Now that the new consoles have become more mainstream, Andy Saxton, consumer retail analyst at Kantar Worldpanel, examines how it will make this Christmas different, and how retailers can boost sales...
Everyone knows that Christmas is a vital time for retailers, particularly for the video games sector as it is the prime purchasing time for nearly half of all games shoppers.
In fact, 43 per cent of shoppers who bought a game in the last quarter of 2013 hadn't purchased a video game at any other point during the year. These shoppers were on one mission: to buy gifts for the gamers in their lives.
60 per cent of games bought as gifts were purchased by women, and over three quarters of spend coming from over 35s in the last quarter of the year.
The launch of the PS4 and Xbox One created a unique market dynamic. For the first time in almost 10 years two generations of consoles were being sold in tandem. Despite this, there was a 23 per cent decline in the volume of games being purchased as gifts at Christmas 2013, as early adopters of the new consoles bought games directly for themselves.
As a result, a bigger proportion of previous-generation games were purchased as gifts compared with new-gen. Some 48 per cent of previous-generation games were bought as gifts, compared with only 34 per cent of next generation games.
In 2013, retailers also saw the first uplift in spend for several years thanks to the new consoles. Shoppers loosened the purse strings to spend an average 66.39, up almost 10 from 56.98 in 2012.This year, more people are looking to purchase a PS4 or Xbox One – or already own one – and this provides an opportunity for retailers to sell more new-generation games.
In 2013 Q4, the Top Five games accounted for over half of the value in the market. This year it is set to be even higher, with triple-A titles such as FIFA and Call of Duty posting strong launch sales. Offering deals on Xbox One and PS4 bundles this Christmas, which combine a triple-A title game as part of the package, will help convince previous-generation players to trade-up.
FIFA 15 is the current favourite for the number one spot this festive season and Microsoft has pushed an Xbox One bundle including the title.
However, Microsoft has a challenge to win customers over. Over 1.5m customers are planning to buy a PS4 in the next year, compared with just 900,000 who want an Xbox One.
Console loyalty is much more evident for Sony, with 14.4 per cent of PS3 owners planning to upgrade to a PS4. Microsoft, on the other hand, has a more split customer base, with just 8.6 per cent planning to remain an Xbox player, while some 6.2 per cent are set to defect to Sony.
Females over 35 account for 43 per cent of games gift-givers at Christmas, primarily buying games for their children or partners, which presents an opportunity to target different demographics.
Ideally, retailers will look to strike a balance between targeting parents who are buying gifts, as well as the traditional gamer who habitually buys triple-A titles. GAME successfully employed this strategy last Christmas and was the leading games retailer in Q4 2013.
Grocery retailers should consider that families typically buy games in supermarkets or online. Some such as Sainsbury's already have by offering FIFA 15 at a discounted rate when shoppers spend over 30.
Retailers need to strike a balance to cater for core gamers as well as seasonal shoppers, and if they are able to get their strategies right, this 2014 is set to bring Britain's games stores a hefty present.