JB Hi-Fi Selling A Lot Of Game Consoles, But Maybe Not So Many Games

Is it a sign of the times? JB Hi-Fi's half year results were released today. It was a reasonable second quarter for the tech retail giant, bolstered by hardware sales, but software sales are clearly on the decline.

According to the results, JB Hi-Fi's hardware sales were up 4.7% in the quarter, with the result specifically naming console sales — alongside fitness gear and appliances — as the reason for that growth. Software sales, however, were down a massive 10.8%.

But given the majority of JB's sales are centred around hardware, it added up to an overall 1.4% growth in sales for JB. CEO Richard Murray was pleased with the results.

"[T]his was a pleasing result for the half year given the combined headwinds of a challenging first quarter sales result and the the cycling of both digital switchover in visual and the launch of new gaming consoles in the second quarter last financial year," he said.

But the rapid decline of software sales is a clear warning sign. Are consumers buying hardware in stores and then buying the games themselves online? Or is mobile gaming part of the problem? It's difficult to say, but stores like JB Hi-Fi have traditionally used video games as a loss leader for other products and a sales decline in software might be the proverbial canary in the coal mine. Games retail is an interesting business. Traditionally stores like EB Games and JB Hi-Fi will sell consoles at low margins, the idea being that those same consumers will come back to buy video games. Will the story remain the same when people are less likely to buy video games at brick and mortar stores? That's the question. Other retailers like Target, Kmart and Big W have already threatened to reduced its stock of games in stores, maybe we'll start to see JB Hi-Fi follow suit.


Comments

    We would sell a LOT more software if Nintendo would actually supply us with enough :l

      Yeah for a console apparently not selling (WiiU) I had a hard time getting Hyrule Warriors, Bayonetta 2 and Pikmin 3. The same seems to be true of 3DS software. Why on earth they did not supply more Limited Edition Majora's Mask over standard too.....

        Why on earth they did not supply more Limited Edition Majora's Mask
        ...because then it wouldn't be LIMITED!

    I find with the PS4, Im buying more Digital games because I can get it "nearly" straight away, and I dont have to leave the house :)

      Yep, me too. I don't own a single PS4 disc, I just ended up going 100% digital. I love having everything available to play immediately, which works well with remote play on the vita too. It's worth upgrading the HDD too (I've got a 2TB in there).

        Yep, but funny when I'm using remote play & I have to go into the other room to switch discs

      The only problem with Digital content is its price. I am waiting for the day to buy a digital download code from JB or EB for the shop price not the digital download price. Far Cry 4 and GTA V was $30 more expensive on the PS4 and Xbone stores than for a disc copy at JB. I am only buying digital atm but ill wait for sales, I don't want discs and I don't want to pay a premium for something that costs less to produce.

    PS3 PS4/Xbone/Wii U's got no gaems.

      Maybe 2 years ago. I've got a pretty decent pile of shame for my Wii U.

        Yeah me too.

          My pile of shame: Bayo 2 & 1, Pikmin 3, Wind Waker HD...

          Damn MK8 and Smash Bros. Wii U!

            Rayman Legends, Darksiders 2, NFSMW, MK8, Revelations (though not really since I already did it on 3DS), Splinter Cell Blacklist, Hyrule Warriors, Bayo, AssPirates, Game & Wario, Ninja Gaiden 3, Captain Toad.

            Terrible.

              Currently on Hyrule Warriors. I can't even keep up with the DLC!

              Got Darunia's tier 3 weapon last night though! Pumped.

            Agh, haven't even picked up Bayo yet. And you've got a treat coming up with Pikmin 3. I wish I could do that one fresh again.

              Get on that Bayonetta goodness. It is far from overrated but in fact under appreciated.

      Really. I have a Wii U and have a stack of games I am struggling to get through.
      Bayonetta, Wind Waker, Pikmin, MK8, Wonderful 101 (not even touched yet). It is like the best console of the 3 and I am a Sony fanboy.

        Dude you're talking to one of the biggest Nintendo fanboys on the site. It was a facetious comment, sending up the "PS3 haz no gaems" running joke of way back when. Which we partly saw across the board this time around, with all the consoles launching with very little in the way of games. Sure, things have changed now, but the comment falls in line with the JB results.

        That'll learn me to joke around with things :P

          To he honest I didn't take note of the usernames etc. I will give you credit for the joke as it is indeed a quality facetious comment. I must of been slow the other day, I tip my hat sir.

            Haha, didn't mean it in a "don't you know who I am" sense at all, although to be fair, running around as another black-and-pink K probably doesn't make it any easier anyway :P

    Well, considering the price of the PS Store (not sure about XBox Live Marketplace, but Sony would put their prices down I'm guessing if Microsoft were cheaper), is still $99.95 for a lot of games, people probably aren't going online for their games.

