The Retail Cold War: An Investigation Into The Strangest Street Break In Australian History

The Retail Cold War: An Investigation Into The Strangest Street Break In Australian History
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According to all official statements from Nintendo, Ocarina of Time on the 3DS is on sale today – but most of us have been playing the game since last Friday. It was the strangest, most covert street break in Australian history – a street break that threatens to transform the way games are sold in this country. We spoke to all the major retailers, and Nintendo itself, to try and uncover precisely what happened, and why.

“The launch date remains the 30th of June,” claimed the statement, read out word for word by a Nintendo representative – the wording careful, precise.

“Nintendo believes it is incorrect to single out any particular retailer. If any retailers sell the game prior to the 30th of June that is a matter for Nintendo to take up with those particular retailers.”

We scribbled it down quickly before being asked to read back what we had written, to make sure we had it exactly right. Nintendo is known for being extremely careful with its brand — cold, emotionless statements like this were the end result of that almost puritanical zeal.

Zelda: The Ocarina of Time was being sold in stores – EB, Game, JB Hi-Fi – there was no doubt about that; we had the receipts as evidence and confirmation from store clerks around the country. But the criteria required to actually purchase a copy of the game read like the entry rules to some strange, exclusive club – like buying prohibition-era booze. You half expected Eliot Ness to bust down the doors in protest.

A pre-order was required. No in-store advertising was allowed. Games had to be kept behind the counter. It wasn’t to be discussed over the phone.

“Are you selling Ocarina of Time today?” we asked one EB clerk.

“The game is available on the 30th,” he replied, cooly.

“But if I walk into the store and ask for it today,” we continued, “will you sell it to me?”

“Quite possibly.”

This was not your normal street break. We weren’t even sure if you could call it a street break at all.

THE GREY AREA
Our story begins at GameTraders.

“The logic behind selling this game early,” claimed Mark Langford, Managing Director of Game Traders, “is that our stores take exception when publishers do exclusive deals with major corporations but they won’t offer the same deal to us, an Australian-owned company.”

It was June 22, eight days before The Ocarina of Time was to be released in Australia. The game was already on sale in Europe and in other territories, but larger retailers such as Game, EB and JB Hi-Fi were under strict instructions not to sell it until June 30. GameTraders, taking advantage of this fact, bought grey-imported stock from distributors overseas, selling European versions of the game in GameTraders stores across the country, over a week before gamers could buy it anywhere else.

“The game was released in the UK a couple of weeks ago, so GameTraders were able to import stock ahead of Australian release date,” said one retail source, who asked to remain anonymous.

It was a unique situation, which challenged many of the norms that Australian retailers are used to dealing with. If a game breaks street date, and other retailers can prove this, the green light is usually given by the publisher to go ahead and sell as normal — it then becomes a free for all and retailers can sell without fear. Since GameTraders, by selling imported stock, were operating outside of these traditional rules — albeit within the boundaries of the law — other retailers were at a complete loss.

“EB, Game, JB all started to lose pre-orders as GameTraders started selling early,” claimed our source. “So Nintendo gave permission to everyone to sell to pre-order customers only – if they asked or were going to cancel – but the game itself was not allowed to be put on the shelf.

“All retailers put Nintendo under pressure to let us sell early, but they refused. Not even EB were brave enough to defy Nintendo’s guidelines.”

TAKING THINGS TO THE STREET
The politics of the street break are shrouded in a strange mystery. Publishers are well within their rights to punish retailers for selling games early, but speaking to games industry insiders, such fines rarely manifest themselves. Most people we spoke to claimed that, in their experience, the threat was never followed through. An MD of a high profile specialist retail chain claimed that most “punishments” took the form of “lower priority allocation” or lowered advertising spend in-store, but never a monetary fine.

“I don’t want to dob people in,” said Mark Langford, Managing Director of GameTraders, “but last time one of our competitors actually put it on Facebook that they were selling early – and it really annoys me that GameTraders seemed to be demonised as the rebels when it comes to street dates, when everyone else does it as well.

