OPINION: Are the price cuts enough for UK games retail?

Michael French
OPINION: Are the price cuts enough for UK games retail?

As the saying goes, it’s always darkest before the dawn. And, metaphorically speaking, the High Street and online outlets selling boxed games have faced one long, sleepy night during these last few months.

The 3DS price cut has started to rouse the market though – but the immediate PS3 price cut is the alarm going off. Deus Ex next week, a meal I can’t wait to sink my teeth into, is a hearty breakfast and… well, I’ll stop the parable there.

You get the message: serious price cut action and a flow of actual product can help us out of the doldrums.

But are the price cuts enough?

Retailers have been telling the world for months – either via comments in MCV or via national ads promoting the latest deals – that the pricing of games and hardware is too high.

Consumers need to be tempted into stores to buy things they can afford. So last week’s 3DS slice and the new PS3 price should satisfy games buyers (both types) as they hope for a turnaround Christmas.

But 3DS is proof that retailers will push these prices even lower. The handheld came out with an estimated price of £230. Nobody sold it for that. Most went below £200. But even that was too expensive. The new 3DS price is more compelling, but even at ‘around £149’, its most popular deals have been those like Tesco’s £115 offer and similar deals.

“Nobody will be surprised if the PS3 is temporarily £150 at Christmas as someone uses it as a loss leader for a weekend.”

That same thinking will no doubt be applied to PS3’s drop down from £250 to £199.99 (exactly as we said it would five weeks ago).Many retailers had been selling the console for close to £200 for months. So expect PS3 pricing to read closer to £179.99 on store shelves.

And nobody will be surprised if the PS3 is temporarily priced at £150 at Christmas as someone uses it as a loss leader for a weekend. Shaving a few pounds off the margin is a risk, but one worth taking to drive people in store. Especially when punters are hopefully back out on the High Street come October, November and December.

The message from retailers has been clear: if suppliers aren’t going to cut the price, then they will.

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Tags: Retail , Opinion , uk , video games , price cuts

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Comments

2 comments

Thats all very well if you can afford to loss lead ( although I don't for one second believe that the nationals are ) but after such a long and hard year there is no way I can afford to do this now, the new PS3 price has already generated interest from customers but when the price war starts as it had already yesterday where does that leave us, is it really necessary to further reduce a reduced product, margins are already non existant and what perception does that give the consumer, for example 3DS rrp was £229.99, you can now pick one up for £115 half the price, great for the consumer but what long term damage does this do, the perception from consumers is that there are huge proffits in gaming there must be how can you reduce a new product by 50%, I was chatting to a customer a few weeks ago and explained to him that my BF3 pre-orders wouldn't be £39.99 like everyone else and when I discussed cost prices with him his response was " I would shut the door and go home if I where you " and thats exacty what is going to happen with many indies, the industry is in self destruct mode.
Supermarkets are then new distribution centres Xbox 360 250gb for £143 National TV / Press coverage, explain that one to your loyal customers who don't want to but from supermarkets they want to buy from a game store but are being driven away you would be mad to pass up such huge saving !
Rant over !

Michael Pearce

Michael Pearce INDUSTRY
Aug 18th 2011 at 10:06AM

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Well said michael - as an Indie we have seen over the last 9 months a ridiculous situation where every title released and every Console available, joe public is paying far less for than we can get them for at Distribution. We still cant afford to buy a 3DS from Distribution because they charge us £138 when its £115 at Tesco etc. In 2009 I spent £150K with Official Distribution and £20k with Amazon & Supermarkets, I now spend £150K with Amazon & Supermarkets and only buy stock amazon & supermarkets don't sell. Don't get me wrong I believe that all Indies should stock from Distribution and shun Amazon & Supermarkets but from a Business point of view we have no choice - I refuse to buy a product that one of my customers can get cheaper than me. THE INDUSTRY WILL IMPLODE IF RIDICULOUS UNDER PRICING AND LOSS LEADING CONTINUES

Simon Gough

Simon Gough INDUSTRY
Aug 18th 2011 at 10:28AM

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