    I'd say it's more that despite Destiny or Dragon Age, there's still not a great deal of new games to buy on PS4 or Xbone. It won't be until this year that a lot of high profile games come out that should boost sales. Simply put, 2014 was a barren year for games and it showed, but the new consoles are still providing popular

      As a recent PS+ subscriber, I'm finding I don't have the time to finish the free games, let alone purchasing new retail ones. I'm also hesitant to buy knowing that in a year or so the game may well be available for free via PS+.

      These days I'm happy to wait to play a game that's critically acclaimed and continue with the games released a year or so ago. I suspect there may be others like me.

        I follow a similar line of reasoning. I buy up a few games when a steam/origin sale is on and then I play them until the next sale. Unless I can get a new release very cheap I leave them until they are half price.

        Am doing the same thing, I've just purchesd titan fall now it's worth $12 on the US xbox store, Same with need for speed rivals,also bought wolfenstein and aliens late on steam half price, I'm just happy to wait :)

        I still haven't finished Rainbow Moon that came with PS+ 6 months ago! Arrrgg!

    This console gen has been all digital for me - apart from a few collectors editions. Even then I wait for a sale, and buy the same game digitally. I've already upgraded my PS4 because of it. If Xbone ever release any games I might have to do the same for that rig too.

    Interestingly enough, JB define their 'software' category as games, music, and computer programs. So a 10% decline could in fact refer to a 20% decline in music, and a 10% rise in games software. Of course those figures are speculation, but show the potential difference of averaging figures across departements.

    But but but.... Everyone wants a solid disc copy of a game these days guys!!! Remember???

      I would. If it wasn't 60% cheaper from my online stores.

    I'll keep buying my games in-store while I have a 750kb/s download connection. Thank you JB-Hifi!

      Meanwhile I struggle with 400kb/s cause idiots.

        OK, so a sympathy upvote there but here's hoping you get some awesome internet soon. I am grateful for every kilobyte I get!

          Thanks. :)
          It is full speed ADSL 2+ but the rip off merchants at TPG claim that is within reason. Though it is obviously bad wiring as friends of mine further on the same exchange get 600-800kb/s.

    I'm an old fogey. I like to have my game disc on my PS4. I've only started with the online stuff for games like Walking Dead and my PS Plus "freebies".

    Last edited 02/02/15 11:51 am

      Same here. Plus, the price On PSN is really off putting. The normal price on PSN is almost always more expensive (sometimes as much as $20!) than physical copies sold at JB, I can never understand why? Am I paying for the convenience? Shouldn't digital games be cheaper as they don't incur shipping and packaging fee? Isn't that the whole idea?

        Nope, you're just paying an Australia Tax cause they think you'll pay it...there is no reason for the discrepancy in cost...which was there even as our dollar was over parity with the USD.

        Sony don't have a single clue when it comes to price parity.

    i only buy retail cause its cheaper, if digital was cheaper id never leave home

    If they were a loss leader on games in order to push hardware, then surely selling hardware without taking the hit with games is an improvement for them.

      I thought that retailers made next to nothing on hardware and made all their money on games...

        Game hardware, sure. What about TVs, microwaves, computers and even coffee machines? They've branched out quite a lot.

        @Trjn, @Zambayoshi

        That's essentially what most game retailers do. The idea is that when a customer buys a console, it instills the idea in them that that particular store will be able to provide them with what they need for that console in future, i.e. games and accessories. However, specialist stores like EB Games and large chain stores have different goals to attain from this.

        EB Games, for example, tend to sell their games at RRP to make a profit (which is the real reason EB's default prices tend to be more expensive than chain stores as there still isn't a lot of margin in new games, rather than some irrational desire to screw people on pricing, which far too many people actually believe), while also selling preowned games, accessories, video game related paraphernalia and game guarantees which have a larger profit margin. JB HIFI, on the other hand, will happily price fairly competitively and can take a loss on their games because every time someone visits their store, they see it as a chance that they will purchase items with more margin (like headsets), or a LOT more margin (like a TV to play the console on). The idea is that if you can buy pretty much everything you need for your gaming at JB, why would you go anywhere else?

        I thought Manufactuers lost money on Consoles and made money on Games.
        I thought Retailers got screwed on Game Pricing with tiny Profit Margins and made Money on Extended Warranties, Hardware and 3rd party stuff.

    Go back a few years and JB was the cheap option on a day 1 purchase. These days target and big w seem to be undercutting them on a lot of big releases.

      Yep, this. I've been into JB many times over the last 18 months or so and never purchased a game there unless it's not available in other stores. The prices are higher than other retailers and much higher than I can get games for online.

      But also I've increasingly transitioned to digital for everything. Generally don't buy games locally much any more as it is, and when I do and it's a CE I really want I tend to pay the extra and get it from EB as I've had much better experiences with preorders through them than JB.

