Gaming weathers retail downturn to trump music and video

With retail in the doldrums, mid-season sales already underway and daily predictions of a bleak Christmas, it may come as a surprise that there is any cheer in the retail sector right now. But the gaming market remains a bright spot, with sales predicted to outstrip music and video for the first time this year.

Video games and consoles are turning into the UK’s most popular form of entertainment, with Verdict Research predicting that spend will rise by 42% to £4.64bn by the end of the year. Sales of music and video are expected to finish at only £4.46bn. While some industry experts say these figures are distorted by the inclusion of hardware sales, there is little doubt that gaming has had a strong year.

The broad appeal of the Nintendo Wii and new releases from the industry’s biggest and more-established franchises, such as Grand Theft Auto (GTA), have helped sales, but it is add-ons, exclusive content and innovative formats that are helping retain interest, even with consumer spending under pressure. Think Guitar Hero, containing exclusive Metallica tracks, and Little Big Planet (LBP), which aims to encourage players to create new levels and share them online.

While some industry sources doubt that Little Big Planet, the first game to be based around user-generated content and the idea of community, will ever rival GTA, God of War or Halo, it has received a positive reaction from the industry and critical acclaim.

Sources estimate that LBP has sold about 90,000 units in the three weeks since its launch, despite a last-minute hitch where the sound track was found to contain lines from the Koran.

The UGC key

Nick Gibson, Games Investor Consulting analyst, says while gaming is growing across the board, user-generated content is a key segment and LBP has reduced the barrier to entry. “Previously UCG has been passive using Sims-style games to create movies with overdubbed voices, but LBP reduces the barrier to entry because it is interactive at a really low level,” he explains.

Simon Rutter, senior vice-president for marketing and sales at Sony PlayStation, says that the game’s strap line is “Play, Create, Share” and it has been designed to offer quality game play as well as UGC. That said, he adds, that about 80,000 UCG levels have been uploaded already.

Gibson believes Sony has taken a leap of faith with LBP, he questions how it will capitalise on the UGC in a bid to offer further lucrative add-ons.

Meanwhile, a second key trend in adding value to games and one that is already becoming a viable additional revenue stream is downloadable content for existing games. Tom Rothenberg, senior account director for Xbox across Europe, Middle East and Africa, says exclusive music downloads “adds more life to a game” and can be sold through networks such as Xbox Live, which brings new revenue to all parties involved.

Downloadable content

Gibson says that, until recently, through games such as Guitar Hero and Rock Band, the incremental downloadable market has struggled because of a lack of content. He adds: “Consumers have been willing to pay but there was not enough content to buy. There is a direct correlation that if you release new content, you lead the market.”

The internet and the growing emphasis sharing and community is having a fundamental effect on the industry and as one renowned for its early adopter policy, it has moved quickly to capitalise on its potential. As Rutter points out: “Content is king. It is an often used phrase but it is as true today as ever. People don’t buy the hardware for the technology, they buy it for what it can play.”