December is traditionally the biggest games-buying month of the year, but it’s proving distinctly unfestive for retailer Game Digital, which has warned of falling sales in its stores.
Sales of games for current-generation consoles such as the Xbox One and PlayStation 4 are not growing fast enough to outweigh the decline in sales of games for their predecessors, the Xbox 360 and PS3.
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Game says that it, like other retailers, has suffered from lower footfall in high streets and shopping centres. The company is also facing intense competition from supermarkets – which compete aggressively on price – and from Amazon.
But the real threat to Game is the shift in the way people are playing and buying games: a move from boxed titles to digital downloads from the online stores of Sony, Microsoft and Nintendo on consoles; from the digital service Steam on PC and Mac; and from Apple and Google’s app stores on mobile devices.
According to the industry body Ukie, sales of new boxed console games in the UK fell 6.3% in 2014 to £935m, and were overtaken by the 17.6% rise in sales of digital console and PC games to £1.05bn.
That year, mobile games revenues in the UK rose 21.2% to £548m, according to analyst firm IHS, with that spending almost entirely funnelled through app stores – with no obvious way for a high street retailer such as Game to get involved.
Ukie chief executive, Jo Twist, said that while these trends are good news for British developers, who are seeing overall spending on games increase, high street retailers still play an important role in the industry.
“Faster broadband and evolving business models have meant consumers now have multiple ways to buy and play games and content – from mobile and tablets, online and subscription-based games, to PC and console digital and physical retail,” said Twist.
“The still-strong physical market now sits alongside these new fast-growing digital platforms and models, and games consistently bring in more revenue annually than video and music. Despite this transition to digital, having a physical presence for games on the high street remains vital for the sector.”
There are bright spots for Game, including a 10.7% rise in sales of secondhand games to £106.8m in 2014, for which the retailer has been a key outlet.
Franchises such as Skylanders, Disney Infinity and Nintendo’s Amiibo that involve physical toys have provided a new revenue stream for Game, as has the merchandise for Minecraft, the game that has become a sustained phenomenon for children.
Nicholas Lovell, an industry analyst, suggests Game is suffering from changing habits of casual gamers.
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“Consoles need more than just core gamers. From the midpoint of their life onwards, they need more casual gamers: those who play Fifa with their mates after the pub, or SingStar. Those who buy a couple of bigger releases each year – a Tomb Raider, a GTA – but who don’t consider themselves as core gamers,” he says.
“Those are the people that buy consoles after the initial rush has passed. The semi-casuals, if you like. But there is now direct competition for those people.”
The core gamers have not abandoned consoles but have more choice than ever about how and where to get their games. However, Lovell sees the rise of mobile gaming as key to Game’s struggles in attracting the casual gamers.
“For many consumers, a choice between a dedicated console and a tablet which they can use all the time, for many things, while also playing The Walking Dead, or Hearthstone, or Clash of Clans, or Candy Crush Saga, is one where the tablet wins,” he said.
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