Tuesday 28 February 2012

The death of games retail, a pointer for other 'directable' FMCG categories?

Last year, according to Digital Spy, the UK games industry saw a 7% year-on-year decline in the sales of physical software in 2011, and this slump is said to have deepened by a further 25% this year. Major retailer GAME saw a whopping 90% wiped off its share price last year after a string of troubles, and this week the firm announced plans to close 35 UK stores and shut down gameplay.co.uk.
Rise of networked gaming
According to Tiga, 71% of games start-ups launched between 2008 and 2011 in Britain were focused exclusively on networked gaming over digital, mobile, online and social channels, while just 10% intended to work on both network and retail titles. Overall, 67% of the UK games development sector is working either exclusively or in part on network gaming. Tiga quote: "A lot of (games developer) start-ups are focusing entirely on digital distribution and networked gaming. There is only around 20% that are focused on retail, which really shows that the tide has turned quite dramatically in distribution."
Initially driven by the advantage of eliminating ‘packaging’ the developers are obviously seeing financial advantages in going direct…
Application to FMCG
In terms of other non-digital categories, whilst the potential for going direct may not be as great as in gaming, the fact remains that a new generation of consumers are becoming accustomed to dealing direct with suppliers, and the delivery infrastructure is falling in place to facilitate the process cost-effectively.
All that remains is attitude, and perhaps a generation gap, or two…
Action for suppliers
Perhaps the time is now right to reconsider adding a little more facilitation to the firm’s web site, incorporate micro-payments, blend in all of those one-off social-networking initiatives , dust down the ‘consumer-advice’  department and use some of that retail margin to integrate the lot, rather like those ‘amateurs’ in home entertainment that have stumbled upon the most obvious approach to monetising a one-to-one dialogue with some of the most demanding and savvy consumers around..
Or instead, perhaps upping last year’s trade spend might be more effective? 

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