Ask an industry exec what retailers can do to survive in today’s increasingly digital marketplace, and they’ll tell you: ‘Retail needs to evolve.’
It’s a meaningless soundbite because when asked how, few seem to know. Those that do simply suggest copying Apple’s store format or spending millions on unproven online platforms. Retail may need to evolve, but no one actually has any answers.
Except for Xbox.
Ever since the Redmond-based giant came up with Xbox Live, the firm has been eager to keep traditional retail on side. The result? Almost 70 per cent of European Xbox Live Gold members buy their subscriptions on the High Street. Store owners bestow the benefits of the online service to their customers, while enjoying consistent sales of points cards, headsets and the rest. To the team at Microsoft, retail already has evolved.
LIVE AND LET LIVE
One glance at the latest figures highlight the scale of Xbox Live today. There are 35m active members (both paid and free) from 35 countries, and these members are spending – on average – 60 hours a month on the platform. Compare that to Facebook, where the monthly average is five hours and 20 minutes per user.Live has become the centre point to everything Microsoft is doing today – from Windows Phone 7 to the upcoming Windows 8 operating system on PC.
Retail is playing a crucial role in this development. From educating consumers to selling points cards, subscriptions and even entire Xbox Live Arcade games in-store – the High Street has got right behind Microsoft’s digital platform. And there are more retail initiatives on the way.
“We are working very actively with retail,” says Robin Burrowes, the Xbox Live marketing manager for EMEA. “And talking to stores in different ways.
“There’s going to be new digital innovations that will help drive more business – new form factors and digital tokens. For example, we’ve been testing electronic software distribution in a couple of places. That’s as well as point-of-sale activation, which is similar to buying digital cards in store and redeeming that code at the point of purchase.”
The most popular form factors are specialist subscription and points cards.Every time new Call of Duty DLC comes out, Activision releases limited edition branded points cards. During the release of the Black Ops: Escalation DLC, 132,000 points cards were sold at retail. That’s more than some new games manage during a debut week.
“We are continuing to innovate that with limited editions,” adds Burrowes. “For example, a Gears of War subscription card is on the way where you get 12 months, two bonus months and you get an in-game weapon to use in Gears of War 3.”
What’s more, Microsoft is increasingly bundling Xbox Live points, subs and even entire downloadable games with retail releases – such as the inclusion of XBLA title Fruit Ninja Kinect with boxed game The Gunstringer.
“There’s going to be a lot of in-game bundling activity,” continues Burrowes. “So for certain Kinect games coming out this Christmas there will be codes included, which we will talk more about soon. “Consumers will also be able to buy a subscription card and you will get points that can redeemed against movies or games.”
FRIEND OR FOE?
As a platform that sells games, Xbox Live is technically a rival to the High Street. Yet Microsoft has kept its relationship with retail intact by not challenging it head-on. Boxed Xbox 360 games are always released on shelves before they are fully made available to download – often there’s as much as a six-month gap between the retail and digital versions.
This is in stark contrast to Sony, which is offering up all PlayStation Vita games over PSN at the same time as they are released in stores.
Burrowes adds: “There are no plans for that kind of day and date parity. Right now, we are very respectful of that retail environment, in that we have a window between the release of a retail game and the digital one. There are no immediate plans to change that.”
Furthermore, Microsoft promotes its Xbox Live Arcade service during the summer, and away from retail’s crucial Christmas sales period.“Xbox Live Arcade is almost counter-cyclical to traditional retail,” explains Burrowes. “Mainly driven on the back of programmes like Summer of Arcade, which has had titles like Braid and Trials HD.
“What we see during peak time, when the big blockbuster retail games come out, is that Xbox Live Arcade has been traditionally soft. It is in the quieter times that we have been very actively pushing the XBLA service, such as what we are doing with Summer of Arcade right now. From Dust is doing really well and Fruit Ninja Kinect is doing very well indeed.”
Microsoft proves that when it comes to the digital market, it’s not just retail that needs to evolve.
By offering traditional outlets something they can sell – be it Call of Duty-branded points cards or Gears of War subscriptions – the High Street has been able to help Xbox Live establish itself as a powerful distribution platform. It’s a successful partnership that other publishers and platforms may want to learn from.