The war between retailers and publishers looks set to once again erupt over software pricing – with Sainsbury's last week issuing a fierce battlecry.
The supermarket chain used its entertainment conference to throw down a warning to publishers that it will not continue to swallow the cost of cutting games RRPs itself, with non-food MD Luke Jensen firing: We will not bleed margin on your behalf forever.”
Jensen continued: This is a journey we need to take together, and if it's not one we take together, it's a journey that won't happen. I've heard people in the entertainment industry complain about the fact that prices are being driven down, but the fact is that what is happening is happening. The customers are leading the charge, we have to follow.”
ERA's director general Kim Bayley added: Retailers need to offer their products at a value which consumers are prepared to pay. Consumers tell retailers consistently that they don't always value entertainment in the same way as they have done historically. It is only natural that the effect of these pricing expectations should be shared between retailer and supplier.”
However, the demands of Sainsbury's have angered the publishing community. One unnamed boss of a Top Five publisher told MCV:
I don't understand the logic of Sainsbury's wanting publishers to de-value their titles and to follow the path of DVD and music. The grocers played a key part in destroying value in these categories, and I can't believe they would even have the cheek to suggest that we should want to follow suit to drive their share ambitions.
Sainsbury's needs to think about adding value to the games category and taking a responsibility to support an industry which already takes huge risks on its behalf.”
Codemasters CEO Rod Cousens added: Consumer pricing is a matter for the retailers and is often a consequence of competitive strategy amongst their number.
Consumers have benefited from prices that haven't moved upwards while the experience has increased and the production costs have escalated.
It seems to me that any call for downward movement in publisher pricing is misdirected.”