Club Penguin. Runescape. Moshi Monsters. These digital franchises generate a significant chunk of their revenue on the High Street – not only through merchandise but also through pre-paid content cards.
These can contain anything from points and currency to subscriptions and codes for full download titles. You’ll find them in almost every form of retail, too – specialists, supermarkets, department stores and even non-games retailers like WH Smiths and Clinton Cards. And often positioned alongside high-profile brands like iTunes.
The benefits for retailers are obvious. In this increasingly digital world, firms like InComm Europe and Link Distribution offer bricks-and-mortar stores a way to tap into the revenues surrounding social games – an opportunity many have embraced.
“Online digital time and currency is clearly a rapidly increasing market, and one that HMV is committed to being a part of – it’s a nice fit with our recent entry into the technology market,” says HMV games buyer Richard Thompson.
Sainsbury’s games manger Gurdeep Hunjan adds: “The digital world is growing fast. The next 12 months will give us some solid learnings to really understand the next five years.”
Other retailers add that these cards are a way of entering the digital market “without risky set up of a digital downloading solution”.
Even distributors can profit. Link Distribution sells Xbox subscription cards, and expects these to form 21 per cent of its 2012 turnover.
“Distribution is an extension of retail demand. Not only are our sales of digital access goods increasing, but also the breadth of our account base selling these products is also expanding,” says sales manager Craig Donaldson. “Similar to the effect of iTunes on the music industry, digital has helped focus retail on the ways it can support this growing market.”
Asda’s head of games Andrew Thompson observes that these cards also bring retailers closer to the digital market “without significant, risky set up costs of a digital downloading solution”.
Chart-Track data shows that online time and points cards grew by 71 per cent in terms of UK units sales and 47 per cent by revenue in 2011.
With growth like this, publishers can use these items to push their online games to a wider audience than any homepage takeover ever could.
“Club Penguin membership cards have allowed us to take the brand into newsagents, convenience stores and supermarkets, giving us a connection between our merchandised products and the game,” says Disney’s commercial director for games Matt Carroll.
“Presence in store also offers us prime real estate that’s visible to both our target audiences: parents and tweens.”
Microsoft’s Xbox boss Stephen McGill observes that publishers are experimenting with what they sell in card form: “It was around this time last year we introduced a trial of the digital code distribution model at GAME stores, which has now been replicated by other publishers.”
Naturally, the low price and form factor of the cards lend themselves to impulse purchases and gifting, considerably more so than a £50 boxed console title.
And let’s not forget the safety and convenience of a one-time code. The world of entertainment may have embraced downloads, many shoppers still place their faith in retail.
“Not all customers have credit cards, and some are wary of using them online,” says Asda’s Thompson. “Therefore sales of cards are very healthy in bricks-and-mortar retail.”
Carroll adds: “Consumers still live in both worlds and are shopping online and offline.”
ON THE CARDS
So where do we go from here?
In the last year, Microsoft has released cards that entitle users to full XBLA titles or DLC for boxed games, but what else can publishers pack onto these prepaid cards?
McGill is keen to explore the possibilities: “There’s a market for both digital and retail purchases and we’ll continue to invest in both. We’re working with other UK retailers to look at similar business models.”
Asda’s Thompson predicts: “As development costs continue to rise on triple-A products, and with the next generation of consoles just around the corner, I think we will see games developers producing more and more episodic content, which will further drive sales of points and DLC cards.
“This is a good thing for both publishers and retail, as all parties can benefit from the sales opportunity this will bring.”