99 for a game, and maybe up to £34.99 for the Modern Warfare 2s of the world, but less for the Brain Trainings or Singstar song packs.

If that was standard pricing policy both online and in-store (and distributor prices were adjusted accordingly) then I actually think there would be much less of an incentive for supermarkets to use games as loss leaders to attract people to their stores. I mean, you don't see nearly the same scale of discounting on CDs or DVDs - maybe £3-4 at best, precisely because the prices of those goods are pitched at a reasonable level in the first place. There's therefore less of an incentive on consumers to go out of their way to pick up a bargain.

So it's all very well for publishers to speak out against this, but really, they are the ultimate cause of this problem, not retailers.

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Loss Leaders

posted by Marty Oct 08, 2009 at 5:39 pm
4
Marty

Indies should try it. Another words if ya can't beat them join em.

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Marty

posted by Grow up Oct 08, 2009 at 5:51 pm
5
Grow up

What planet are you on marty? Go back to your school homework.

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I'm realisic

posted by Marty Oct 08, 2009 at 6:25 pm
6
Marty

Indies arn't been. Some that post on here want fixed RRP prices so they can rip off the gamer. Rather than offer value. The loss leader works why do you think the supermarkets use it. All I said is the indies should try it.

What you lose on one item you make back on other items.

I myself are a trader, u don't see me crying about prices. We just move with the times, deversify. Move into other lines that do make money and arn't as cut throat.

Why do you think the supermarkets ended up moving into games in the first place. Cos ther margins got squeezed on other lines. You never saw them moan. They just moved to other lines. Which makes perfect business sense.

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Prices

posted by Mark Oct 08, 2009 at 7:18 pm
7
Mark

Marty, first of all, you won't see supermarkets complain, because, whilst they make a loss on games like this, they rub their hands with glee on the profit and margin they make on the food and petrol they sell.

I work for a retailer that has not long opened in a new location and with supermarkets pulling stunts like this, its hurting us. We sell these titles at £39.99, pounds cheaper than other places, yet we were still accused by customers last weekend of overcharging! this sets a very dangerous precedent.

Yes, I do agree that we all love bargains, but this bordering on legal piracy (an oxymoron, I know). The games developers get a share of proceeds from each unit sold, which forms part of the bank roll for the next game in the series. Surely, we want to see the industry thrive, not sink in the current climate

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Prices

posted by GJC Oct 08, 2009 at 9:33 pm
8
GJC

As on online retailer, we experimented with loss leaders a few years back with PS2 games when the supermarkets started to get heavily into games. We also sold DVDs at a loss too and hoped we'd make the profit from our other products. It didn't work - consumers came to us for the games only and probably found they could get our other products cheaper elsewhere. I don't think we sold a single other product alongside a game or DVD. So we ditched games and DVDs altogether and are happily selling our other products.

We'll never go back to games unless we can get a fair crack at making some profit on them. There's no point even us buying in several thousand pounds worth of games just to make a few pence back, we'd make more money on interest in the bank even with the virtually zero interest rate!

It must surely be in the games publishers interests to see their product in as many places as possible for decent prices?

I think prices as a whole need looking at - the RRPs are far too high, distributors sell to us at too high prices and consumers will only pay the very least especially in these hard times. It's quite sad as there's plenty of money for us all to make from games if prices were lower for everyone. Quantities sold would be much, much higher and therefore the money brought in would be greater too.

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fixed rrp

posted by paul johnson Oct 09, 2009 at 7:35 am
9
paul johnson

wow dont let superhero consumer King JB here that, hell want you all to move to france, wow level playing feild for all retailers and the customers all pay the same, so no one ever pays more than anyone else, this is madness, sounds like something a dictator would want, please help us JB your the only one that can save us from these evil indies !!

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ok

posted by paul johnson Oct 09, 2009 at 7:41 am
10
paul johnson

this problem really doesnt exist in the US i was there for a few months in summer and there is a slight difference in price at some large chains but no where near the degree it is in the uk with supermarkets,
a low set price could work, but there is no law to say supermarkets have to stick to any rrp, shame as now the distributors must be worried about their jobs, its difficult but really does make the industry worse. also i am starting to loose a little faith in mcv's credability letting people like jb slate indies for trying to run a business, when he has no real knowledge of the topic, i feel this will just turn into a sess pool like n4g, who died and made him consumer king the arrogance of the guy and sheer ignorance is astounding to me, we all want cheaper products but i wouldnt wish anyone out of a job or out of home, these people have families, they only want a fair chance to run their business as best they can, you cant produce profit where there is none

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Supermarkets

posted by Redh3lix Oct 09, 2009 at 8:00 am
11

This loss leaders sales technique fits the supermarket paradigm and makes perfect sense, but certainly not for indies. I'm not swayed towards purchasing any other product other than the very game I'm looking for when I walk into a independant gaming shop. In relation to supermarkets, it's very, very hard to walk out without a sudden realisation that you need say, milk, bread etc.

How many times have you heard or said "I only came in for milk" only to spend around £30 to £60.

