GAME is over, as a British high-street retailer. That much has been apparent for awhile. The physical distribution model in gaming is a thing of the past, and the question on everyone’s lips is whether or not consumers are ready to move into cloud gaming, or will continue using consoles, with digital distribution. GAME has been more-and-more resigned to being a second-hand store, rather than the customer destination for new titles.
EA (and perhaps Nintendo) are likely to deal the deathblow to the struggling games retailer, pulling out supply of big, big franchises (the forthcoming no-show of Mass Effect 3 has been widely covered in the media), and leaving consumers to buy online (either physically from Amazon, or digitally from systems like Origin). Suggestions have been made that suppliers were wary of GAME’s dwindling credit lines, and saw contined supply as too large a risk. I wonder if EA has missed an opportunity here.
If physical distribution of games is dead (it is), the winning publishers in the next 5 years will be those that can mop up the customers that used to buy physically, and establish serious online loyalty. Steam and Origin are duking it out for this customer base as we speak. But there is a subtlety to this battle which might make EA’s choice to execute GAME so quickly a questionable strategy.
The “first movers” in the customer base heading to digital purchase were the hardcore gamers – particularly PC gamers – but essentially any gamers who recognised the value of digital downloads (probably because they were exposed to the marketing of companies like Steam at an earlier stage). The latecomers to digital downloads will be the casual gamers. Gamers who play with families. Gamers who play Wii. Also, some of the gamers who play big franchise titles, rather than those seeking out new, lesser known titles (that only really exist digitally now). The latecomers are the GAME customers.
In the Steam vs. Origin stakes, Steam seems to be taking round one (the first moving customers). They were the first-mover in serious digital distribution themselves, entering the market in 2003 (rather than 2011 – Origin). They have a robust system, which rarely breaks down. Titles like Counter Strike (and Source iterations) did them favours at inception, and big hits like Portal meant influxes of users as the platform developed. Forbes recently estimated that Steam had c.4om users, compared to Origin’s c.9m. Steam better serves the hardcore gamer market than a retailer like GAME, stocking c.1,800 different titles. A recent Christmas sales programme was well-received by the online hardcore gaming community, at the same time that Origin was being confronted with a grim litany of customer service disasters. It is widely-accepted, then, that Origin has some catching up to do. It arrived late, and has so far struggled to serve the hardcore gaming market.
But the GAME market – the customers that will soon have to move towards digital distribution – don’t have the preconceptions about Origin that EA are left battling in the rest of the market. These customers, the ones that will be displaced when GAME folds (and then when HMV fold, and then when… etc.), are a great target for EA’s Origin, because they are not the “hardcore” market. In pulling the titles from GAME shelves, it might look like EA are trying to push these customers in the right direction. But I suspect they could be achieving more.
Imagine this situation: EA takes a gamble on GAME for another 2 months worth of titles. Perhaps GAME folds. Perhaps it doesn’t (yet). But EA releases its content through GAME for 2 months laden with Origin-themed goodies for customers. “Take your copy of Mass Effect 3, get half price DLC when you register it with Origin” perhaps. A big chunk of users who have never really been introduced to Origin are converted, and EA capitalise on GAME’s loss.
Sure, EA is giving every Origin pre-order of Mass Effect 3 lots of pre-order goodies, but how are the displaced GAME customers finding out about this? Put bluntly, they aren’t. These customers will go to HMV, or they will use Amazon or Play.co.uk. In cutting off GAME, rather than negotiating some tasty Origin cross-marketing benefits while they had a strong bargaining position, EA has missed an early opportunity to mop up some PC gamers who are otherwise likely to linger with Amazon for a few more years.