JB Hi-Fi Notes 'Significant Decline' In Games

Image: Getty

Over the last few years, games and gaming accessories have been a strong growth category for JB Hi-Fi, helping offset the continued decline of music and movie DVD sales. But for the first half of the 2019-20 financial year, that trend reversed.

JB Hi-Fi released their half-year financial results this week, and overall the yellow-branded retailer is having a good year. Statutory net profit rose 6.6 percent to $170.6 million, surpassing market expectations, and comparable sales across JB's 199 Australian stores rose by 4.4 percent thanks to increased online sales, particularly sales of Apple products.

But the one sour note in the half-year results presentation, surprisingly, was video games. Software sales for the whole company fell by 18.2 percent, and while JB didn't note the exact percentage, the company said they saw "a significant decline in the Games Software category as we cycled strong new release titles".

Image: JB Hi-Fi

Software sales make up just over 8 percent of JB's offering, which isn't a huge amount comparatively but a notable decline from the first half of 2019, where software sales accounted for 10.6 percent of JB's total sales. JB also noted 4.8 percent comparable sales growth over the Christmas quarter, and a 5.1 percent increase in total sales to $2.72 billion.

There's still some hope for games software sales to recover in the second half, however. A few major releases will land before the financial year ends, including Final Fantasy 7 Remake, DOOM Eternal, Animal Crossing: New Horizons and The Last of Us Part 2, but any sales for Cyberpunk 2077 will go into the first half results for 2020-21 after the game was delayed to mid-September.

Another boost to JB's profits for the rest of the year are also likely to come from phones, phone plans and potentially internet services. The company cited a "national rollout of Telco services in partnership with Telstra" as one of their focus areas for the rest of the 2020 financial year. Telstra's mobile plans are already promoted through The Good Guys, which JB Hi-Fi owns, and JB's existing mobile plans use the Telstra network.


Comments

    Surely their 'Cracker Gaming Deals' can't have anything to do with it, can they?

      When you're selling a PS4 slim for $429 and wondering aloud why people aren't stampeding the isles...

      Or their Switch games going for RRP...

        That's a Nintendo policy, not JB Hifi

          It's kind of annoying that even after its release over 2 years ago now that Breath of the Wild or Odyssey are still going for max price. Surely by now they could shift more units by dropping the price

            SO frustrating.

            I would buy a Switch game per month if the pricing of the big titles ever came down. As it is, I just play BotW and Mariokart.

            Try Mario Kart 7 on 3DS! Still $59.95. Nintendo rarely discount their own games. If they do, they become a "Player's Choice" range at half price. I was waiting 5 years for Animal Cross New Leaf to get cheap.

            As for Breath Of The Wild or Odyssey or even MK8 Deluxe, expect them to be full price for at least 2 more years. Fact is people keep buying them so there's no reason to discount them. We won't see a MK9 either while MK8 Deluxe keeps selling like crazy.

            It's for this reason Nintendo's own games I must own are the only ones I buy on release day. Everything else, I wait.

          In fairness, Nintendo give the big retailers good deals, so the prices at JB and Target are usually $20 less than actual RRP (that you see at EB). Nintendo rarely discount their own games either because they keep selling. At best they become a "Players's Choice" after several years. I waited 5 years for Animal Crossing on 3DS to become exactly this.

        This is 100% Nintendo. They never do price protection on their games, and as such none of their games ever go on sale in any meaningful way. Or even drop in price for that matter.

        Last edited 12/02/20 2:11 pm

    Buy games from brick and mortar stores is on it's way out.
    The only reason there's any volume there is because with freakin' consoles half the time it's cheaper to buy the game from a store than online (which is just nuts!).

    The writing is on the wall for game sales.

      Also, Microsoft and Sony NEED retailers to stock the consoles themselves (for the time being). Store presence is a huge part of their marketing.

    Lack of game sales is mainly due to lack of games in general, everyone's getting ready for the next gen consoles. (and PC games sales doesn't exist anymore)

    Doesn't help that anytime I wander into a JB I'm there for about 5 seconds because the PC Games section is about 30cm wide and comprised of 25% Blizzard games I have no interest in, and 25% titles no one wants and 50% decent games that are priced at $79.95 when they are available on Steam for $4.95.
    Maybe if they spent some time being competitive their sales would improve.

