A lot has been written about the impending takeover of digital media in the realms of gaming, with many people seeing it more as an inevitability than a mere possibility. However, the retail shops and physical media may still have an important role to play in the digital boom, according to Peter Moore, COO of Electronic Arts (EA). In his talk at the Bank of America Merrill Lynch 2012 Global Technology Conference, he outlined the vital role retailers still play in the company’s bottom line. This gives a somewhat optimistic viewpoint that our beloved game discs are not headed to the great pile of obsolescence in the sky just yet.
Despite the fact that digital game and downloadable content sales have been on the steady increase, and EA has seen more than its fair share of growth in this market, Moore stresses that game sales at the retail level still account for a substantial portion of their revenue. Outside of the obvious benefits of product placement in the stores and front-facing store employees who promote the titles, there has been an increase of in-store promotions, exclusive merchandise and midnight launches with a party vibe. This generates excitement among the gaming community and helps drive sales, something that digital distribution simply cannot replace at this point in time.
“We love what retail does for us. We love its ability to create massive launches and create excitement. GameStop probably sees three million hardcore gamers walk through their doors every day, and that’s a marketing opportunity for us.” Moore noted, demonstrating that the benefits of retail are not lost on the big publishers.
Moore also pointed to the fact that a large portion of their profits come from downloadable content and add-ons purchased after the initial sale, so more games going into consumer hands raises the potential for subsequent sales, as was the case with big EA like Mass Effect 3 and FIFA 12.
He further touched upon the fact that not every consumer is ready to go completely online, adding
“A lot of our consumers don’t own credit cards. A lot of our consumers are still afraid of what happened to the PlayStation Network when 77 million accounts were accessed by Anonymous in 2011.”
This does raise the interesting point that consumer confidence in online distribution is still not where it needs to be in order for physical media to die out. The security concerns regarding their personal information go hand-in-hand with the traditional consumerist mentality of preferring the tangible over the intangible.
Another point that Moore brought up is the potential for additional content sold as retail cards, which complement the physical game by providing optional DLC while still giving the consumer the benefit of owning the physical game. The sales of retail cards have done extremely well, especially among those who do not own a credit card or are wary of paying for games online. Both Xbox Live and the Playstation Network utilize points cards sold at retailers, so a similar strategy for individual games will help boost profits while catering to both the progressive digital adopters and the old-school champions of physical game discs.
This should provide some encouraging news for those who bemoan the potential decline of video game retailers. It shows that that publishers, including juggernauts like EA, still see the retail market as a viable and important resource for getting their games in the hands of gamers. While we can only speculate on the future of gaming and it’s media, we may just be able to keep our brick and mortar stores a little while longer.