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The Inevitable Death of the High-Street Game Retailer

Retail

When I started writing for Thunderbolt in December my first article focused on the growing debate surrounding the pre-owned videogame market. From the EA-led Online Pass scheme to the controversial Catwoman DLC in Batman: Arkham City, it seemed as if publishers and developers were beginning to win their war on the used game market.

“Microsoft could effectively end the distribution of used Xbox games”The debate did not simmer and in late January rumours circled throughout the videogame world that Microsoft were planning to block pre-owned games on their next home console. It was suggested that, by issuing each game with a unique code to tie it to a user’s Xbox Live account, Microsoft could effectively end the distribution of used Xbox games.

The move was backed by Volition’s Jameson Durall, who argued that: “This would be a fantastic change for our business and even thought the consumers would be up in arms about it at first, they will grow to understand why and that it won’t kill them”. These comments from Mr. Durall, who oversaw the development of all three Saints Row games, echo those made by several other videogame developers and designers in recent months including figures from EA, Quantic Dream and Activision.

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Quite clearly, this is an issue on which videogame developers feel very strongly and their frustration that gamers may be enjoying their product without having paid them directly for it is to an extent understandable. However, Mr. Durall’s later comments suggest either a general misunderstanding or a damning ignorance of the current state of videogame retail:

“I know that some will say I’m not considering the retail games stores and the impact that something like this would have on them, but remember they were doing fine well before the used game market became such a staple of their business. The truth is, they aren’t concerned with how this business is affecting us, so why should I care how these changes will affect them?”

There is nothing to suggest that videogame retailers in the UK are doing “fine”, with or without the used games market as a staple. Game Group recently announced a decline in like-for-like sales of 12.9% over the 2011 Christmas period and a loss of £18 million over the last calendar year, affecting their high-street GAME and Gamestation stores. The truth is that pre-owned games have been a staple of the retail business for decades, even going as far back as the late-80s, yet it is only now that the issue is really beginning to make headlines in the media.

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Pre-owned games accounted for 30.1% of GAME’s total sales in the first half of 2011, a period in which the store made a total loss of £51.5 million. Even in the midst of such huge financial problems pre-owned videogames made up nearly a third of GAME’s actual sales. The plans that Microsoft are rumoured to be considering would massively dent GAME’s already dwindling sales and, at a time when stores across the country are already being closed, a gradual 30% loss in sales could potentially risk the future of the high-street retailer.

Some might argue that my prediction here is somewhat hysterical but the videogame industry seems intent on pushing the pre-owned videogame market out of retail. The rapid rise in DLC suggests that developers want their consumers to hold on to their games by increasing their life-span with new content but for every superb downloadable release like Rockstar’s The Ballad of Gay Tony for Grand Theft Auto IV, there will be another three publishers charging customers extra to access blocked features already present on their game disc in the name of quick profit. That’s not much of an incentive for a customer to invest in a game they don’t even receive in full upon purchase.

With the release of the PS Vita, Sony are offering a different incentive to consumers to encourage them not to trade in their Vita games. As well as the standard physical copies of the game being sold in retailers, a cheaper downloadable version of each game will be available for purchase from the PlayStation Store. The choice is therefore the gamers’: buy a more expensive physical copy that you can trade in later or save money by purchasing a downloadable copy.

Both of these solutions presumably recuperate some of the lost revenue that developers claim to have lost through the used game market but where do these solutions leave the high-street retailers? The future of videogames may well be digital and the Xbox 720 could block pre-owned games when it’s eventually released but should that be the case, high-street stores like GAME, Gamestation and GameSpot could struggle to survive another decade in business.

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Mr. Durall believes that unless videogame companies “do something about [the used game market] our industry is going to fall apart”. But should Microsoft’s rumoured plans to block the use of pre-owned games on the Xbox 720 come to light then we could be witnessing the start of an ugly chain reaction in the retail sector. The huge hit that videogame stockists would take from the loss of pre-owned game profit will almost certainly lead to a future of digital sales where the latest games are sold in a manner not dissimilar to the Steam platform on PC.

I suppose I’m ending on a purely sentimental point but I genuinely fear that the majority of high-street videogame retailers will close within the next decade or perhaps even sooner. This week’s news that neither GAME nor Gamestation will be stocking Mass Effect 3 (or any other EA title) throughout March due to their ongoing credit problems should act as a real warning sign to the problems currently afflicting the retail sector.

It’s a real shame to think that Grand Theft Auto 6, FIFA 18 or Batman: Arkham World will be released not to the fanfare and colossal gathering of a midnight launch but via a well-timed click of the refresh button. Rather than walking home in giddy anticipation with the game box in your hand, downloading the latest highly-anticipated title will become no more entertaining and exhilarating than downloading Angry Birds from the App Store.

I’m not suggesting that the death of the videogame retailer will come purely down to whether or not Microsoft block pre-owned games. The current swing in favour toward cheaper digital distribution coupled with the ongoing financial woes of retailers throughout the world mean that we are likely headed toward that inevitable conclusion. But blocking used games on a next-generation console would ensure that the day we wave goodbye to our high-street videogame stores will be a great deal sooner than we could imagine.

The author of this fine article

is a Staff Writer at Thunderbolt, having joined in December 2011. Get in touch on Twitter @WilkinsonAshley.

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