A battle is being fought on the High Street.
GAME has closed 277 stores and its major rivals are scrambling to win its customers.
Supermarkets and online giants are hoping to capitalise. Tesco's bold ‘Home of Gaming' press ad set out its belief last month that it has the specialist credentials to step up.
But on the High Street itself there are two main competitors who have positioned themselves to wrestle market share from GAME.
We have nearly 600 stores, a database of nearly 4.2m people and a lot of consumers have grown up with us,” says Blockbuster's UK commercial director Gerry Butler.
We have picked up a lot of business owing to the demise of some of GAME and now, in some towns, we are the only games retailer on the High Street left.”
HMV CEO Simon Fox adds: The High Street has nearly 300 fewer dedicated games outlets. We have a very credible games offer on many of those High Streets and it would be absolutely criminal of us to not take advantage of that. I wish the new GAME success, I think Martyn [Gibbs, GAME CEO] is a great leader of the business. But they are a competitor and we need to do everything that we can to grab market share, both where we are up against them and where we are not.”
GAME ON FOR HMV
HMV's statement of intent is the most surprising.
Only three months ago the chain told MCV it wasn't getting the support it needed from suppliers and would be decreasing in-store space for video games. It merged its games and technology teams together, which resulted in the departure of long-term video games boss Tim Ellis. And although the retailer never outright said it, it was clear that the games industry's link with HMV had been diminished.
But that, says CEO Fox, has changed completely.
It is true to say that prior to Christmas, and running right through Christmas, the support that we were getting from the games industry in general was very disappointing. Post-January when we managed to get our own business into a much more stable place, we have been able to rebuild our relationships with all of the key publishers. And I would say that the relationship that we now have with the games industry has probably never been stronger. We have certainly gone from a place of thinking that we might have to reduce the space for games, to the exact opposite.
Just look at what we have been doing recently, which is putting games at the front of store, putting them in our market place, putting them on our chart wall.”
Suppliers are clearly back on board in a major way, with HMV Oxford Street chosen as the official launch venue for Diablo III earlier this week.
There is an absolute commitment from us to really drive our games business hard,” says Fox. We want our market share to increase significantly in the coming weeks.”
BLOCKBUSTER'S GAME PLAN
Elsewhere, the closure of those 277 GAME stores means that Blockbuster is now the biggest specialist games chain in the country. That's a fact it's aggressively trying to capitalise on.
This year the firm has worked with publishers to secure in-game content for titles such as Tiger Woods 13 and Prototype 2. It ran midnight openings for Kinect Star Wars, and has just launched a VIP Gamer loyalty scheme with IGN, which rewards customers for buying games, trading-in, watching trailers and rating their favourite titles.
A lot of people are complaining about the market, we are not,” says Blockbuster's UK commercial director Gerry Butler.
We have been in the games business for a long time, just as GAME has. It is unfortunate when any retailer loses stores. But we have picked up a fair increase in business because, as I said earlier, in some cases we are the only games specialist in a town. The situation with GAME has brought to our attention a lot of opportunities that, because we don't just sell games, we have missed. Hence there has been a much greater focus on the whole gaming proposition.
If you think of the advantages that Blockbuster has, we have a lot of stores, a very big online community, we open late, seven days a week. And we offer new games at competitive prices, we offer used games, we offer rental – try before you buy. We are the only retailer in the UK that offers a total solution for the gaming community.
The publishers see us now. There are a lot of High Street stores and multiples out there selling lots of games, but I don't think there's any out there communicating with customers in the way that we do.”
SHORT-TERM GAME PLAN
There is a third competitor vying for GAME's market share and that's GAME itself. Many of those closed 277 were secondary sites in towns that GAME still operate in. And new CEO Martyn Gibbs and his team will be working hard to ensure those ‘lost' customers migrate to the other store down the road.
Yet a wider concern is that surely Blockbuster and HMV's market share grab is nothing more than a short-term solution? The fall of GAME may help HMV pocket 10m in profit this year, but what about the fact that consumers are no-longer reliant on the High Street for their entertainment?
We are trying to plot a strategy for the next five to ten years, not for the next five to ten months,” defends Fox.
How customers are changing, how they are buying games, how they are being influenced by social media, is at the heart of our thinking. There is absolutely no-doubt that the stores will change, the relationship between physical and digital will change. It is not something I can update you about today, but if you are asking a broad question: are we are thinking a lot about it? Then yeah, definitely, we are thinking a real lot about it.
We are certainly not sticking our heads in the sand and thinking that in ten years time that the packaged media market won't have changed. It will have changed massively and the role of the store would have changed massively. But broadly, we think that there is a role on the High Street for entertainment, but what we do and sell in store will be different, very different.”
Butler concludes: I am sitting on 4.2m customers. Publishers want our customers and we want their content. We have to come up with a mechanism that works for everybody.”
WHO WILL BENEFIT FROM GAME CLOSURES?
According to Kantar World Panel, it's a touch too early to tell who will be the main beneficiary of GAME closures. Although the firm says that ‘initial results do show HMV benefitting more than we would expect based solely on their market share.'
Based on research from before GAME and Gamestation stores closed, GAME buyers have an affinity to bricks and mortar outlets, having spent more money on the High Street and in supermarkets than the average games customer (this is after GAME spend has been factored out).
Just over 22 per cent of GAME customers spent money at other High Street stores, compared to 19.6 per cent for the average buyer. Meanwhile, GAME customers spent less money online than the average buyer.
GAME shoppers are closely aligned to the market average demographic.
HMV's shares a similar demographic of customer to GAME, although it appeals to a larger proportion of people aged under 45. HMV is also likely to pick up some of GAME's childrens audience.
Blockbuster and the grocers p