“The publishers also say they’ll punish those that break street date, but we damn well know they don’t,” he continued. “And we get sick and tired of being seen as the company that break dates when it’s everyone that gets into this thing.

“It’s just ridiculous.”

Since, technically, GameTraders was not breaking any street date by selling imported copies of Ocarina of Time, and since parallel importing (the act of importing goods from overseas stores then selling them at retail) is perfectly legal, GameTraders attempt to beat its competitors to the punch by selling early was above board in every respect.

There was little that other retailers could do in response except sell Ocarina of Time in the strange, protracted manner that Nintendo was apparently allowing them to.

THE EMPIRE STRIKES BACK?
It’s hard to imagine precisely what repercussions could come from the whole situation, but GameTraders decision has clearly angered a number of key players in the Australian Games Industry, most obviously Nintendo themselves.

But considering the fact that GameTraders doesn’t have any direct dealings with Nintendo, is there really anything the company can do?

“Nintendo do not deal with Gametraders directly, so are unable to penalise them or stop them from selling early,” claimed our retail source. “Nintendo usually punish retailers for breaking their street dates, by delivering next new release late, or closing their account.

“But GameTraders has upset a big beast and it will be interesting to see what ramifications, if any, may come their way, although I suspect we will never hear.

“One thing is for sure, either Nintendo will try and close down the import route — they’ll be investigating the source of supply — or they will ensure Australian release dates on AAA products is in line with Europe.”

As a company, Nintendo isn’t the type to take this kind of thing lying down — key relationships with Australian retailers have been bruised. We attempted on numerous occasions to discuss this matter with EB Games, but a one-on-one interview is apparently against EB’s policy, and what little information we got back from an interview was mostly irrelevant. Except for one small detail: EB confirmed that it had spent a significant amount of its own budget on marketing Ocarina of Time.

That investment, along with what our retail source called a significant amount of money spent at point of sale in-store, meant that Nintendo had pressure from all sides to simply break street date properly, instead of creating a protracted “don’t ask don’t tell” style policy of satiating publishers, whilst stubbornly clinging to a proper release date that, by all accounts, didn’t really exist anymore.

“The launch date remains the 30th of June,” claimed Nintendo’s statement. Strangely.

A statement we received from EB was an interesting exercise in false logic.

“We didn’t start selling the game a week before release date,” EB claimed, “we did, however, make copies of the game available on request so as to not disadvantage our loyal customers.”

In short: We didn’t sell the game before its release date, but really… we did.

Why all the cloak and daggers? Why not just sell the game officially ahead of its release date? Almost all retailers had stock by last Friday — why not just go ahead with a good old-fashioned street break.

The reason, according to our source, was a stubborn sense of pride on the part of Nintendo. No one wanted to admit that a small retailer like GameTraders, via an interesting loophole, had exposed the notion of staggered release dates for the outdated, utterly pointless practice it has increasingly become.

“My personal opinion is that if Nintendo had given in,” began our source, “and allowed retailers to sell early ahead of street date, it would have been forced upon them by Gametraders import strategy — rather than Nintendo controlling its own products release.”

That was an ego blow Nintendo wasn’t willing to take.

[imnage url=”https://www.kotaku.com.au/content/uploads/sites/3/2011/06/ocarina-of-time-3ds.jpg” size=”legacy” align=”right”] THE REPERCUSSIONS
Ultimately, the entire Ocarina of Time incident is an unique insight into the politics of the publisher/retail relationship, a case study in how easily even the smallest niche retailer can disrupt and topple the cease-fire that exists between the two entities. Like a small scale Cold War, GameTraders has brought the nukes into Cuba — but does Nintendo have its finger on the big red button?

“There’s nothing Nintendo can do,” said GameTraders MD, Mark Langford, brazenly. “What we’re doing is encouraged by the government under the parallel importing act – we’re encouraged to import to increase competition. It’s in legislation.

