Amazon: ‘It’s been a challenging year for games retail’

Few retailers claim as large an audience as Amazon.

In total, the UK arm of the retail giant generated a massive 6.3bn in 2015 with research outlet Kantar Worldpanel saying that Amazon has a 22 per cent share of the entertainment market – the largest for this sector.

But, speaking about the video games market, games and software category, boss Russell Jones says that the sector has been tough in 2016.

It’s a challenging year for games from a product point of view,” he says.

We’re really feeling the drop-off in the old generation. There was a lot of talk about that last year. Nothing has come out on old-gen this year so far. FIFA is launching for it, and the LEGO games, but that’s about it. We just haven’t seen the shift up to the next generation of consoles in terms of that volume and user base.

Clearly what’s going on with Xbox One S and the slim PS4 is the creation of that opportunity. For this quarter ahead, it’s hugely important that the industry expands that user base to keep the category growing like it has been. It’s okay, but as ever it’s all about the fourth quarter.”

Part of the issue with expanding who owns PS4 and Xbox One consoles beyond the core gamer is that there simply isn’t much out there for kids and families on these platforms.

It’s definitely a challenge for the industry,” Jones admits.

”Of course, you have to have the content in the first place. Ratchet & Clank has been a phenomenal success. The reaction to the Crash Bandicoot remasters announcement at E3 was huge so that will do really well. The fact he’s in Skylanders is going to give that title a good kick this year. LEGO Dimensions is doing great – it’s solid. We could do with some real blockbuster games that aren’t 16+.

Overwatch was a phenomenal game, Blizzard did a great job and part of the success of that was its PEGI 12 rating. It’s been a big driver for console sales, which points to the fact we need some great 12 and under games to drive them up.”

The family market is one that Jones believes Nintendo might be able to serve in the console space with its new NX machine, set for launch in March 2017.

Nintendo’s strong-hold is the family audience,” he says.

”We’re missing a console platform that’s really designed to drive families. Hopefully, NX is a product that families can engage with and can drive a lot of volume, and that it can come with all the great games that Nintendo is famous for.”

It isn’t just Nintendo that is in the process of launching new hardware. Sony has its PlayStation 4 Pro hitting shelves in November, while Microsoft is rolling out its new and powerful Scorpio machine next year. Both of these support 4K, but Jones isn’t clear how much of a selling point this is.

I’m still unclear about how many people have the 4K TVs to play on,” he says.

But it’s great that [Sony and Microsoft] are innovating at the top end. It’s great that we don’t have to wait two years and that we have something that’s available for customers who are willing to pay the premium for the extra tech inside the box.”

VR has also launched in 2016, with the PC-based and expensive Oculus Rift and HTC Vive rolling out earlier this year, before PlayStation VR hits shelves next week. It’s Sony’s hardware that Jones believes will be leading the market, at least in terms of sales.

From a volume point of view, PlayStation VR [will be the best-performing],” he says.

It has a real price advantage, not just in the headset but that consumers can buy a slim PS4 for 259 and that’ll run a 349 PSVR. That’s cheaper than Oculus on its own, before you have to buy an expensive PC. Just from a sheer volume and units point of view, PSVR will drive the most sales.

But Oculus Rift clearly has much more potential beyond just video games. VR long term is going to be all about films, experiences, travel, training and so on. How Sony adapts to that will be interesting. It has a lot invested in the sector, and how it gets out into the wider industry will be interesting.”

"We’re missing a console really designed
to drive families. Hopefully NX will be that product."

Russell Jones, Amazon UK

As well as shifting large amounts of boxed product, Amazon also has its fingers in the digital pie. In mid-2013, the retailer started selling digital codes for PC and Mac, before launching a store of PSN titles at the end of the year.

The amount of content we have on there is increasing significantly. We now sell full game downloads for Xbox One, we didn’t do that a year ago,” Jones says.

There’s more planned in that space. It’s a work in progress and a huge opportunity. Customers are showing increasing interest in getting rid of the physical side of things. That said, there are a surprising number of digital customers who then want a physical item with their game, so we’re selling things like statues with downloads. If that’s what they want then we’ll try and make it happen for them. It’s a growing part of our business. What we have available this Christmas is night and die versus this time last year, and it will continue to improve as time goes on.”

Looking towards the Q4 line-up, Jones says that it’s hard to tell which games will be the big hitters.

Most years, you have Call of Duty and FIFA coming out and they do a great job each time,” he says.

You tend to come out of E3 knowing what the third, and possibly fourth, big game will be. Last year it was obviously Fallout 4 and Star Wars Battlefront. It’s still not clear – there are loads of titles pre-ordering okay. It’s all to play for.

What’s interesting is the remasters for the new consoles, like Skyrim Special Edition and Batman: Return to Arkham, are doing really well.

It’s going to be fascinating to see what breaks out of that middle ground to be the third and fourth game of the year. We need something to break through.”

This year, Amazon UK was the official retail partner for Gamer Network’s EGX.

As part of this deal, Amazon had a sizeable presence at the show. On many of the games booths were Scan and Buy codes (pictured, above), allowing consumers to pre-order or purchase what they were just playing. That’s on-top of a Prime Now stand at the expo where gamers were able to order goods on their phone and have them delivered to the show.

We’ve been keen for a long time to find a way to get closer to our customers and help publishers connect that moment of someone trying a game to ordering it,” Jones says.

The EGX opportunity came around so we jumped at the chance to get involved. We’re trying to do two things: the first is where product is available, people can order it and take it home there and then if they’re a Prime member literally by opening the