Why does Sega now need a director of digital distribution?
This is not a new position as such. It has existed at Sega for over three years, albeit under a different title and with a more technical remit.
Is it a role you expect to see filled at other publishers?
These positions do exist at other firms, although it seems the nature of the digital business gives them a certain level of anonymity. This will change, of course.
What new skills have you had to learn for the role?
First of all, you realise very quickly that the absence of a box does change things quite significantly.
My industry experience so far has been with boxed goods: we receive a release schedule, plan our release and campaigns around the schedule and once the goods are ready we ship.
The new role means that I am involved much earlier in this process and have to familiarise myself with a whole new language.
The roles occupied by the team also illustrate the differences. The Sega UK team that has built our business successfully over the last five years specialise in PR, marketing and sales, whereas the download team has a different balance.
Mark Prince is a finance manager and analyst, Jessica Padkin is a producer and James Schall fronts the business to all our partners and ensures the smooth running and delivery of our games to consumers.
To support this we’re now bringing a specific digital account manager on board to give a better balance across the business.
What share of Sega’s PC revenue is now made through digital distribution and how do you think that will grow?
Across Sega West [EMEA and US], our market share on frontline PC games is around 4.5 per cent higher in the UK – lagrely thanks, of course, to Football Manager. There are many figures from analysts saying that digital has overtaken packaged goods, but given that this includes casual games which I’m not looking at here, I’d say 15 per cent is a closer benchmark – rising steadily to 30 per cent in four years.
What challenges are unique to digital retailing?
Well there aren’t millions of people crossing store thresholds every day. And unlike general online retailing, digital delivery is still specialist; it’s not yet broad.
One of the biggest differences is that when you visit traditional retail, whether bricks and mortar or online, all formats are merchandised in one location and digital is different. Xbox 360, PS3, PC and so on are all available in different ‘shops’, and it’s PC that has the most outlets – imagine that on the High Street.
Do you feel there’s room for more digital retailers in the market?
The last couple of years have seen the packaged market grow to be bigger than it’s ever been. Do we have more retailers than 15 years ago, or just different ones, with different consumers, buying games on different formats?
I don’t think it’s necessarily a case of more. The term ‘digital retailer’ is key there: people who are going to be successful are going to be successful at retailing as well as offering great technical execution.
What kind of impact can traditional retail – GAME, Amazon, Play and so on – have on this space?
Again, the word ‘retailing’ is key. Traditional retail has spent years broadening the reach to consumers, driving brand and customer loyalty, establishing themselves as authorities within gaming.
Last year in the UK, nearly 75 million games were sold in boxes through traditional retail; that’s a lot of transactions. A lot of customer interaction, offering these consumers games on all formats across all delivery methods whilst nurturing the relationships is key.
A number of retailers have expressed concern over Steam’s control of the market. What is Sega’s position on this?
Let me narrow down some publicly available market figures for you.
In 2009, nearly 75 million boxes were sold in the UK. The PC share of this was less than 10 per cent – and not growing.
The digital share is at maximum 15 per cent and probably closer to 10 per cent in the UK. Steam operates just in this area with many other partners and new ones arriving each week.