What does free-to-play mean for retail?

There’s no hiding the impact that digital games is having on retail.

The sales decline seen this year may be driven by the aging console cycle and the economic downturn. But the fact that more games are coming out digitally and fewer are released physically is having an effect.

Games retail will die off, whether we want it or not,” says the outspoken CEO of Wargaming, Victor Kislyi, the games publisher behind the global free-to-play phenomenon, World of Tanks.

Games are digital products. They’re zeros and ones. Yet we’re still selling them in physical boxes on shelves. That is the exact manner that people were selling tomatoes 5,000 years ago in Babylon.

We released a handful of titles at retail. We barely survived. It was a risky but bright decision for us to burn bridges with retail and go digital.

With us, as soon as the polishing procedure has finished, the game will immediately be available to 35m players. Isn’t it cool? If something goes wrong, we tweak it. With a retail title, if there’s a bug, you wait for a patch. Retail philosophy is first month, and they don’t care what happens afterwards. Here, we have to care about our game and make it stable for the next ten years.”

Bigpoint chairman?Heiko Hubertz believes games retail has a future, but its role will have diminished.

Retail’s role will only be for special versions, merchandising and pre-paid cards. Not for distributing games.”

WORD ON THE STREET
Other free-to-play companies are not so eager to dismiss retail so easily.

There is indeed a place for retail in the entire space,” insists Carsten van Husen, CEO at Gameforge.

We take pride in having access to people digitally but these are not the same people who frequent the High Street. That’s a significant audience.”

David Reid, CMO at CCP – the firm behind free-to-play PS3 game Dust 514 and subscription MMO Eve Online – agrees: Retail remains a fundamentally important place to discover and buy games for lots and lots of people.

Historically for us retail has not been an important part of the success of Eve Online. And coming into the company, I’m like ‘geez, this is a missed opportunity.’

I don’t imagine for a minute that retail loses its importance in the next generation. It will be different and consumers will purchase where they choose, but you can see the rack of point-of-sale cards – principally for digitally distributed titles. And those are high margin products.”

Indeed, Bigpoint is launching retail games via a partnership with Excalibur. Even Wargaming, with its belief that retail’s time is over, has built a World of Tanks board game.

And those free-to-play firms that are already utilising retail, says it is proving a lucrative avenue for them.

We actually do a significant part of our business through retail with game time and game credit cards,” says Jagex CMO David Solari.

Retail gives us access to audiences we otherwise couldn’t engage with.

I see that the role of retail will continue to grow as there are potentially many other ways we could work with retail to raise the profile of free-to-play games.”

Yet does free-to-play need specialists like GAME and HMV, or just mainstream outlets like Asda and Tesco? And is there enough revenue in points cards and merchandise?

These things are far from certain. But retail is doing its best to stay relevant by becoming customer ‘experiences’. GAME is building a core userbase that freemium firms can utilise. HMV wants to promote mobile titles alongside its technology products. ?Meanwhile, GameStop is making its own free-to-play titles.

Wargaming’s Victor Kislyi may be correct when he says retail isn’t necessary to distribute games. But as a marketing tool, the High Street certainly has a role to play.