A little over a year ago the Entertainment Retailer Association (ERA) announced that the gaming market accounted for more than half of the entire UK entertainment sector at more than £3.8bn, making it bigger than video and music combined.
The top games released that year included FIFA 2019, Red Dead Redemption 2 and Call Of Duty: Black Ops 4, which sold 1.8 million, 1.7 million and 1.1 million physical units respectively in the UK.
Fast forward a year and the picture is slightly different. Sales figures contracted slightly in 2019 to £3.77bn, attributed by the ERA to the “inevitable slowdown” in sales ahead of the expected launch of the new PlayStation and Xbox consoles in late 2020.
It’s by no means a huge slump, but the last such downturn came ahead of the launch of the current generation of Sony and Microsoft consoles in 2013 according to the ERA. So if trends are anything to go by, late 2020, and the years thereafter, will be a key time for gaming. But not only that, the launch of the ninth generation of consoles presents a unique opportunity for the UK high street, “more so now than previous console generations”, claims Richard Lim, CEO of research consultancy firm Retail Economics.
The difference now is the way retailers are using experiences in-store to “drive interest and build customer loyalty”, says Lim. He points to Microsoft’s new flagship store opposite Oxford Circus, which opened late last year, as proof of how this formula is proving to be a success in attracting and retaining customers. “The whole purpose of that flagship is to give people meaningful, immersive experiences, and provide entertainment for their customers in a really aspirational setting,” he explains.
“Part of the store has this huge section for the Xbox where there are multiple screens absolutely everywhere, where they are really encouraging consumers to spend time in this setting, playing games and socialising,” he adds. He believes this is a “critical part” of the customer journey, especially when a new gaming console is released, as people will want to experience it first-hand to see if it’s something they want to buy into.
ERA CEO Kim Bayley, agrees with Lim, and says Microsoft did a “fantastic” job with the store, adding that it is capitalising on a growing trend that can be seen in retail. “Whatever kind of retail you are doing, whether it be fashion retailing or entertainment, trying to bring that experience into shops is what makes customers want to continue to shop in store rather than online,” she adds.
On a smaller scale, this formula is being tested by Mike Ashley with the launch of Game concessions located inside Sport Direct stores. While less flashy, the concessions appear to serve the same purpose in drawing in customers. Bayley, thinks what Game is doing is really “positive”, particularly when considering the kind of customers that are shopping in Sports Direct. “There is quite a big correlation between sports and gamers,” says Bayley, “and I think it makes a lot of sense to tie those two brands together.”
She adds that anything that puts “more games on the high street is good”, and claims that companies like HMV have withdrawn slightly from video games over the past few years, resulting in fewer outlets on the high street to buy games.
On a separate note, Mike Ashley’s stance on video games and retail is a notable one, given Sports Direct’s acquisition of the video game retailer last year. In December 2019, Ashley attended a select committee in Westminster after demanding to meet MPs in person amid an inquiry by the Housing, Communities and Local Government Committee into ‘High streets and town centres in 2030’.
His comments on how department stores could utilise video games as one solution to boost footfall and retention still feels as profound now as it did two years ago. To quote Ashley: “Why wouldn’t you put free gaming on the top floors of department stores?”
Ashley believes it to be a “brilliant idea” that could turn department stores into a more attractive proposition. He added at the time: “The average gamer is like 31, not 12 like some people like to imagine. They are actually adults. So all of a sudden you are creating a place where somebody goes because they need to go.
“Let’s assume my wife is an avid gamer and I am not, therefore we ended up going to the department store, she goes and plays and I wander off around the department store, have a cup of tea and buy something. That is the sort of thing that can change department stores.”
Bayley says the key message to take away from the games business in 2019 is that “we need those two new consoles from PlayStation and Xbox – and soon”. She says the launch of these heavyweight consoles will help to give a boost to the already burgeoning games market, which will be supported by the announcement of new video game titles in the lead up to the Playstation 5 and Xbox X’s release.
Additionally, Bayley said the main draw of a new line of consoles for the UK high street is also the positive effect it will have on footfall. “People will definitely go out to buy their consoles”, says Bayley, who believes there are still a “huge number” of people who prefer to purchase these consoles in shops, rather than online.
“There will also be people who go into Game and have a look at the new consoles but then choose to order it from the retailer’s online site thereafter,” she adds. Both avenues of sale still see the bricks-and-mortar store somewhere in the equation.
She continues: “The new console generation should drive people in shops, becauses people like to see what they are buying before they commit to the purchase – especially if it’s something that will cost several hundred pounds.”
Bayley says Game is still the “preeminent” bricks-and-mortar retailer for video games, but goes on to say that Argos is also “incredibly successful” in terms of gaming, despite its poor results in terms of games selling last year. “There are still a consistent amount of people who want to shop in stores like that,” she adds.
Additionally, Bayley says supermarkets shouldn’t be dismissed either, as the biggest grocers will usually stock a range of the top selling games that year. “They still sell significant volumes, and when you hear of games like Fifa selling 1.8 million units, quite a lot of those copies would have been sold through grocers like Tesco and Asda,” adds Bayely. She says the reason behind those sales volumes is helped in part by the front of store promotions for those kinds of titles.
Bayley concludes by saying a lot of retailers can capitalise on experiential offerings for customers through video games, especially since gaming “lends itself so easily” to competition and is a very visual way of bringing experiences into stores.
“In the music sector it’s become very experiential, with record shops doing ‘in-stores’ with musicians or mixing cafes with record players,” she adds. “I think you will see much more of that in the gaming sector and more high street outlets trying to bring that entertainment into its stores.”