      Most the time the content of the dvd these days, if there even is one, is just the launcher. 90% of PC "physical" copies these days are a code for the platform of the developers choice. You get the physical copy not for the actual physical copy, but because of the price or because of the collectors edition content.

      That said, there is no way physical stores can compete with digital distribution. The physical stores have to buy the software in advance, which has a minimum cost involved due to overheads, distribution, storage and so on, plus pay staff. Digital distribution pretty much runs itself once its set up, you just need enough to cover the servers and some support staff. When steam sells a recent release game for $4.95, they make $2. If a retail store sells it at $4.95, they are probably losing at least $40.

      This is my sentiment, I used to buy most of my PC games there as it was really the only retail store that stocked a decent range that was competitively priced. Now days they have hardly any stock, and the stock they do have is a pretty ordinary catalogue of older or irrelevant stuff.

    It’s almost as if 2019 was a terrible year for quality games and there was new generation consoles about to come out.

    Don't blame me. I spent a few hundred dollars on games last year. Some of which I've even played. :/

    I buy some of my PC games from JB HiFi... cause Epic Games, Origin, Ubisoft, Bethesda overcharge for their games on their electronic store fronts due to currency conversion (aka Australia Tax).

    Add their buying power and market share, JB HiFi is selling games cheaper that US prices (after conversion). Borderlands 3 was $24 US dollars (factoring in conversion) cheaper than Epic Game store for a box copy. Jedi Fallen Order was cheaper to pre-order at JB HiFi too, and both games were just boxes with a piece of paper with a code to the store that was overcharging us Australians. Its insane!

    The lack of wage growth and the continual increase in the cost of living has shrunk my disposal income for gaming.

    And yet my JB shares are buying me more and more tendies by the day?

      No thanks to the game sales, though. Luckily, the rest of the business is doing fantastic.

      I say luckily, because I too own JB shares. Bought a year and a half ago. The rest of my stocks are rather uninspiring, though.

    Looks like a lot of people refusing to identify online sales (both electronic storefront and online retailers like Amazon) and the rise of Game Pass as key reasons why people aren't buying brick and mortar anymore.

    According to the Nelson Media Research, global games revenue was up 4% from last year, so the money is still being spent, it's just not at EB Games, or JB HiFi.

    I'm preparing myself to see the variety of games available at the local shopping centre start to shrink this upcoming generation.

    I guess maybe it's further proof that 2019 sucked for gaming? Or people didn't buy enough copies of Anthem.

      This is probably the truest answer - there just wasn't as many big games, or at least big in the way retailers see them.

        I also think there's a general apathy to the big companies now. used to be everyone was excited for basically any game coming from certain companies. those companies have now damaged there reputations so everyone has this tepid wait and see reaction at best and outright vitriol for them at worst.

    If they didn't have the industry's most expensive preowned games by far, they might be seeing some growth.

    Pretty sure they use games as a loss leader, strategically buried after you pass the sexy tv's and gaming laptops

    I think the last game I bought there was Luigi's mansion 3. It feels like their games section has been shrinking for years, but they're sometimes ok for launch day prices.

    While JB Hi-Fi has risen it's sales by around 11% it's cracking deals on video games is definitely no exception despite Harris Scarfe closing down it's store in Adelaide's Rundle Mall bringing it's 170 year history to an end. I mean EB Games is no different to what happened when they closed down their 19 stores across Australia due to staff layoffs or what have you.
    But all in all JB Hi-Fi and it's significant decline in video games music CDs DVDs and 4K Blu-ray titles are absolutely no exception at all.

    For my part, I just didn't find much to get excited about game-wise last year. I spent 2019 replaying old titles that I knew I'd enjoy. I suppose the online game buying system must have eaten into the physical store sale component, but apart from some of the smaller titles, I wasn't really feeling it, myself. Thinking of taking a look at Disco Elysium, and letting my partner take the lead on Outer Worlds on her switch (I can watch her play something for a change), but that's all I can think of.

    I'm pretty confident this is due to the Oculus Quest;have you seen the Oculus Quest?

    Traditional console gaming is dead to me.

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