      Yep, pretty much this... My local is pretty horrible for any sort of sales, to the point that even EB Games were a better and more cost effective option, that's how bad it can get.

      I've always used JB as the store to pick up those games where you have a passing interest in, but not until it hits $20 or so... I've still got a few games on that list and they are all still full RRP at most JBs I've hit up, despite the games been quite a number of years old now, they just don't seem to do that anymore.

      Yeah exactly. This is a major reason why people don't buy from, JB anymore.

      They were the leading retailer in cheap games, but over the past couple of years they have jacked up the price of everything. They are not nearly as expensive as EB Games, JB still undercuts them in price, but Big W and Target are often undercutting JB on day 1 prices.

      And no mobile gaming is 0% not a factor.

        Actually as someone who drops by both JB and EB at the local shopping centre the "not nearly as expensive" as EB doesn't really hold up these days.

        Most games that aren't on sale usually have a mere difference of between 5 bucks to 5 cents on their catalogues. And their sales buck per buck are pretty much on par.

        AFAIK the only real differentiator between JB/EB these days is the exclusive freebies for the LE's otherwise it's pretty much practically the same these days =(

      It still is in my area to some extent.
      The local Target and Big W almost never have stock on day one and when they do it's not all that much cheaper. For example Destiny was $79 from Target and $69 from JB. Big W is either the same as JB or only a few dollar less. I would go to them more but they are much further away and JB is happy to price match them.

      Plus after many years of being a customer, my local JB gives me a lot of left over codes and special edition items for free (If they didn't sell out or get enough pre-orders)

      exactly this...they just hoped to have sucked you in and you always think they are cheapest.

    They used to be my goto local store for games, but lately places like Big W have cheaper launch prices for games or I just buy digital in the case of PC games.

    Plus I've gotten a lot pickier with my purchases, I only buy what I have time to play rather than buying every new release that might interest me.

      Plus I've gotten a lot pickier with my purchases, I only buy what I have time to play rather than buying every new release that might interest me.

      That's where digital is hitting me. It's really good at taking advantage of my poor impulse control. It's there 24/7 so all it takes is a moment of weakness or a sale that adds up to roughly retail price.

        I've just given myself a rule that I only add to my digital wallets with prepaid cards rather than the credit card, so most of the time I only buy enough balance to pay for what I want, not leaving much leftover for impulse purchases.

    I think the big question is where does this level out? I mean unless it utterly failed to the point where they had to turn off the PS Store/XBOX Store there was always going to be a decline simply because a new way of purchasing came along and further fragmented the audience.
    At this point I would say those buying physical and digital have chosen there sides so this could very easily be the biggest part of the drop. We'll see a converts later down the track but this isn't like Blu-Ray vs HD-DVD where the two sides battle it out until one gains enough of a lead to kill the other and force the remaining holdouts to convert. There are still plenty of reasons to buy physical copies, especially given the pricing on both the XBOX and PS Stores.

    I ship around so my money goes wherever the cheapest price is, could be online could be in-store.

    The last time I bought anything new from JB Hi Fi was the big special edition of MGS HD on PS3, that's how long it's been.

    I did pick up Yakuza 3 for $5 preowned a month ago. What a deal, had the OST too!

    Well JB Hi Fi lost a customer on PS4 launch day when they refused to price match Big W because "they increase the price of chocolate to cover their loss on games".

      This is why I don't understand them continuing to price match. With EB price matching made sense because their standard price was a joke designed to get suckers to pay too much with all the rational people just price matching to get JB's price. However JB offer a price where they make a little money and everyone wins as standard. Going under that is generally a bad idea for them and it only wins the loyalty of customers who cause them to make either next to nothing or lose money on each sale.
      By continuing to price match they put themselves out for the sake of sales I don't think they really need or even want. They were having no problem selling PS4's on day one but because they normally offer price matching they put themselves in a tough spot. Lose money on the PS4 or piss off a customer. I'm guessing they pissed off a lot of customers that day.

      I mean by all means take advantage of their price matching, as a consumer you're your own number one priority, but it just seems weird to me that they continue to price match. I guess they're worried about the bad PR of taking it away.

        JB Hi Fi didn't price match on launch of ps4, cause there were no one to price match that had stock available. You cant price match something a competitor doesn't have :)

    I like buying digital if the price is the same or cheaper than a physical copy from a local shop but sometimes with nzgameshop they are a lot cheaper so I go with them but you have the week or so wait for the game. Digi its there day one don't have to leave house or swap disks which is worth paying few extra $$ for.

    What would classification ratings have to do with this, if anything?

    The 'usual suspects' are all probably going to fall into the R18+ bracket if they don't already fall into the MA15+ bracket by the end of generation, surely.

