Meet the UK’s newest games retailer – Gamefly

Gamefly was never planning to come to the UK.

The US rental retailer – which this year celebrates its tenth anniversary – had ruled out going international.

But that was before it bought Direct2Drive, and instantly owned one of the world’s most established digital retailers.

The advantages for us in acquiring Direct2Drive is that it got us to where we want to be much faster,” says Gamefly founder Sean Spector. It got us employees, it got us a lot of consumer data and then it got us relationships with 300 publishers worldwide. It also put us, in some markets, the No.2 digital retailer.”

And in January this year, the Direct2Drive site vanished and Gamefly.co.uk emerged.

COME FLY WITH ME

Gamefly.co.uk doesn’t sell physical games like its US counterpart. But that doesn’t mean it won’t.

Spector says: It might make sense. And I’d like to do it in the UK.”

Indeed, for all the noise Gamefly is making in the digital space (it has also just announced plans to become an Android and iOS publisher), it is the physical parts of its business that generates the most revenue.

Digital is still a small part of our business,” continues Spector. The disc is not going away tomorrow. As quickly as people think change happens, it usually takes time.

If you go back two years, and think about OnLive, that was going to disrupt everything. Everyone was just going to stream games. Two years later, it just hasn’t happened. But mobile and digital are a big part of our future. That is where gamers are, so to ignore it would be silly.”

DIGITAL INNOVATION

Gamefly hasn’t just spent the last six months incorporating Direct2Drive into its website. Spector and his team have also been working on a mobile app and, most importantly, a Steam-style downloadable client.

And it is a client crammed with sections and content, including editorial supplied by the company’s own Shacknews, a Twitter-inspired social network, with videos, reviews, and more.

It also looks a lot like iTunes.

It’s not by accident that it looks like that,” admits Spector.

Everyone is comfortable with iTunes, so we didn’t want to make them learn a whole new system. It is hard enough to get people to download another client, so if we are going to do it, we are going to make it really easy.”

Another key difference between Gamefly’s offering and Direct2Drive is the games that it stocks. Direct2Drive famously refused to sell Steam-enabled games but Spector has no such qualms.

We want to give consumers choice, regardless of who makes the games and what platforms they work on,” he adds.

We are agonistic, just like we have been on the physical side. We carry games from all publishers across all platforms. That has always been our mantra and it applies to digital as well.”

But what about that fear of giving away these customers to a rival?

I am not worried about that,” says Spector. If I can sell a Valve game then great. The reality is there is room for more than just Steam. I believe consumers are going to migrate and the price conscious ones are going to check for deals.

People are also going to go where they like to shop, so what’s easy for them and where there’s a community. All of that is part of the experience we are building. We don’t expect to knock Steam off its No.1 spot, but any industry is better when there is competition.”

TARGETING STEAM

Spector may not expect to overcome Steam, but Gamefly still has the Valve-owned retailer firmly in its sights.

Our first goal is to get back to where Direct2Drive was. Then we want to go beyond that, which is giving people alternatives to Steam or whatever they are using.”

But that first goal of getting Direct2Drive back to where it was isn’t going to be an easy one. There is a vast number of rivals in this space, and not just other retailers, but publishers are also going direct to consumers.

As a publisher, I would like to have some ownership of my consumers,” says Spector. But as a customer I don’t want to go to 15 different places to buy games. We don’t shop that way.”

And there’s not a lot of room left for other PC digital retailers, either.

Publishers don’t want 50 digital partners,”Spector comments. That’s too much to manage. The reality is, the bottom 75 per cent of PC digital retailers won’t bring in enough revenue to justify the effort.”

But Gamefly won’t be amongst that 75 per cent. The company is confident it has what it takes to break through. It is why it bought Direct2Drive in the first place. And Spector says Gamefly – like many online retailers – already have the know-how to compete with Steam.

As a retailer of any type, you always have to innovate,” he says. And you have to service your consumers or otherwise they are going to leave. If that means digital for some people, then it means digital. If it means more sales people on the shop floor, then it means more sales people. Good retail is hard to do well and you really have to work at it.

Yes we are new to digital, but we are an e-commerce company. We don’t have 5,000 stores where we have to manage shops versus digital. We have always been a digital company, it’s just we haven’t being delivering digital goods in a digital manner. Now we are.”