But how does it all work behind the scenes? Why do pre-order offers exist? How are they negotiated? We spoke to some of the major players in the Australian retail space in an attempt to shed some light on a process some believe is strangling video games as a stand alone product.
Kotaku US ran the story under the headline ‘Video Games, 2014’. We called it the ‘worst/best pre-order bonus’ in video game history. Either way it felt like a zeitgeist moment.
At the very least it was a ‘moment’. A moment to bear witness to. This is how ludicrous the video game pre-order bonus had become. This is how low it had sunk.
Pre-order Assassin’s Creed: Unity. Get an additional pair of pants that make you move faster.
It was an offer so stupendously silly it bordered on parody. People laughed, but people also complained. Some people got angry. Perhaps rightly so.
Rewind. A month previously. A brand new pre-order bonus for the highly anticipated Alien: Isolation. Back then Alien: Isolation was being marketed as a sequel set years after the original Alien movie, featuring a brand new set of characters in the same universe. Yet Alien: Isolation’s newly revealed pre-order bonus was different, it was tantalisingly worthwhile: a short series of additional missions featuring the original cast of Alien. It played directly to hardcore fans of the series. And they went ballistic.
The pre-order bonus was perfect, almost too perfect, to the point where it played negatively to an increasing crowd of consumers rallying against the pre-order and its negative influence on the industry at large. This wasn’t your bog standard useless piece of DLC kit; this was not pre-order pants. This was a must-have, clearly high-budget, piece of content that would only be available to players if they walked into a store and put money down before the game was released. Before reviews, before word of mouth, before anyone had a chance to create some sort of consensus on whether this game was actually worth paying for.
Again, people got angry. Again, perhaps rightly so.
In the face of the backlash, Sega quickly relented, revealing there would be other avenues for consumers to download and play this content, but the issue had already been raised: why pre-order video games? Who are pre-orders for? Are they anti-consumer? Why are we being asked to pay for video games in advance? Why are we allowing ourselves to be dictated to in this way?
“It’s just retail,” explains Chris Wright. “That’s the sales process. And it is a process.”
Nowadays Chris Wright runs Surprise Attack, a specialist games marketing firm. Once upon a time he was Director of Marketing in Australia at THQ. Chris spent close to a decade marketing AAA video games to a broad audience. He says that pre-order offers were part of every single marketing campaign he ever worked on.
Pre-orders. They were initially sold to consumers as a way to avoid ‘missing out’, to ensure we reserved our copies of highly anticipated consoles or video games. But according to Chris, pre-orders have always worked as a communication tool between retail and publishing. For retail it’s a way of predicting how much a video game will sell; for publishers it’s an avenue used to convince retail that their new video game will sell.
“Pre-orders inform the retailer,” explains Chris. “Orders to the publishers are often heavily based on that.”
“Publishers want to get pre-orders up, that helps you sell more stock. That’s why so many of these offers are about pre-orders for specialist games. It’s basically money in the bank.”
Pre-orders have never been about making sure customers secure a copy of a game that could potentially run out of stock. Ironically an increased amount of pre-orders help retail predict the potential success of a game hence making it less likely the publisher will undersupply (“it’s rare that game will sell out now,” says Chris, citing Dark Souls as a rare example of a game that retail underestimated). The pre-order has always been about moving stock, and moving the right amount of stock to the right places.
And Chris argues even consumers have a general understanding of that pact between publisher and retail. Consumers are well aware that games will not sell out, he says. That makes it even more difficult to convince customers to put their money down early.
“Everyone is having to incentivise it a bit more,” he says. “ Since I started it’s gotten a lot more complex.”
Complex means moving from the “$20 down $20 off” standard that was in place when Chris started at THQ, to the wide and increasingly confusing array of pre-order options available to consumers today. Nowadays it’s common for a single game to have multiple different pre-order bonuses at multiple different specialist retailers. Ubisoft is arguably the worst offender, putting together a mind-boggling 10 different editions of Watch Dogs this year, each featuring different types of content.
It can be confusing.
“It’s a fine line to walk,” says Chris. “You want to keep your messaging simple.
“I think having multiple different editions, you can create that paralysis of choice. ‘I don’t know which one I’m going to pick, so I won’t choose any of them’. But the thing is publishers are constantly trying to figure what works, constantly trying different things. Multiple editions have been around for a while so they must be working on some level otherwise they would stop doing them.”