“If they’re going to collude and make it difficult for us to survive in business they’ll be subject to fines. If a publisher decides to punish someone, and use their muscle and power to punish a retailer for selling imports, then they can be fined in a very big way. We’re talking multi-million dollar fines here.”

And unlike the empty threat of publisher fines for breaking street dates — this threat is very real. In 2002 Universal and Warner were fined over $1 million in Australia for “refusing to supply… CDs to Australian retailers who stocked noninfringing parallel imported CDs.” The precise same laws and regulations apply to video game retail. Nintendo may have to take this one on the chin.

There will be repercussions, however — and depending on how Nintendo want to play this, it could end up being either positive or negative for Australian consumers.

Nintendo could see this as a wake-up call for staggered release dates, finding a way to sell AAA video games at the same precise time in all regions. But, conversely, they could use this incident as an excuse to create an even more stringent region locking system on their consoles, forcing consumers to buy games later, at an increased cost.

We know which solution we prefer.

Comments

  • Interesting read. Hopefully this will shine some light on the silly practice of staggering the Aus release date for no good reason.

    I see the same thing with steam, to tie-in with physical copies. It’s senseless, irritating, and will generally result in me getting my copy elsewhere (ie grey importing as per the above from a UK source).

    Go ozgameshop!

    • I think it was GTA:San Andreas that was released later here because the demand in the Europe was higher than they expected and needed the discs pressed for Aus to sell there.

      Not sure if that’s a reason for any of the other staggering releases but I wouldn’t be surprised.

      Then again, I can’t imagine the demand for Kirby’s Epic Yarn was that huge….

      • Yeah but theres a simple solution to that.

        Postpone release until you have enough to satisfy at least the opening weeks predictions to deliver software.

        I mean what happens if at the end of this year the Playstation Vita gets delayed for australia/Europe.

        And it’s not region locked.

        There is nothing stopping gametraders or anyone else from sourcing 20,000 units to sell within australia. Aside from trying to find a supplier that will let that much stock leave the US.

        Hell its essentially the principle that Ebay works on. but because a retailer decided to do it it’s evil

  • Nice Mark!
    Some of the stores i went into last week had massive signs saying “Where is Zelda??? Just ask our staff!”
    Once again I ask how can they claim a broken street date for a game that is 13 years old!!! 🙂

  • I think the Marketing EB spent on Ocarina was to buy all the preorder bonuses from stlocarina.com to give them an edge over other stores since there was no offical bonuses.

    • Yes, that’s something that’s perplexed me too. My understanding is that eb australia approached STL and had the ocarinas made as an advertising thing, not that the ocarinas were offered by nintendo.

      Should this prove true, game traders just threw a major childish tantrum.

      Frankly I think the lesson in all this is “We want decent pre-order bonuses. Not op ingame starter weapons, instead, actual t-shirts. Not faster mount speed, instead, corny bonus emotes.”

      want the preorder? Help me geek out.

  • I don’t understand what is so hard for them to release the game in australia the same day as europ or at least within a couple of days. Nintendo Australia need to get of there backsides and fix the staggered release dates.

  • Next thing you see will be EB Games and GAME coming out in “support” (i.e bribes) of Nintendo and saying Gametraders and parallel importing is “hurting Australian business”. Just you watch.

  • Thanks for the article Mark. While some of it was educated guesswork, I think it hits pretty close to the mark.

    Next step would be to learn why different regions have different release dates. Surely things would be simplified by universal releases at least within PAL or NTSC regions.

    • Yeah, I’d like to know how that came about.
      Is it just a hold over from the days when everything was shipped at a snails pace?

  • Right now there are 2 articles on the front page of Kotaku.com.au that really highlight how Nintendo really do treat their customers with contempt. This along with the NoA not brining in Japanese RPG’s highlight just how little they care for their customers, and how arrogant they’ve become. I hope more retails bypass Nintendo Australia (and America) and source their games from elsewhere, it’s the only way they’ll every stop exploiting their customers.

  • Lol, in the face, take that Nintendo. They should just release the game here the same time they release it everywhere else.

  • Hey Mark, interesting read. Was Gametraders selling it for the same price as EB etc?

