In Real Life

What Will 2013 Do To Aussie Games Retail?

Australia’s not exactly blessed with lots of competing video game retail chains. What’s the story likely to be in 2013, and does physical retail matter any more in any case?

The business of selling video games in Australia has been a constantly shifting and evolving one. I can well remember in my youth the smaller computer stores being the best place to buy games, alongside larger retail outlets such as K-Mart or Retravision; indeed, my local K-Mart used to load up C64 games and leave them running as a primitive way to advertise games… or attract lots of spotty kids who would only reluctantly step away from the counter the C64 was lodged behind. Yeah, I’m that old.

Video games retail has certainly become a lot more sophisticated than that in recent times, but the simple truth is this; there aren’t anywhere near as many places to physically buy games in Australia as there used to be, and it doesn’t really appear that this is a trend that’s likely to reverse in 2013.

The Established Players

The local scene is dominated in pure terms by EB Games, but, at least on an anecdotal basis, the last dozen or so stores I’ve been in have been solidly dominated by second-hand sales rather than strong competition in pricing new titles. Nothing wrong with second-hand per se in terms of EB Games’ bottom line, but it’s not something that can perpetuate without a source of new titles, and it’s not something that actively drives new games prices down; typically a second-hand title on EB Games’ shelves is only a matter of dollars cheaper than a new copy!

EB Games’ closest competitor is easily JB Hi-Fi, another store where second-hand has rapidly become a solid part of the business, albeit (at least on the surface) not to quite the same extent as it is with EB Games. JB isn’t particularly dependant on just games sales the way that EB Games is, but that’s arguably a strength for games consumers, as it’ll often aggressively cut prices on new titles as a loss leader to get customers into its stores, bolstered by profits elsewhere in its stores.

Read JB Hi-Fi’s 2012 report, though, and it’s a bit gloomier; games doesn’t get much of a look in when considering growth factors, with JB Hi-Fi seeing more growth in the computer category — and specifically tablets — driving its sales in the future. Games gets exactly one mention, and that’s purely as a mention that JB Hi-Fi happens to sell them.

GameTraders continues to be a presence, and the only other multi-state games store chain (feel free to correct me here if I’m wrong) we’ve got. It’s an interesting case; while it’s a smaller chain, it’s also willing to “break the rules” via aggressive direct importing, something that the other chains have only really dabbled in. I’m personally a bit sad that the retro sections that used to make GameTraders stores rather distinctive have been all but phased out — you can’t even order retro titles from GameTraders web site any more — but that’s just my personal retro bias at play.

Beyond those three, you’ve got the larger retail chains — K-Mart, Big W, Dick Smith, Harvey Norman and so on — but aside from the odd loss-leading special, they’re in no way specialist games retailers; indeed, it’s a common complaint here on Kotaku that it’s almost impossible to find some games within the mass retail space. I don’t expect that to change much in 2013; indeed, K-Mart’s seen a lot of success in a retail sense by switching to its own house brands for just about everything. Short of launching the K-Mart 360 (unlikely), it can’t do that with games, but it wouldn’t surprise me to see games further marginalised in mass retail as 2013 rolls out.

What About A Pure Second-hand Play?

One thing I hadn’t realised quite literally until yesterday was that UK second-hand games chain CEX had launched in Australia; there’s now 11 stores across NSW and the ACT, and they seem to be expanding rapidly. From the look of the store I saw and the web site, it appears they’re targeting old GAME store locations, although I suppose that depends on commercial availability of the retail space.

I’ve personally got fond memories of CEX right back to its original London store; the store near Warren St Tube station transformed itself into one of the nicest retro games stores I’ve ever been in (for a while), and from what I could (anecdotally) see yesterday, locally CEX is certainly pricing its second-hand stock quite aggressively for most platforms. That’s good news for those wanting another trade-in option for their played out physical games, but CEX simply doesn’t exist without existing games sales. With Sony reportedly working on making PS4 games impossible (or at least, illogical) to trade in, though, CEX’s exact model may well shift rapidly away from games and into more profitable areas such as mobile phones and Blu-Ray discs.

With Digital And Online, Does It Really Matter?

The elephant in the room here is that all these stores have physical presence, and for a lot of games retail, it’s perhaps not a vital component. Pretty much any time an article runs here at Kotaku talking up a local sale, it’ll be checked quickly against the online importers. That makes sense from an immediate financial point of view; if an overseas store will sell you GTA V cheaper than the “sale” price here, why wouldn’t you buy it that way? At the same time, though, many of those stores operate on the margin between the local retail price and whatever they pay in their territory; with less local competition they could well see an opportunity to raise their prices and profits while still seeming “cheap”.

Then there’s the totally digital plays of services like Steam, PSN, Nintendo’s eShop and XBLA. I’ve got plenty of titles across all four, but with the exception of Steam, there’s not exactly “competition” in these spaces to drive down prices; they are whatever Sony, Nintendo or Microsoft decide they’re going to be. 2012 didn’t exactly see digital-only copies of games even pretend to keep pace with the price of full copies. Is that the future that we want to see for games retail locally, especially as there’s obviously no way to generate a second-hand sale for digital goods like these?

Steam’s the exception there, with a fairly healthy, if somewhat predictable price reduction structure, driven at least in part because it’s not as though Steam is the only way to get PC games. It’s nice to bag a bargain, and my Steam pile of shame is indeed pretty shameful, but at the same time there have been far too many instances of Australian Steam game pricing being way behind that of the rest of the world. Invest too heavily here, and that could be the future we’re looking towards. Interestingly, JB Hi-Fi’s 2012 annual report talks about the success of its NOW music platform, with a note that “JB Hi=Fi’s ongoing evolution of the NOW platform will include expanding into new digital markets”. It’s a long shot, but there’s always the possibility of a more localised digital game distribution front launching in 2013.

What do you reckon? How do you buy your games now, and does the fate of Australian games retail concern you in any real way?