Retail Killed the PC Shelf

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Retail Killed the PC Shelf

Post by Administrator on Sat 1 May 2010 - 12:55

There is a simmering undertone of discontent in the PC games market at the moment. Whether you beleive it to still be alive and kicking, or doomed to die a slow death, one way or another physical PC media at retail seems to be in decline.

Many of you will have noticed the dwindling presence of PC games at your local games stores if they haven’t been abandoned altogether already. Publishers and retailers have conflicting opinions on why this is happening and have even resorted to accusing each other of precipitating the decline.

Firstly we have to remember that whilst the PC sales have never matched those of the home console market, PC games have represented a consistent market for over 20 years seeing off 4 generations of consoles. Why then are retailers claiming that they are losing faith in PC retail?

There are a few good reasons why retailers are losing faith in PC games retail. The proliferation of download services like Direct2Drive, GamersGate and Steam have made PC games much easier to get a hold of negating the need to visit the high street to pick up the latest release. Traditional retailers have no idea how to combat this and fear losing customers to digital platforms. Of course, the absence of digital sales figures really makes assessing the threat digital platforms present to traditional retail impossible.

Watch out for Gfk ChartTrack figures later this year as they have managed to convince some of the digital platforms provide their sales figures for the UK games charts. Steam, which is arguably the biggest PC digital delivery platform, has still declined to publish any sales figures as yet so it is still questionable as to how much the addition of download figures will affect the UK charts.

The other element in the projected decline of PC retail is the constant battle between publishers and software pirates. Publishers are working on ever-more complex digital rights management tools to confound pirates, many of which create problems for retailers, especially when it comes to returning products. The problems over the printing of registration codes on Football Manager 2009; the printing of ‘1’ as ‘I’ and ‘0’ as ‘O’ in the registration codes caused verification problems on Steam and led to mass returns and the additional codes being provided to disgruntled customers. Bear this in mind because it will rear its ugly head again later on.

Retailers will say that they have lost faith in the PC sector and the drastic drops in the circulations of Future’s PC magazines may serve to back up their argument.

The publishers believe that something else is going on. 1C’s Darryl Still told MCV recently: “There is still demand, but retail is forcing PC games out. Digital is fantastic, and we’re very pleased with it. But it is not us as the developers and publishers driving products to digital – it is because the options for the PC at retail are so limited. You just have to head into a games store and look for their PC titles, and you’ll see there is no focus, listings or promotions for them.”

Still has an argument. Visit your local games store and you will see that the PC stock gets one wall bay, if that and there is little or no merchandising for PC titles specifically.

The answer is simple and very much tied to publishers’ ongoing battle with piracy. With the publishers introducing more and more sophisticated DRM systems it becomes more and more difficult to migrate copies of PC games from one system to another. EA’s DRM on Spore is particularly problematic when a reinstall is required as it limits user to 2 or 3 installs before the copy is frozen and unusable.

For this reason one major retailer in the UK excluded PC games completely from their trade-in policy and adopted a very strict no-returns policy on opened PC titles. That same retailer recorded another year of record profits this year with the proportion of its revenue accounted for by the pre-owned games market growing to around 25% of their total.

If their income is increasingly provided by second hand games and they do not operate a trade-in programme for PC games you can probably see where I’m going with this. As the demand for pre-owned space on the shop floor increases something has to make way and, as PC games do not contribute to the pre-owned sales market, they are the games that lose floor space and marketing attention.

Given that the pre-owned games have a much higher profit margin (33% to 5000% as opposed to 25% for mint stock) it makes commercial sense to devote more space to the console pre-owned market than to stock that will no contribute to the pre-owned market at all. The net result is that PC loses out because it is not seen as major source of income.

At the end of the day, retailers are out to make money and, because they don’t see the PC as a lucrative market they are pushing it out to make way for the pocket-lining pre-owned market. Retail isn’t losing faith in the PC market; they’re systematically killing it.


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