    Also do you have any idea of numbers of units sold early?

  • It’s an interesting situation.

    Parallel importing was established for precisely this reason, and a lot of the domestic retailers (books, music, games) were up in arms about it when faced with competition from imported stock.

    GameTraders were perfectly legitimate in what they did.

    • And look what’s happened to the local book retail business, which DIDN’T get the parallel import restrictions dropped. Bye bye, Borders and Angus & Robertson. Pretty soon the only places you’ll be able to go into and buy a book off the shelf will be Myer and KMart.

      • Yeah. Publishers were screaming about it, but retail were hit harder when they had to purchase insanely expensive stock from domestic suppliers.

        Absolutely no sense in enforcing what amounts to protectionism for local publishers when identical stock is available overseas for much cheaper.

        The onus should be on publishers to compete and reduce prices, rather than retail having to buy overpriced stock without parallel importing.

      • The irony being that Borders Founded itself on parallel importing.

        There was a day where going to borders meant you would be able to find books that no other australian retailer had because they simply didn’t bother selling them here, or we were on a delayed release.

        They were the same things you could buy from amazon, but just cost 5-10 dollars more. Which for a take it home now price isn’t that much of an issue.

        But more recently they seemed to have just gone lets not bother. Whether it’s due to the benefits not being worth it(since they have to pay import tax) or the fact that the country is alot more internet savy and are more than willing to just order off of amazon or the like along with the 10 other things they are buying there

        A&R was just the expensive rip off version of Borders they seemed to exist just to offset borders savings for some reason.

        Biggest issue Borders had imo, was they had insane DVD and CD sections that were all RRP. And when there is nearly always a JB-HiFi Selling Movies at much lower prices it would be interesting if the dvd/cd section was worth it

  • Great read. I’m sick of games always being released in Australia last! Just release it here at the same time as Europe for heavens sack!

  • Quick question for those who’ve played it. Can you have multiple saves? So could I play it, then pass it to the missus for her to play her own game?

  • Excellent article, Mark. I hope the end result is removing the silly staggered release system we currently undergo.

  • An excellent article Mark.

    I have little to no interesting in the game itself but the whole situation is intriguing and it will be interesting to see how Nintendo handles future AAA title releases, and perhaps just an important, will Gametraders be willing to pull the same stunt again?

  • When I was at EB on Monday to grab my copy, there was a big poster of the game in the 3DS section with an “Out Now!” footer. There was also a stack of them behind the counter, not exactly the most subtle arrangement.

  • Even without a preorder, I bought three copies for the price of two from Myer on the 25th, then instantly sold the other two for 59 each on eBay. So I not only got the game early, I also got it for free.

  • Yeah, so I ordered my copy of Zelda: OoT from EBgames online and it still say’s “Coming Soon”. Cheers EBgames so much for your “you will recieve this on release date”. Last time you steal my money from me.

    • When did you order it? A mate of mine bought three copies online as they’re selling for around $150 on eBay, and his arrived two days ago (28th). Weird too because we’re in Tassie, and because of the Chilean volacanic eruption they said it would take longer to be posted to us? Sucks for you man

      • I ordered it on the 26/05/2011 so they have had plenty of time to get the order.

        This is the last time I give EB the benefit of the doubt.

        • WTF? My mate ordered his three copies on Friday the 24th of June. Well at least I can assure you the game is well worth the wait. It’s awesome!

  • Nintendo are not the only ones guilty of this *I’m looking at you specifically Rock Band* there hae been several instances of staggered releases, every now and then though Aussies benefit (More recently DNF – which oddly enough stands for Did Not Finish – Irony much?)
    It’s ridiculous though and can also adversely affect Marketing, if a game is Panned in one continent and it is released in another a week later – surely that will hurt sales?
    Launch it big and make sure all the consumers are happy. People will just import anyway if there is a significant and hurt the local retail outlets as a result.

    • though rockband is slightly different in that it’s not a 1 week delay for no apparent reason.

