How has 2008 been for Mastertronic so far?
It has been very challenging. But it was always going to be challenging, especially for those making core games. What's interesting this year is that the whole entertainment space has become jumbled up – which I see as a good thing. The onset of casual gaming really bodes well for those that either make or sell games.
There's been many changes at Mastertronic over the years, how has this developed?
The Producers was a service-based business, and Sold Out was a budget PC software publisher operating at 4.99. In 2002 the two businesses came together. Our first advance was going from 4.99 on PC budget products to 9.99, and these 9.99 ranges have actually done okay. That fact just goes to prove that there's more money in these games than some publishers may originally think.
After raising the price of budget PC games, we then released our kids' range of licensed PS2 products under the Blast label. We originally aimed these at young children, although initially we aimed a bit too young. Paddington Bear and Postman Pat are almost pre-nursery school and kids at this age couldn't get to grips with the PS2 pad.
But recently we've moved to other licences like Casper and Mr. Bean, which have been ideal for us. After Blast, we started looking at synergies with companies, and that's where the Rising Star Games relationship came from.
How has your partnership with Rising Star developed?
Over the last two years we have worked very hard in getting our sales pitch just right. We spent a lot of time and money building a sales team and understanding how UK retail works, which we've used to help companies like Rising Star.
Rising Star products are at the more expensive end of the market and include formats we don't cover, like PS3 and 360.
So working with Rising Star has helped us understand these markets better. Rising Star and Mastertronic on their own wouldn't be a strong as they are together, but this isn't just a distribution arrangement. It's a joint sales arrangement. And we're extending this further by working with Gamecock and CDV, by helping them bring their products to UK retail.
Our products don't compete either. Rising Star deals with primarily Japanese games, whereas CDV and Gamecock work with non-licensed quirky American products. So our games all complement each other. Do we have room for anyone else? It'd be tight, but maybe one or two more.
Are you planning to invest more in the Blast range?
We've got a warchest now for the Blast range. Blast is part of the Mastertronic group but it's through a venture with a Dutch distributor, and they are committing more funds for new products and product development. So we're looking at our 2010 products now, which may not be exclusive to retail. We'll certainly be doing some WiiWare products by next year.
We're not sure about PSN or Xbox Live at the moment. Having said, that we are looking at value PS3 and Xbox products by 2009/2010.
ChartTrack recently told us that the console budget market is booming. How have you made sure your Blast range capitalises on this?
The first issue is with price. UK retail appears to be on permanent promotion, with cut-price deals and buy-one-get-one-free offers pretty much everywhere.
The first thing a publisher needs to consider is what price bracket they are in. Fortunately, we can be quite flexible on price due to the way we make our games and how we use our capital.
The second issue is to do with marketing. Our formulae there is to use properties and licenses that are already widely known.
The third thing is making sure you have good retail exposure. At the moment specialist retail – in particular GAME and Gamestation – is doing very brisk business, whilst Zavvi, HMV and the supermarkets are grabbing as much market share as they can. So you've got to get your product properly positioned at retail, and that will always involve a mix of price, the relationship with the store and the brand itself – not to mention the quality.
ChartTrack also told us recently that the budget PC market has seen a big year-on-year drop. Is this something you've noticed and why do you think this has happened?
We've seen it, and I think this has happened for several reasons. For starters PC games have become less fashionable, and PC games have never been plug and play.
Another reason is the on-set of the next generation, and the growth of Nintendo's consoles.
With everyone doing so well, retail is struggling for space, and this has hit PC. Take the PS2 market as an example: it's been virtually killed overnight, and that's because retail just doesn't have the space.
However, the PC boxed product market is actualy pretty strong. It's still the most profitable part of our business. But there are less games coming, which means competition is fierce and people drop out.
Take Greenstreet. They've gone bust for the third time, and Empire aren't exactly thriving. And I've spoken to GSP and Focus, and they also say that business isn't what it used to be.
To answer your question, the numbers in the PC market are going down, but there's still business there. Speaking long term, the PC could be the future of gaming.
Today's video game machines are restrictive formats, and this is like living in the dark ages. I personally think that there will be a PS4 and Xbox 720, but nothing beyond that. Because there's no future for the closed format.