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Loss Leaders?

posted by Burner Oct 09, 2009 at 8:43 am
12
Burner

Lots of comments about Loss leaders on here.

You have to remember that the multiples and major chains enter into agreements with publishers and visa versa. Publishers, as well as pushing Triple A releases will be securing a whole package of product including, according to the hardcore, shovelware and tat.

I know a lot of product is discounted at supermarkets but look along the shelves and most of the non AAA titles can usually be found for RRP if not a little lower.

Publishers want to maximise their exposure over others so with lots of competing publishers out there great deals can be struck by the major retailers. That said what the publishers give over with their major releases they would net back with the other products.

Majors also have marketing budgets so when they have a big promotion guess what funds it? with help from publishers who have their own marketing budgets.

Heres a thought, if supermarkets squeeze the specialists out of the market place would that mean that a lot of publishers would have to merge to be competitive or fall of the face of the earth, fewer publishers mean that they can be more aggressive and dictate terms.

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Do they though

posted by Indie RIP Oct 09, 2009 at 10:06 am
13
Indie RIP

@ Mark 7

I was at an Asda last thursday watching 350 young lads of between 15 and 25 queuing for Fifa 10 at £26.71.

Not one of them bought food or Petrol. They did however steal a few bottles of drink while they were waiting because there was not enough Asda Staff to cope.

I doubt anyone who bought Fifa 10 in any Supermarket last week also did their shopping.

So what profit if any did they make

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rrp

posted by dave Oct 09, 2009 at 10:19 am
14
dave

rather than complaining about it with genuine triple A titles like fifa, the publishers should just remove the reduction in cost price when you buy in bulk. This would insure that if any chain decided to sell at £25 it would be a much bigger loss.

legislation isn't needed just a backbone from the major publishers. If the cost price is at £33ish and you don't reduce that regardless of how many you buy then supermarkets would be less inclined to do this. Also when you reduce the cost price of these items to reduce the price point, to include these games in sales think about who you are reducing cost price for.

As far as I know there is nothing illegal about saying to a supermarket why should I reduce the cost price for you now so you can sell at £25 when you did it from day of release?? I don't need to reduce the cost price because you can afford that price point anyway.

Admitedly this won't work with your standard releases but lets be honest publishers I wish I hadn't paid £40 for more than one game over the last year. If you make rubbish you shouldn't be slapping a £40 RRP on it. e.g. Terminator was about 6 hours long but you didn't reduce the price accordingly untill after they release hardly anyone bought it.

Lets not forget B movie's produce a much lower RRP than big blockbusters but the same doesn't happen for games which isn't fair in anyway for consumers.

There should be 2 rough bandings of pricings for games and the publishers have the power to ensure that the top titles have a top price and the rubbish is cheaper. Activision are right in that sense at least top titles should get a premium to the rubbish. (just £55 takes the mick)

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Gentlemen

posted by Captain Scarlet Oct 09, 2009 at 10:24 am
15
Captain Scarlet

Price fixing is illegal in Europe, however, standardized discounting to retailers is not.

We have a idiots in ELSPA that are only looking for a Knighthood, get off your arse and do something constructive.

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No rrp restirctions

posted by MarketZero Oct 09, 2009 at 10:54 am
16
MarketZero

No we don't need rrp restrictions, this happens with a small handful of games once in a while and everyone starts kicking up a stink about the evil supermarkets. In these trying fiancial times, long may it continue I say. There are games out soon that I would not buy for £45 but I would for under £30. So if no-one (including supermarkets) sells it at under taht, I'm not buying it anyway.

I accept this does have a knock on effect with Indies and even established stores like GAME but that's just how things are. If it does result in some losing huge profits or even shutting down then that IS sad but the sooner it's accepted, the sooner you can make a contingency plan.

I'm typing this while working at a company about to lay off 3000 people because of a shortage of money, including possibly me. Life's sh1t for loads of people at the moment and we're going cheap where we can.

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Long may price slashing continue

posted by Marty Oct 09, 2009 at 12:57 pm
17
Marty

Certain indies have had it there own way for years, fixing high prices, offering sh#te customer care. About time they were brought into line. The stronger indies will surrive competition if the don't sit on there arses do jack sh#t. Move with the times deversify.

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Please Stop Now

posted by Martha Farquar Oct 09, 2009 at 2:06 pm
18
Martha Farquar

Marty please stop this.

At the moment games retail at £10 BELOW the SRP. Yes, they're sold in as £49.99 products.

Yes this is expensive, but it isn't the retailer that sets these prices. The retailer simply reflects the cost price.

Now give it a rest.

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Some indies sell above RRP

posted by Marty Oct 09, 2009 at 3:53 pm
19
Marty

Which is just shocking, and greedy. It should'nt be allowed.

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Times are changing

posted by JB Oct 09, 2009 at 4:42 pm
20
JB

Fact is the industry is moving forward as more and more people take up game playing. Where people buy their games and at what price has drastically changed in the last few years. As much as it might be hard to take in for some the independent sector being the one stop for video games is slowly becoming a thing of the past and as such they've become naught but a dead weight, desperately trying to drag things back to a time when the indie ruled all and games cost the earth to buy.