      Like Eb and Game all had stock sitting there to be sold before the release date.

      It’s not like Eb was sitting on a Box of copies of rock band for the year+ later it took before it was released

  • Exemplary article!

    Will be curious to see how they handle things like this in the future. I’d like to know what idiot thought staggering a Zelda release would be a good idea in the first place. Numpty.

  • I’m wondering if the response and handling of the situation would have been different were it an actual new never-before-seen game as opposed to a remake of an old game.

  • An entertaining and well-written article, thanks for the read!

    on a side note: Club Nintendo Aus is now accepting the points redemption code found in your (local) copy of OoT… So go get your free Zelda Soundtrack CD!

  • Really great article! I don’t say this enough but it’s great to see such interesting in-depth articles from the Kotaku AU team – wish I could say the same about some of the Kotaku US team…

    Staggered release dates are stupid, and server only to hurt local retailers. Even before this absurd street date, you can bet your bottom dollar thousands of die-hard fans were importing the game from the UK individually

  • Isn’t it illegal for them to use ‘region locking’ as a tool to vary market conditions (such as cost) depending on their location in the world? I know it’s already happening to an extent but surely they wouldn’t go that low. The logical thing to do would to have universal release dates… although recently Nintendo hasn’t been known for it’s logical decisions.

  • Great article!

    Only allowed to sell pre-orders? EB broke street date for me and I hadn’t pre-ordered. Also they had an “out now” poster in the 3DS section and a box with the cartridge removed displayed on the front counter. I’m curious to see if Gametraders will be doing this for every release that gets a staggered release in Aus now. If so then I’ll probably be visiting there quite regularly.

  • Last Thurs (30/6) I went into a local (aussie) EB and asked about the 3DS OoT (pretty much trying to find out if they were selling on Thursday). The sales staff I talked to said they weren’t selling (the guy I spoke to seemed tightlipped about any info regarding it at all) – and I indicated that I had heard that some places like Gametraders were selling it already. I was told by the staff member “yeah, gametraders do a lot of illegal stuff”. It seems like there’s some confusion, even with the staff of these game retailers, about the legality of parallel importing?…

  • There’s not a lot of option for retailers of games in terms of picking wholesalers in the console game market.

    I think there’s AllInteractive and one or two others, and it’s a pretty cutthroat business, so any margin adjustments hit very hard.

    So, the necessity of being able to parallel import for games is pretty much set in stone. If you are a smaller retailer you’d have to to make enough profit regardless.

  • Now, if this were Sony, lawsuits would be flying thick and fast and pressure would be put on the Australian government to ban grey imports.

    But hey, if GT didn’t grey import, I would have. When I can buy a copy of a game, brand new for $20+ less than most stores and get it before the official launch date, I’m going to!

    • What utter BS man.

      Sony have REGION-FREE consoles.

      If anything they promote this kind of thing by not locking down there hardware.

      Not to mention that Nintendo laid down some lawsuits last time a game was released in one region before another.

      it was a little game called New super mario bros. Sued some kid for putting a pirate copy online because they released it in australia first.

      Nintendo have always been arrogant it’s their way or the highway. Hell it’s why they lost the Final Fantasy series when the N64 came out

  • Top shelf, old boy. Flair and fact writ neat and clean all in the same space. Capital, major league, bloody good show and all that kind of business. Super!

  • I kinda get what Game Traders are getting at. But they would not have the buying power that say EB/JB has. Hence why they probably get certain exclusives.

    • Yep. That’s an important point. If you buy in bulk you get a better price. That’s the nature of the beast.

  • I can see the Wii U being strictly region locked now, where UK PAL imports are not even going to work on an AUS PAL machine.

  • It’s actually interesting you say that there was no in-store advertisements allowed. It seems that most stores are being quite cheeky.

    Just the other day (28th) I picked up my copy from EBGames and then also went into K-Mart nearby to see a Large Cardboard Zelda OoT 3DS Stand with it advertised all over.

    It’s quite surprising there’s no repercussions for some of these businesses.

