Believe the doom mongers and you'll believe that games retail won't exist in ten years time. We think it will, just in a radically different form.
Traditional video games retail is dying.
If you want the proof then simply look at the nightmare that has engulfed HMV and Blockbuster over the past four weeks. Music downloading and movie streaming is growing at such a pace that the idea of buying a disc has become old-fashioned. It's no wonder these iconic chains are in such turmoil. We don't need them.
And the video games sector is following this trend. More games are being made and sold digitally. The days of the local video game shop is coming to an end. It's inevitable.
Or is it? After speaking to HMV and GAME this week, I can't help but feel that not only does physical video games retail have a future, but an important role to play in definining it, too.
The industry is constantly evolving – that's the nature of any technology-based industry,” explains GAME CEO Martyn Gibbs (pictured far left), who returned to lead the company following its administration in April last year.
We've seen fundamental changes to the industry with the release of the Xbox 360, PS3 and Wii – these brought new customer demographics to the market and were changes that were easy for retailers to take advantage of as they sat within the established retail model.
"The current changes require a very different approach. The proliferation of a multitude of new devices, more versatile platforms and many new ways to game and to access games is changing the fabric of the gaming industry. It's a very exciting time.
"In the middle of those changes, one thing remains constant – wherever there is gaming, there will be gaming communities.”
Although it is fun to compare video games to its sister industries music and movies, it's not always wise to do so.
"The Xbox store or FIFA 14 store could become a reality this year."
- Dominic Mulroy, HMV
Video games is a far more complex sector. The sheer number of devices, business models, digital options, and control types – motion, touch screen and otherwise – make video games confusing for even your average core gamer, let alone your Asda mum.
And then there's the challenge around marketing games. A trailer on TV can accurately convey what you might expect from your Skyfall DVD, while a song on the radio will give you a good idea what to expect from the new Biffy Clyro album. But to fully understand how good Dead Space 3 is going to be, consumers need to be able to go hands on and experience the product.
And that's where shops come in.
Games retail cannot hope to recapture the loyalty of consumers by competing on price, convenience or relationship alone. They need to reimagine themselves to become destination spots,” says HMV's Dominic Mulroy, who joined the retailer after selling it his Gamerbase business. Gamerbase remains one of HMV's most profitable businesses, something HMV's new owner Hilco will no doubt be aware of.
While parents are educated by brand ambassadors, their kids are encouraged to assemble by providing entertainment and the opportunity to compete and have fun. The games stores of the future will need to become edutainment stores."
Mulroy adds that these new games retailers will rely heavily on supplier investment by creating showcases.” He says: This will instigate a shift of the business model, where retail becomes less reliant on consumer spend, and more so from the trade and experiential marketing budgets.
The games industry will have to change its relationship with retailerstoo, or risk losing the battle on the frontline. A consumer will not be deciding between just an Xbox 720 or PlayStation 4, they will be comparing the cost of those consoles with that of the latest Apple or Samsung mobile or tablet, or a new Smart Television.
"The games industry cannot lose the ability to demonstrate new technology and brands to the consumer at retail level.”
It's something that Gibbs and the team at GAME appears to have recognised, too.
We have centred our strategy on building the UK's most valuable community of gamers,” the game boss told us.
We have over 12 million reward card holders – third only to Tesco and Boots – a growing social media following and stores that are becoming the hub of their local gaming community.
"In terms of our physical stores, our teams have driven a really pleasing overall performance and they continue to innovate - we've launched community events like in-stores lock-ins and we've secured some of the best exclusive content available.”
"Our stores are becoming the hub of their local gaming community."
- Martyn Gibbs, GAME
Just imagine a video games store filled with devices – consoles, tablets, TVs and mobies. Each device has a game on it that customers can play and – should they like it – these customers can then pay to have that title delivered direct to their devices at home.
This is the video games retailer of 2023. A marketing vehicle as much as a shop, with digital its friend and not its enemy.
And it's something publishers seem interested in, too. Pop-up shops and concessions dedicated to specific brands are becoming ever more prevalent. Activision ran a temporary Call of Duty: Black Ops II live venue during the game's launch in London to let consumers get hands-on with the title, while the same publisher also launched Skylanders concessions in three major HMV outlets during the same period.
The same publisher opened Skylanders concessions in three major HMV outlets during the same period. And historically Nintendo and Sony have both taken space in John Lewis' Oxford Street outlet dedicated to its products, and there's been pop-up shops for Ubisoft's Child of Eden and Moshi Monsters.
Our pop up shop was at the start of 2011,” recalls Andy Matjaszek, senior marketing manager at Moshi Monster developer Mind Candy.
"At that time our physical presence was still in its infancy so it was great for us to understand how well the brand was transitioning into the wider physical market place. The pop-up shop allowed us to build on the ever growing exposure for the online game and helped position us as a brand to watch for the future.
"From a marketing standpoint, the exposure we received from the shop helped us have further conversations with potential partners such as Activision when positioning the brand and its overall potential to produce and distribute other Moshi products."
"Our pop-up shop helped position Moshi Monsters as a brand to watch for the future."
- Andy Matjaszek, Mind Candy
And it's this sort of activity that may define the future of video games on the High Street.
Mulroy concludes: I foresee video games stores and departments being rebranded for three or four weeks around a new product release. The Xbox store or FIFA 14 store could become a reality this year.