Even buying and trading online offers a far better value than your local independent trader. As prices come down more and more people will take up the hobby so all this nonsense about it 'hurting the games industry' is just that, nonsense. It happened with music and it happened with films and both are selling more music and films than ever.

Add DLC into the mix and I doubt that the indies will even be a factor 10 years from now, if not sooner.

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Production costs are increasing...

posted by Phil Oct 09, 2009 at 5:15 pm
21
Phil

I have read through most of the posts here and I can see what everyone is saying.
Something no one has mentioned is production costs.
It costs more now than ever before to make a game due to the numbers of people involved but the cost to consumers hasn't risen and in some cases it has dropped. The RRP has risen but retailers aren't usually using that to price the games.
Yes more people are buying games than before either but other things have risen in price.
Cinema tickets have almost doubled in the past decade, food has increased over the past few years a lot.

@JB Music and movies haven't come down in price, making the physical discs has come down dramatically but the cost to the studios have gone up. Take a look, a proper look at the RRP of DVDs, they aren't that cheap. Front page on Play (when I looked anyway) Coraline on DVD RRP of £19.99 for a one disc edition, Play price £11.99 and this is a second income source for movies, games really only get one shot.

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Indies

posted by Jay Oct 09, 2009 at 7:14 pm
22
Jay

Marty shut up. The rrp is £49.99 but indies sell at £39.99. They can't sell any lower as they will lose money. The greed is from publishers.

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@phil

posted by JB Oct 09, 2009 at 7:54 pm
23
JB

#Music and movies haven't come down in price#

Err, yes they have, far quicker than video games as well. True there are a few who still like to hike their prices, but both DVDs and CDs are cheaper than they once were. Comparativily games are still a damn sight more expensive, and most are sporting a number after the title being an incremental update of the previous effort.

Is FIFA 10, not being a huge leap from 09, for example worth more than £30? Mosdern Warfare 2 £55? Absolutley not. Tescos pricing on FIFA 10 was absolutely spot on.

Give me a fresh, innovative and original title and Ill cough up the readies, but give me a title thats just an update of last years game then and I wont commit. How much are we expected to pay for the next COD, or the one after that? Everything loses its worth eventually.

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Wake up!

posted by Agent75 Oct 09, 2009 at 9:30 pm
24
Agent75

What a load of old tosh! How can you defend any retailer that rips gamers off? I've been saying for years that no game in the history of gaming has been/is worth more than £30. Why would anyone want to pay £40 to £50 for a game when you could go somewhere else and get it for say £20 or £25? It's called competition. They'll never be a law that stops stores from selling items at big discounts. And let's face it, gaming is finished when it comes to new ideas/genres. We're basically given updates every year, more so with FIFA, Need for Speed, Call of Duty to name a few. I'll always stick by my guns by looking for the cheapest price and not paying more than £20. I've had some great bargains over the last few years and I know that'll continue. If you want to be ripped off by the likes of Game and HMV, that's your choice.

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Who's in control?

posted by Jimbo Oct 09, 2009 at 10:40 pm
25
Jimbo

Oh please. Do we really believe this article? Don't you think the publishers which own the games choose who they sell to? If the publishers are making a profit and it exceeds their total project cost (ie. advertising, wages, office bills, software licences, etc) they don't care how much the damn things sell for. What I don't like though is the supermarkets eventually get rid of high quality goods sold in smaller shops. Eg. butchers, bakers, fruit & veg, the small bookshop, the small independent music shop, etc. Eventually the small retailers go, then eventually good value goods go. Boohoo to the supermarkets.

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Blame the platform holders

posted by Chad Sexington Oct 12, 2009 at 2:22 am
26
Chad Sexington

The reason why console games have such high RRPs is because of the platform holders (i.e. Microsoft, Nintendo and Sony) -- they all charge licensing fees in the form of a cut of the profits from each unit sold.

If you look at PC games, there are no platform holders, so no licensing fees, which is why the games have much lower RRPs. Publishers will make more money per unit on a PC at a lower sales price because of this, but of course piracy is so rife that not all is rosy there either.

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You have to laugh

posted by LeeC Oct 12, 2009 at 2:48 am
27

More and more studios are re-hashing games year after year. COD4, 5, 6 ohh, change than name to Moder Warfare, then MW2, 3 etc.... They're producing in 12 months what originally took 3 years yet they want the same price for the re-hash as they did the original.

I'm sorry, they only people devaluing games, are developers and publishers who are more interested in the quick buck than the quality game. I hope they do take on a fixed RRP system. And alongside it, I hope they are forced to justify that RRP in comparison to previously released titles by giving full disclosure of development costs and schedules.

You can guarantee, make them give full disclosure and you'll get "ermm, never mind, we'll stick with the discounted prices thanks", because it will expose them for the frauds they really are.

So yeah, put a fixedd RRP in place and then ban sequels for 24 months to stop them exploiting the gamers with re-hashed sh*te. Put it too high, and I'll happily buy used... simples.

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