Merchandise sector still 'finding its feet', says GM UK

Marie Dealessandri
Merchandise sector still 'finding its feet', says GM UK

We already know that 2016 was not the best year ever for the UK games market. But there’s one category within gaming that still provides growth: merchandise. 

GAME said in its 2016 financial report that although sales declined in the year, licensed merchandise was up 70 per cent year-on-year. 

But sometimes growth is not enough to call a year successful.

“2016 has been something of a mixed bag all told,” Gaming Merchandise UK’s founder and director Luiz Ferreira (pictured, right) tells MCV. “As is everyone else in the industry, we’re driven by the quality of releases. There were some amazing software releases in 2016, which, for whatever reason, didn’t quite gain the traction of the previous years. Many games that reviewed well just didn’t hit the numbers anybody expected. Merchandise sales are very much linked to how well the software performs in the market but we are hopeful that ‘the good will out’, and now that we’re seeing prices dip, these titles will hit the numbers they deserve and we’ll piggy-back on that.”

CH-CH-CHANGES

GM UK launched in 2013 and has since then become a key player in the market. In this respect, the merchandise firm knows the industry trends better than anyone else and has evolved alongside the sector. And it has changed quite a lot lately, according to GM UK’s buying manager Phil Rolls (pictured, top far right).

“Once upon a time it was enough to print a bog-standard t-shirt with box cover art on it, and it would sell,” he says. “We’re seeing customers are far more discerning these days with a move towards fashion pieces. Cosplay, too, continues to blossom and we’re seeing IP holders really getting on board and engaging with the community to produce the merch they actually want. And away from apparel, we’re seeing a demand for higher-end figures and statues. Consumer expectations are now so high that license-holders really have to produce top quality product to stand out in the marketplace.” 

This evolution is evident in the emergence of brands such as Musterbrand or Level Up Wear – companies that are investing in high-end, ‘trendy’ apparel with higher price points. Are gamers now ready to spend more than before on tie-in items?

“The evidence suggests so,” Rolls answers. “We’ve worked closely with the [Musterbrand and Level Up Wear] guys and have seen a shift towards the higher-quality, higher-priced product. The trick is in finding that market though. Some franchises lend themselves more readily to ‘fashion’ items – Assassin’s Creed, Dishonored 2 spring immediately to mind – the challenge lies in being able to engage with customers who’ll be buy this merch but don’t even necessarily know it’s out there.”

But the market isn’t only heading towards higher-quality products – it’s more complicated than that, as there are also huge opportunities at the bottom of the ladder.

“There is unquestionably a serviceable space at the lower-end of the market,” Rolls continues. “Let’s not forget that gamers don’t always have huge amounts of disposable income, but still want to demonstrate their affinity to the brand in some way or other. Key-rings, dog-tags and the like are perfect in this respect – so long as the quality is right. At whatever price point, customers rightly demand quality.”

But a booming market doesn’t come without challenges and the merchandise sector is no exception. For starters, as any profitable market, merch attracts new firms every day, with the risk of levelling down the whole sector and eventually reaching a saturation point.

“With shareholders chasing growth, and merch being a very profitable means by which to achieve it, it’s no wonder that more firms are getting involved in the sector,” Rolls explains. “There will of course be a tipping point at which the market will become saturated but we’re not there yet. Ultimately success will be driven by those who pick up the right type of license, and then delivering on quality. Volume merch sales work best at the intersection of cult ‘cool’ and mainstream popularity. Fallout is the perfect example – even over a year after release its still amongst our top-selling ranges.”


"The market will become saturated but we're not there yet."

Phil Rolls, Gaming Merchandise UK


But profitability, top-selling ranges and popular franchises mean another thing: everyone wants a slice of the cake and, as a consequence, counterfeit products are another issue looming on the market, Ferreira adds. 

“It’s an issue that needs addressing,” he says. “The proliferation of counterfeit
merch benefits no-one except those selling it. IP holders’ brands are damaged, they lose royalties, and legitimate traders are in a position where they can’t compete on price, particularly at the lower end of the market.”

He adds: “Event organisers, publishers, IP holders, legitimate retailers, licensees and trading standards need to come together to coordinate a coherent strategy that delivers tangible and lasting results quickly.”

Interestingly, gaming shows are where counterfeit merchandise thrives, according to Ferreira, but it’s also where licensed firms do most of their business – hence GM UK’s discontent with unlicensed products.

“We’ve been working events, both gaming and more general Comic Con-type shows for some years now and our strategy continues to evolve,” Ferreira explains. “They are a vital part of our business, as not only do they provide important income but they give us an opportunity to engage directly with the community and find out exactly what they want ‘from the horse’s mouth’. We based range decisions on feedback from events in the past and will continue to do so.”

But, again, that doesn’t come without challenges.

“The events space is becoming more competitive, both in terms of the number of events available to trade at, and the number of traders at those events,” Ferreira says. “There is a ‘sweet spot’ in respect of the ratio of traders/customers and we’ll focus on those events where we feel that ratio works rather than chase every event that’s offered.”

Rolls adds: “The acquisition of Multiplay by GAME has meant that the Insomnia events have become a much bigger proposition. They now occupy some of the same space as EGX, competing for the same pound in the consumers’ pockets.”

But both Ferreira and Rolls are positive about the merchandise market, and believe it’s only just the beginning and bright days are ahead.

“Notwithstanding those challenges, we’re really excited about where merch is headed right now, both in terms of the quality of releases in 2017 and the quality of merch being made available for them,” Ferreira says.

Rolls concludes: “The merch sector is in its relative infancy
and it’s fair to say we’re all still ‘finding our feet’ to some extent. Some are further ahead than others and we can all learn lessons from one another.”

Advertisement

Tags: Interviews , merchandise , feature

Follow us on

  • RSS