  • random question but with the sheet music you are given in the Ocarina edition, how come the link does not work, any ideas?

  • I love nintendo, but honestly they are f*ing stupid sometimes. I only import nintendo games now days because i get them early and half the price. Good on Gametraders for importing, but I hope they sold it at a cheaper price too!

  • EB here had a open box full with the game in front of a big zelda cutout. Technically not on a shelf. I guess their back storefoom was too full and had to store it in the middle of the store. It isn’t their fault if you happened to find out about it and ask to buy it.

  • I got my copy from GAME on Monday. It was $18 because I traded Rayman 3D because they were running a trade in deal. When I walked in I simply asked “Can I get Ocarina of Time today?” and they replied with a simple “Sure…” EASY!

    As for what I hope comes from this, I hope that Nintendo stops neglecting Australia and releases games at more or less the same time as the rest of the world, or at least Europe.

  • I thought we were past the days when Australia would get a release date later than everyone else. Nintendo aren’t doing themselves (or retailers here) much good by delaying releases. Good on Gametraders for giving everything a kick in the backside.

  • Given Gametraders sourced their copies from the UK, did they have any price advantage over the competition or did they just mark it up the the Australian RRP?

  • Last week I called EB and asked when the game was coming out, they said not until the 30th, but if I came in and asked about it, I might get lucky. So I did, they sold it to me and told me that Nintendo had given them the go ahead to sell it early to those that asked; they just weren’t allowed to advertise it. They did have a whole wall of the hint books up, with ‘Out Now’ written across it. I asked them about that and they said that ‘technically’ they weren’t advertising that the game was out, but rather the hint books, and if people mistook it for the game, then that was their fortunate mistake. SNEAKY.

    A bit of drama never hurt anyone though.

  • Surely region-locking must be considered to be an infringement on fair trade practices in this day and age, as it monopolises trade sources.

    If push comes to shove tho (and I actually bought Nintendo products) I’d just buy a damn 3DS from the US and play games I imported on that. It’ll work out to half the cost and it’s lost revenue for our retailers which means lost revenue for Nintendo as they still charge us the ridiculous localised costs here in Aus.

  • When I went to pick up my pre-order of the Ocarina Edition at EB last week, I had first asked the clerk:
    “Are you guys selling Ocarina of Time now?”
    and he just responded:
    “Well, you can buy it if you want”
    and when I said I had a pre-order, it was fine and he got it out from the back.

    So… I suppose anyone could’ve rocked up and bought a copy if they asked.

  • At the end of the Wii’s lifespan people finally begun to see it as one big gimmick. And the response to the Wii U has, compared to the Wii, ben incredibly negative. Nintendo are on the verge of an all-time low and garbage like heavier region locking is just the kind of crap it would take to push them over, especially when basically the ONLY thing Sony is doing right is not region locking a damn thing.

  • I’ll pipe in with another positive for this article. Really engrossing read. Highlights the disparity between serving the consumer, and serving the publisher, and how it’s possible that they can differ.

    Loved some of the comments too. Especially the one on the first page about “ask our staff”. It wouldn’t be so funny if it wasn’t true.

  • “A pre-order was required. No in-store advertising was allowed. Games had to be kept behind the counter. It wasn’t to be discussed over the phone.”

    This is not true; I walked into my local JB-Hifi store on Saturday the 25th of June and saw a sign that said something akin to “where’s Zelda on 3DS? Ask our staff!!!”

    I asked and walked out with a shiny new 3DS, the game, the strategy guide and some random accessory pack for $373. I didn’t need a sign to know they’d sell it to me based on articles on the internet, but it would have certainly helped anyone who wasn’t aware.

    Frankly if Nintendo can’t come up with a reasonable reason as to why it took an extra 13 days to be released here I don’t see why they can complain that much. It’s not like I was pirating software, and if stores already had stock I find it a bit stupid – but hey I don’t work in business – what do I know?

    • Someone else mentioned this before – retailers were either breaking Nintendo’s rules, or trying to bend them to breaking point.

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