This Week In The Business: 'Retail's Worst Nightmare Is Coming True'

What's happened in the business of video games this past week ...

QUOTE | "Retail's worst nightmare is coming true." — Former editor Rob Fahey, talking about the horrible year game retailing had in 2012 and what the future holds as digital takes over.

QUOTE | "We'll be able to compete with any AAA game out there." — Chris Roberts, designer of the famed Wing Commander series, talking about the graphics of his partly crowd-funded game Star Citizen.

QUOTE | "I would rather not compare it to Guitar Hero... I'd rather compare it to a sports franchise." — Tony Key, senior VP of sales and marketing at Ubisoft, talking about why they will release a new version of Just Dance every year.

QUOTE | "All the preconceived notions and console paradigms a lot of us brought in trying to do core for mobile is now sloughing away." — Industrial Toys president Tim Harris, talking about how their new shooter Morning Star for iOS will re-invent mobile shooters.

QUOTE | "The other thing that's really important, besides big spenders, is commitment really matters." — Emily Greer, COO and co-founder of Kongregate, talking about where the money is in free-to-play games.

QUOTE | "The industry needs to continue to create new IP, because it will get stale and old fast, and consumers will go to a different industry." — Tim Willits, studio director at id Software, talking about the need for new IP even before a new console cycle.

QUOTE | "It is doing an order of magnitude greater revenue daily than any of our other titles." — John Smedley, president of SOE, talking about the success of the Planetside 2 free-to-play game on PS3.

STAT | 10 — Number of the top 10 highest-grossing iPhone apps that are games, according to Apple; 7 of the top 10 highest-grossing iPad apps are games.

STAT | 450,000 — Number of subscribers to EVE Online on its 10th anniversary; the game has grown every year since its launch, according to publisher CCP.

QUOTE | "Claymation is quite a ridiculous idea to do if you're not geared up to do it." — Animator Chris Roe of Fat Pebble, talking about their new iOS game ClayJam, entirely done in claymation.

STAT | 48 per cent — Percentage of gamers that play online games in the US; this compares to the 42 per cent who play console games

QUOTE | "If you go to some of the Android stores it's extraordinary, it's incredible, it's like the Wild West." — Jason Kingsley, CEO of Rebellion, talking about why the industry's negative over-reaction to Windows 8 isn't justified when compared to an open platform like Android.

This Week in the Business courtesy of GamesIndustry International

Image from Shutterstock


    Simple fact is Retail has to find a way to change. While a physical boxed copy will always be more expensive than a digital copy due to the physical presence, sometimes these pricings cannot be justified. This cuts both ways though when we see Digital games on sale for 80 and 90 dollars too...

      Physical always more expensive than digital? Better tell that to Nintendo and their eShop :P

        I did say sometimes these pricings cannot be justified and then say it does cut both ways sometimes ;)

        Xbox live is the worst offender for pricing games online. Its horrendous. Kingdoms of Amalur was going for 20 bucks over at EB, yet online its apparently over 100???

    I think the cost of digital games will fall. PSN+ with discounted and free games, Steam sales, F2P all indicate that digitial will drop in price before long.

    Yep. The retail industry has become the new music industry. Regressive, nonsensical buisness models in combination with shovelware like COD that gets released every year for $109.95. They'll keep doing it until they almost go out of business and blame everyone but themselves while consumers are busy importing, saving almost 60%.

    Publishers need to get real and stop being greedy and retailers need to do the same. There is simply no reason for anyone to pay more than $40 - $50 for a game. When the industry gets that through their heads, everyone will be better off.

    For all the talk of retail dying and digital teabagging it's still-warm corpse, people don't seem to be thinking this through. Don't feel bad though, it's become the standard worldview of gaming forums on the web, once you get into the circle-jerk it's hard to consider other perspectives, in case you end up making eye contact and things get awkward.

    Anyway, I logged on to my PSN+ the other day to check out the new free games on offer. Batman Arkham City? Very cool. Download size? Around 8GB. Infamous 2? Heard good things. Download size? 14GB. That's all pretty indicative of the digital gaming landscape.

    Now, think about the next generation consoles. If you've been a gamer for any period of time, you'll know that devs have zero motivation to make their games small. In practical terms, the size of the available physical media has more of an influence on the efforts taken to reduce their digital footprint than anything else. And that's ever increasing, because of the growing footprint of graphics and the like. Think that'll change? No. It won't. That extra space will get filled, and then they'll move to multiple discs, because miniaturisation increases cost, and profitability depends on keeping prices reasonable. All the braying and neighing about $50 games from the usual farmyard animals bears this out pretty strongly.

    Sure, internet connections are getting faster etc, but noone seems to consider that we're,the fearless forum travellers, are not the norm. The average person has a pretty dinky internet connection, because, hell, why pay more? In a family's view Timmy needs braces, Jenny need soccer boots. That's money better spent, and works against the all too common digital-centric worldview.

    So. Games will continue to get bigger, the average family's internet speed won't increase much, and retail will shrink but will still be where the vast majority of the common people buy their games. Digital has its place, but it's hardly the harbinger of doom everyone loooooves to make it out to be.

    Not to mention that companies will charge prices that the market will bear, while recouping their investments and making a profit. What the hivemind would call 'greed'. So no, not only won't they get much cheaper, they'll get more expensive in the next generation. It's pretty straightforward business.


    Part of the reason the retail sector is failing is because everyone hates their jobs, and so they pass on that pessimism to the customer.

    Whenever I shop at a major games retailer like JB Hi Fi, I get the vibe that the staff just want me to go away so they can continue chatting with their co-workers. I've gone home with the wrong game disk in the box, 2 out of the required 4 of the game disks, and a scratched secondhand disk (that was supposed to be brand new), all because the checkout chick was so focused on getting rid of me so she could get back to gossiping with her friends. They are "hot" girls who look at serving a geek like me as an inconvenience, not a job they are required to perform with courtesy and professionalism.

    I could understand this attitude if I was a demanding and rude customer, but I literally don't say anything except to smile and request the game I want. They treat me like I'm an intruder and I'd be willing to bet that my experience is not unique.

    Contrast that with steam, and you can download games without even leaving the house, and it's usually cheaper too.

    In conclusion, fuck retail. Unless they come up with a damn good reason why I should drive to their store and endure their shitty customer service, I'm sticking with steam and GoG.

      unfortunately a lot of people have poor work ethic or the repetitive nature of retail can remove any human connection they can have with customers.
      having said that there are good retail stores with people that can maintain good customer service day in and day out they are just few and far between.

        Rebel has good customer service. They need to put there sticker on the product they sale to you so management can see who is working the floor properly.

        I feel like some of the laws and regulation we have in Australia are also leading the charge for useless customer services in retail. Why would an employee try to work hard for a minimum wage that far succeeds that of other countries?

        What incentives do they have to work hard? when working lazy and working hard pays the same.

    One must also remember the margins in software at retail are very poor. I used to work in a local independent videogame rental/sales shop and was horrified by the margins. Obviously these margins are larger for the bigger retailers, but at most an $80 game sale at a shop nets about $20 profit or less for the retailer. This is not an effective margin to maintain any kind of decent cashflow. This is why most retailers take a bath on software and hardware but make 500-1000% on accessories, especially 3rd party ones. The same can be said for things like iPhones/iPads. On a $700 sale these guys are making less than $50. Business needs to adapt, as mentioned above.

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