But why so many? And why have multiple different editions exclusive to different retailers? JB Hi-Fi needs an exclusive, EB Games needs an exclusive. The end result is this: video games become incomplete packages. There’s essentially no way to get the ‘complete’ package unless you buy more than one copy of the same game. Surely that represents an absolute breakdown of the pre-order as a consumer incentive? Surely that’s representative of some sort of collective madness?
“It’s just the nature of retail,” claims Chris. “If you have five retailers that are significant and you have an offer, you’re going to need five different offers. Because if you only have one then all retailers have the same offer and that’s not competitive. One retailer doesn’t have the advantage over the other.
It makes a certain amount of sense, but in practice the pre-order has slowly descended into parody. It has descended into 10 different editions of the exact same game. It has descended into pre-order pants.
“But that’s just the sales process,” explains Chris. “And it is a process. There’s a lot that goes on to get a game on the shelf. Retail is so critical to the games industry — most games are still sold through retail and retail space is some of the most powerful marketing space in the industry. It’s a big part of the purchasing decision.”
EB Games sees it a little differently. To EB the pre-order is more than an information gathering tool — it benefits the consumer.
“Think more games hitting our shores and more industry events like midnight launches,” says an EB spokesperson, speaking to Kotaku.
“It’s about making a gaming experience last beyond the screen and connecting like-minded people.”
When asked about the issues that come with pre-orders, EB were keen to highlight the benefits.
“At the end of the day it’s not about the retail impact; it’s about offering the gaming community the biggest and best gameplay possible.”
Chris Wright mentioned the paralysis of choice that comes with multiple different editions of the same game, but EB Games claims there is no such issue. It claims that clear in-store marketing and well-informed staff ensure that consumers are always aware of what’s available to them.
And retail exclusive pre-orders? They’re simply a way of “thanking” customers. (“We’ll continue to work closely with publishers to score epic bonuses so our customers can jump into their favourite game knowing they’re not missing out.”)
Speaking to JB Hi-Fi, it seems a little more open when it comes to discussing the relationship between publisher and retailer, and how pre-orders effect sales and the bottom line.
“[Pre-orders are] driven to a large extent by the publishers seeking to maximise their Day One result and create awareness and interest in the lead up to launch day,” explains a JB Hi-Fi spokesperson, “as well as optimise their supply chain to ensure they do not over or under supply the market.
“As a consequence consumers do derive some significant advantages with pre-order specials and this in turn does benefit retailers.”
But JB Hi-Fi confirms that consumers are rarely confused by pre-order bonuses, even ones as complex as Watch Dogs’ multiple different SKUs. In general, claims JB, the only issue it has with pre-order bonuses occurs when demand is too high and publishers can’t deliver.
“In those cases consumers do get disenfranchised,” says the JB spokesperson. “This confusion does sometimes manifest itself as a negative backlash which is generally directed towards the retailer who has little control over the situation.”
But if there is a problem, it’s a self perpetuating one. It’s retailers who are demanding a point of difference on pre-orders, it’s retailers who are forcing the publisher’s hand when it comes to creating multiple SKUs. Yet the responsibility flows both ways — publishers need to dial up pre-orders to sell units, retailers need exclusives.
According to Chris, it’s all part of the negotiation process, both parties essentially want the same thing: they both want to sell copious amounts of video games.
“Fundamentally the retailer wants to sell as many units as they can,” says Chris. “The publisher also wants to sell as many units as they can. It comes down to the buyer buying the right amount of stock. That’s his job.
It’s all about competition, it’s about retailers competing for the best deal for its customers; it’s about publishers competing for shelf space.
Ultimately the consumer should be benefitting from this kind of competition, but that isn’t always the case. The system appears to have hit some sort of tipping point: pre-order bonuses are either so scattered and nonsensical they’re hardly worth the bother, or they’re so well put together that consumers get frustrated when they don’t have access to it.
Or is the whole situation really not a problem at all? Is it just one more meaningless issue for a core group of enthusiast players to complain about?
“Sometimes the attention itself creates the story,” admits Chris. “There’s also the issue of what people complain about online, versus what real consumers do.
“Go back to the Australia tax thing. People were complaining about Steam pricing, but the reality was that Australia was heavily over-represented in terms of Steam sales. There was a disconnect. A lot of people were really upset, but at the same time people still wanted to buy through Steam.”
In other words, until the mainstream gaming public gets sick of pre-order bonuses — or all of a sudden become impotent at retail — we’re stuck with them. Whether we like it or not.