Cutting out the Middleman
The news that UK videogame retailer GAME (and sister company Gamestation) will not be stocking upcoming titles from industry-leading Electronic Arts in the foreseeable future caused minor shockwaves within the European gaming community this week. It’s been well-reported throughout the gaming media that the company has suffered backroom financial issues, most worryingly with creditors. The financial decision to not invest in stock for next week’s release of much-anticipated Mass Effect 3 however, will be the first time the company’s struggles become apparent on the high street; a PR nightmare by any standards. Yesterday’s announcement that the company will also not be stocking Capcom’s upcoming games Street Fighter x Tekken and Asura’s Wrath only added salt to the consumer confidence wound.
Whilst blame will be pinned on a fourth year of economic stagnation, the reality is that they are living on borrowed time alongside HMV, Blockbusters and (to a lesser extent) Waterstones. Here are three major factors that will render the high street gaming store redundant by 2020:
Whilst the AAA titles from major publishers that come fronted with six-figure advertising campaigns can line store shelves awaiting acknowledgement, it’s becoming increasingly unviable for smaller releases to justify a physical presence. During internet shopping’s founding years, where credit card fraud paranoia came hand in hand with the Millennium Bug, hungry eyes scoured store shelves. Today even those of us whom stay loyal to the high street rarely enter a store without a fixed purchase in mind. Online stores can still promote a huge array of titles due to the trends of online window shoppers, but a physical product in a physical store no longer gains the same exposure it did even five years ago. When was the last time you made a blind, uninformed gaming purchase?
Paying for the licence, not the product
Prior to digital distribution, the nature of offline gaming meant that if you purchased a video game, you unconditionally owned the licence for it; the copyright information in the back of the manual held as much weight as the paper it was printed on. Online passes and DRM has been significant in the sense that for the first time, the owner does not unconditionally own all aspects of that game. The likes of Spotify and Netflix have taken licence-holding a step further in music and TV/film respectively. Despite OnLive’s lacklustre launch last year, it is inevitable that gaming will see its own on-demand steaming service bloom in a comparable way. ISPs must not only significantly raise connections speeds, but lower costs before this becomes a legitimate alternative. The concept will only continue to be developed; even the Kindle took three generations to find a major target audience. Future consoles will no doubt still be compatible with traditional media but declining CD and DVD sales serve as evidence that the mass market‘s trends will always choose digital convenience over physical novelty. The PC market often leads industrial trends and whilst physical PC games still sell respectably, Steam has enjoyed yearly growth.
No matter how many noble publishers try and open up a market for themselves over the rest of the year, the September-November window is the only time of year that the industry enjoys serious, consistent revenue. Whilst the likes of Call of Duty, Assassin’s Creed and FIFA have shattered their own sales records on a yearly basis, the retail sector’s margin is now failing to subsidise the year’s first nine months. Whilst the economic crisis acts as a catalyst to the problem, the fluctuations have always been present. This becomes a double-edged sword when the successful games offer an ever-evolving online component. When a single title can offer an all-year-round entertainment experience, the casual-to-seasoned gamer, spending £40 on a new eight hour game becomes less appealing than ever, whether the individual has ample disposable income or not. Even with resale value taken into consideration there is less incentive for the more passive gamer (therefore the mass market) to invest regularly. Headsets and Xbox Live memberships can only recoup a minor percentage of lost income.
It would be surprising if such well-established high street names such as GAME and HMV were lost within the next 12-24 months. At present, entertainment retail stores do have a sustainable market and it is clear that their current difficulties are fundamentally a result of a fragile economy. The underlying, long term problem is that the industry they represent are rendering them ever-more irrelevant by the year. The demand and economics of physical media will ensure that dedicate gaming stores survive into the next generation of consoles, but beyond this, only a niche market will remain.
The next generation of consoles will be an opportune time for us as gaming enthusiasts; we must support marketing innovation, but conversely be wary of protecting our interests by not supporting lackluster content and unreasonable pricing. The retailer ensures our industry does not become a monopoly. We must learn to adapt without it or face the consequences.