    Just sayin.

    I still like having discs personally. Also the cost of digital games seems to still be higher than retail (somehow), so I'll keep buying physical copies for the foreseeable future.

    But the rapid decline of software sales is a clear warning sign. Are consumers buying hardware in stores and then buying the games themselves online?

    Personally, I doubt it. I think people are buying the hardware locally (so they have the extra protections and ease of local warranties and the Australian Consumer Law protection) and are then buying the games online from compatible reasons such as OzGameShop.com.au.

    Comes as no surprise when some games five years after release are still being sold at full RRP yet are virtually given away online.

    I still prefer disks, the nice stacked collection in the entertainment unit, being able to lend out copies to mates/return the game to EB after 14 days for all the money back If it sucks. Plus I always prefer forking out cash for something I can actually hold.

    The only recrnt exception wqs dyibg light as I am not waiting a month longer for the disk version when the digital is just sitting there taunting me :-)

    I'm just going to put it down to the usual cycle when there a generation change. People move to new hardware so obviously those sales explode. But there's few big games to drive software sales. People not ready to upgrade console yet also use the chance to hit the second hand and discount bins to play any missed games from the last few years.

    I think a few of the big names to come out alter this year will reverse those software figures.

    I find I've been buying less partly because I've bought some digital that I used to buy retail (mainly stuff that I'm going to put hundreds of hours into like a Battlefield, PES, etc).

    But also, and I'm not sure if this is actually reality or just my perception, but it seems like games haven't been getting discounted as soon or as heavily in recent times. I seem to recall at the peak of the PS3 / 360, games would be down to half price within a couple of months of launch. I generally divide games I want into stuff that I'll buy day 1, or stuff that I'll wait until it's half price. It seems that on PS4, the games that I'm waiting to pick up half price (e.g. Shadow of Mordor GTA 5) just aren't getting there. Once they get down to that price I'll buy them, but until then they're not going to get those sales from me and, presumably, others who are waiting for discounts.

      This is big problem. Why GTAV and Saints Row 4 were priced at $79 is beyond me, this push by publishers to make $79 the new default price for games is going to backfire because I'm quite happy to wait. For my part at least JB's biggest problem is opportunistic pricing by publishers.

        I'm happy enough for $79 to be the new price for a genuine new release. But for re-issues like GTA V and The Last Of Us (which is one of my all time favourite games but I've already finished it 3 times on PS3 so can afford to wait for the PS4 version) I'm not going to fork out that kind of money. I'm happy to wait for them to be about $40.

          Yeah agreed - the only remaster I will happily pay full price for is Dark Souls II, back in 2010 GTA would've been that game though and still is for a lot of folks which is why they can get away with it

    Maybe all the crazy console deals last Christmas have a bit to do with it too. Some deals had up to 7 games (some really decent - last of us, Farcry 4, Forza horizon 2, halo mcc to name a couple for their respective system) in the deal which is more than enough to keep ppl going for a while. Perhaps they gave away too much? I've never seen console deals like the ones seen last Christmas ever before.

    I always prefer buying a physical copy. A lot of people are buying games from UK retailers now too for cheaper prices as well. A console sales boost at his point in expected but i imagine that will be temporary and should increase more this year then drop back down once people have bought their new consoles.

      That's a good point re UK (and other foreign) retailers.

      It'll be interesting to see if that trend starts to change now that the dollar is on the slide after being very high for a few years.

        It's already changing for me, it's been almost a year since I bought a game on ozgameshop because the savings haven't been worth it to wait for postage.

          Me too. I was buying a few games a month from Ozgameshop last gen. Nowaday's I'm just waiting for sales on PSN for PS4 (US or AUS) and buying then. Saves waiting a few weeks, and the savings are about the same anyway.

            With me, I've slowed down because previously I was buying a lot of PS3 games that had been released for ages cheaply from ozgameshop, but now I've basically caught up and am looking at full-price or near full-price games, along with a falling dollar. I think I'll wait and just play backlog games for a while.

              Yeah, I think backlog has been a part of my slowdown too. I've definitely held off pulling the trigger on some games I would have just impulse bought in the past, because of my conscience nagging me to play through at least a part of my pile of shame.

          Same boat here. I did get a few games for christmas and I think my girlfriend still used ozgameshop for those but last I checked ozgameshops current prices are either equal or a dollar or two more than JB Hi Fis so I'll be going back there for most things now. I used to still shop there for games if it were something i wanted right now or if I had vouchers.

            + 1 for username ...... +1 000 000 for delisting Josh Smith ! Soooo over rated !

              Josh Smith is the biggest bone head in the nba, waste of what could be a decent player.

          Yeah, I buy steam keys and xbox live from Ozgameshop, which they email the code for in a couple of hours, but not physical games.

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