Video games escape UK's latest retail crisis

Christopher Dring
Video games escape UK's latest retail crisis

The collapse of HMV and Blockbuster is unlikely to have a massive impact upon the video games market.

The two entertainment giants fell into administration over the last two weeks, following news that Play.com is ending its own direct-to-retail business.

All three retailers are big supporters of the games industry, and employ thousands of dedicated staff and video game advocates. Meanwhile, hopes remain high that HMV will be acquired by Hilco UK, which could save all or some of its stores after buying its debt.

But according to data sourced from MCV, these three entertainment giants only account for around 12 per cent of the games market, so actual game sales won't be impact too heavily. And research firm Kantar Worldpanel says GAME is best placed to pick up any lost sales, ahead of supermarkets and other online rivals.

“In terms of games, even combined, these retailers have a relatively small market share,” said Entertainment Retailers Association’s Kim Bayley.

"Play.com’s transition to a marketplace model could yet see it sell more games than before, but through third party sellers. The sale of entertainment through Blockbuster was always a small part of its business. Meanwhile, HMV looks set to re-emerge in a new form.

“Short-term, the disappearance of rivals from the entertainment business is potentially good news for their competitors.

“It’s far worse news for suppliers. Retailers have long been frustrated by suppliers’ apparent deafness to their pleas, whether on lop-sided release schedules or the need for greater product innovation. If something positive is to come out of this week, hopefully it will be that this acts as a wake-up call that retailers should not be taken for granted.”

Konami’s UK boss Peter Stone added: “At this moment the public is being given the impression there is nowhere left on the High Street to buy games and that may exacerbate the problem. Only yesterday I corrected a friend who thought she had to buy games online ‘because GAME had gone bankrupt’. Let’s hope that each of the chains can find a way to survive into the future.

"Online retailing can be a cut-throat business. Play originally built up their business based on the Jersey model but even then I think found it hard to make profit. In the meantime new entrants such as The Hut and ShopTo have come along and together with Amazon are keeping the market super-competitive. In general physical goods online is still quite a healthy business but retailers need to really stay on their toes to survive."

It’s been better news for retailer GAME, which suffered its own administration woes this time last year. The firm said this week it enjoyed a better than expected Christmas and hopes to improve its store base as part of its strategy to build ‘the UK’s most valuable community of gamers’.

“Looking at the work we’ve done over the last nine months, you’ll see we’re not only adapting to industry changes and delivering for gamers, we’re doing it at pace,” CEO Martyn Gibbs told MCV.

“Let’s be clear – we have a long way to go and a lot of gamers to convince but we are listening to them and combining that with a new technological approach.

“We constantly evaluate our performance and where there are gamer communities we don’t reach – both geographically and virtually – that means constantly re-evaluating our geographical and virtual coverage.

“We’re committed to the gaming communities of the UK and will do everything we can to deliver for them, both now and in the future.”

 

Picture credit: http://thegamingliberty.com/

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Tags: HMV , play.com , Blockbuster , video games retail

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