The video games industry continues to boom, achieving higher sales than music CDs and film DVDs and videos. Heavily hyped new releases generate the kind of anticipation and excitement that has consumers queuing round the block for special midnight openings.
Lara Croft will be back next month, in a new game timed to coincide with the sequel to the blockbuster Hollywood film spawned by the legendary game. The just-released Matrix: Reloaded set a precedent by simultaneously launching the video game and the film.
But the landscape of gaming is set to change. Nokia, for instance, is to join the likes of Sony, Microsoft and Nintendo in mobile gaming. At the E3 conference – the industry’s glitzy annual centre piece – Nokia said this will be a key force behind gaming’s growth.
The big question with this market is whether the high street will continue to be the main outlet for selling games consoles and games software, or whether the internet, in the form of direct selling and digital downloads, will take over.
So far, the high street has proved resilient. Indeed, traditional retailers seem keen to move in on this market. Last Christmas – still the biggest selling period of the year for games, although it is becoming less dominant – the price of games fell as retailers such as Dixons, Argos and Woolworths moved in.
While the consumer gained, the main victim of the mini price war was undoubtedly Game, formerly Electronics Boutique. It claims to be the market leader with about a third of the retail market, but in November it was forced to warn that its Christmas sales might not be as healthy as expected, since margins had come under pressure. As a result its shares took a dive from which they have yet to fully recover.
In the event, Game was saved by some nifty last-minute marketing, including aggressive pricing and bundled product promotions. This led to a post-Christmas surge in sales and it recently announced record turnover and profits.
Game’s secret weapon is its loyalty card scheme. It has a customer database approaching 4 million and is thus one of the UK’s largest. Thanks to careful customer segmentation and profiling, Game claims a much higher than average response rate to its regular customer communications, usually in the form of direct mail.
But this relationship is now being extended to the internet. A subscription-based online gaming package, called Game.net, is being heavily promoted in store, and the company recently relaunched its three-year-old, fully transactional website (shop.game.net).
But navigating the path between competition on the high street and growing competition online, through websites such as Amazon, Tesco.net, Gameplay and Yahoo, will be tricky, so e-volve asked some key people in Game’s marketing department how it planned to do it.
E-volve: How big is the threat from both these areas to your business, which it has to be said is still predominantly based on the high street?
Game marketing director Anna Macario: We are market leader in this fast-paced and growing market, because our primary focus is on our customers’ response to our offering. This includes our huge product range and knowledgeable staff, our in-store policies, pre-owned scheme and, of course, the popular Reward Card programme.
We constantly ask our customers for feedback on these points, and respond to it. Clearly any retailer that stocks games, whether it be online or on the high street is a competitor. But we are constantly renewing our customer offering to make sure they always get the best overall offer from Game.
E-volve: How has the new-look website been faring since it launched last month?
Head of online operations Kieron Smith: It’s going well. Since the redesign we’ve seen an increase in unique visitor numbers, and on May 7 we introduced international shipping, so there’s lots going on.
E-volve: How is the new website an advance on previous versions?
Game new media director Dave Evans: We’d done several redesigns of the site before, but this one is much more in-depth, effectively starting from scratch. We spent the past year creating a completely new infrastructure, using the Microsoft.net technology. This means the new site is much faster, prettier, easier for the user to navigate and easier for us to manage.
One big advance is that the site now calculates bundled promotional discounts as products are being placed into the shopping basket. Previously, users would have to wait until the final moment of checkout before seeing how much they would be saving. This is how most other e-commerce sites still operate and we see it as a big drawback in terms of marketing.
E-volve: How will you integrate your Reward Card programme online?
KS: Our 3.8 million Reward Card holders can of course check their accounts on the website and they can receive regular opt-in e-mails with exclusive news and offers. But we also plan to integrate the Net fully with our high street stores.
We have just signed a deal with Tiscali providing broadband to all our stores, which will allow them to communicate quickly with each other and with the website. This means that, in the future, our Reward Card holders will be able to redeem online vouchers in store, while our sales staff will be able to source alternative stock from other Game stores if they don’t have it themselves.
E-volve: But do you see customers sticking with the high street shopping experience, rather than being drawn to downloadable games?
DE: Downloadable games are unlikely to be a reality for quite some time, and even when they are, the high street is not going to disappear. It’s a key part of the consumer culture in this country. For the moment, the Net remains a mail-order medium, but you’d be surprised how many gamers don’t want to wait even a day for the delivery of a game – they want to buy it immediately.
There is also a very strong culture of customer service at Game – I would say it’s our greatest asset – and this cannot be replicated online. Our staff are highly knowledgeable about their subject and communicate an enthusiasm that also can’t be matched online.