<http://schema.org/articleBody>
" Almost a year ago we asked if the UK was seeing the death of high street games retail. Fast forward 12 months and that seems, on the face of it at least, an easier question to answer. First GAME came within a whisker of the end last year, then HMV and Blockbuster both slumped into administration last month.  This means all the major non-supermarket games retailers on the high street - barring PC World and Currys-owner Dixons Group - have ventured down a certain creek, without a certain instrument of propulsion. But that is by no means the end of the debate. People will still want to buy games and they will sometimes venture out of their homes and into town centres, so can the UK high street rise from the ashes and ride again, or is this truly the beginning of the end?  &amp;quot;The UK games retail market is a joke&amp;quot; Michael Pachter, Wedbush Securities\u00A0managing director of equity research, is damning in his assessment of the current state of play. &amp;quot;The UK games retail market is a joke, with retailers pricing below cost to drive traffic,&amp;quot; he told Digital Spy. &amp;quot;That&amp;#039;s great for consumers, but retailers can&amp;#039;t make any money on games, hence the bankruptcies of GAME, HMV and Blockbuster, and the refusal of GameStop to expand into the market.&amp;quot; \u00A0 Pachter, well known for his forthright opinions, believes that US games retailer GameStop has shunned an expansion into Britain primarily because &amp;quot;games retail in the UK doesn&amp;#039;t make money&amp;quot;. &amp;quot;If all retailers go broke, or if games are dominated by mass merchants like Dixons, gamers are ultimately going to get fewer selections,&amp;quot; he said. &amp;quot;The absence of GameStop and the demise of GAME limits the ability of consumers to trade in used games, depriving many of credits that can be used to purchase new games. Retail needs to make money to exist, and games retail in the UK doesn&amp;#039;t make money.&amp;quot;  Considering the figures, it is somewhat hard to argue with Pachter. The UK games industry saw a 7% year-on-year decline in the sales of physical software in 2011. Last year, this slump increased to 29%, while overall video game sales for the week ending July 29 were the lowest since records began. The trade-in issue flagged above by Pachter could become even more pressing if rumours that the next Xbox won&amp;#039;t play used games prove true.  But a report by Kanter WorldPanel said last month that Blockbuster, HMV and Play.com (the online retailer that intends to drop its direct retail business over a tax issue and become an online marketplace) combined only account for 12% of UK games sales. Their demise has opened the door further to other players. Kantar said that Amazon grew its share of the overall UK entertainment market to 23.4% in the run-up to Christmas, while Tesco and Asda also saw gains. Consumers are still spending, so why are the specialist entertainment retailers failing?  Does the blame lie with publishers and distributors? Some commentators feel that some of the blame should rest with the publishers and distributors, who have created a system that favours them and not store owners. Entertainment Retailers Association&amp;#039;s Kim Bayley told trade publication MCV last month that retailers have &amp;quot;long been frustrated by suppliers&amp;#039; apparent deafness to their pleas, whether on lop-sided release schedules or the need for greater product innovation&amp;quot;. She feels that if &amp;quot;something positive&amp;quot; is to come out of the fall of HMV and Blockbuster, it is that hopefully it will act as &amp;quot;a wake-up call that retailers should not be taken for granted&amp;quot;. She has a point. For too long games have been released according to fiscal years, leading to oddly packed quarters, frantic scrambling to avoid Call of Duty and the mad rush to get in before Christmas. And then there is EA, which tends to topload the opening quarter of every year with its biggest titles.  Blame could also be placed at the door of Microsoft and Sony, which have both elongated the life cycles of their consoles. But even with new PlayStation and Xbox models finally expected this year, the slump in sales as consumers save their money in expectation may even impact the latest Call of Duty title. But then again, with all the doom and gloom around the high street, consumers would be forgiven for thinking that they could no longer buy games or consoles there anyway.   Some people agree with Pachter, though, that the entire model of UK physical games retail is flawed. Jason Kingsley OBE,\u00A0chief executive at UK developer Rebellion and chairman of games trade body TIGA, feels that customers are now naturally gravitating towards digital consumption of games, and the smart developers are the ones who capitalise on that. \u00A0 &amp;quot;Blockbuster&amp;#039;s and HMV&amp;#039;s fall into administration is very sad, not least because of the probable job losses but their decline and fall has been driven by the decisions of consumers to embrace digital downloads,&amp;quot; he said.  &amp;quot;The DVD space is being eaten away by services such as Netflix and Lovefilm, CDs have largely been made irrelevant by iTunes, Steam has made the PC a buoyant gaming platform and mobile platforms have made consumers more at ease with buying for non-tangible products.&amp;quot; \u00A0 He continued: &amp;quot;The future of games development will increasingly lie in direct marketing to consumers and this will not only enable developers to communicate directly with their buyers but it will also allow them to be more creative.&amp;quot;  Research by the Entertainment Retailers Association showed that digital sales of games totaled \u00A3552million in 2012, a rise of 7.7% year-on-year and in sharp contrast to the physical sales decline. Developers can now reach their audience on console, tablet, computer and smartphone without ever needing to think about printing a manual.  So are we now left with the choice of either buying games digitally, or heading to cavernous supermarkets where titles sit on shelves like packets of cereal? Patrick O&amp;#039;Luanaigh,\u00A0the chief executive of nDreams and a TIGA\u00A0board member, is not too optimistic for the specialists. \u00A0 &amp;quot;As someone who has spent a great deal of time and money in Blockbuster and HMV stores, I really hope that the companies are able to come out of administration in some form,&amp;quot; he said.  &amp;quot;Sadly for Blockbuster and HMV,\u00A0there is no doubt that entertainment retail is an increasingly tough sector with more and more gamers spending their money on digital downloads with Apple, Steam, Google, PSN\u00A0and the like. &amp;quot;Like the music industry, I really do feel that this trend is unstoppable, and I hope that Blockbuster, HMV and other entertainment retailers are able to adapt their businesses to fit into the changing environment.&amp;quot;  A failure to keep up with the times But before we get out the violins for games retailers, let&amp;#039;s just remember that some of this decline is of their own making. Let&amp;#039;s look back at Woolworths, the biggest retail casualty of the credit-crunch era. The historic chain was horribly confused towards the end, with sweets, CDs, DVD, games, electricals, gifts and DIY equipment all lumped in together with no real coherency.  Retailers such as GAME, HMV and Blockbuster do not have such a pronounced crisis of identity, but they are equally guilty of lacking relevance. Modern game consumers are so attuned to buying content digitally that bricks and mortar retailers must do more to win their hearts than just relay on the lazy convenience of footfall and the annual Call of Duty blitz.  Dan Wagner, the chief executive and chairman of mobile retail company mPowa, said that the struggling retailers are the ones that &amp;quot;failed to move with the times&amp;quot;, or cope with the &amp;quot;threat of the internet&amp;quot;.  &amp;quot;Blockbuster has faced aggressive competition from rivals such as Lovefilm and Netflix offering cheap, easy and convenient access to films and TV content by streaming,&amp;quot; he said.  &amp;quot;UK consumers are the most internet-savvy in the world, spending on average of \u00A31,083 a year shopping online, and companies needed digitally focused strategies from the outset of this online revolution. Those that did not have one were bound to struggle as they tried to play catch-up.&amp;quot;  But Dan Cohen, regional director at Tradedoubler, feels the the so-called death of the high street is actually just an evolution, as the smart retailers are the ones that adopt a multi-channel approach to reaching their customers.  &amp;quot;Retailers should change their approach to consumers and acknowledge that the habits of consumers are changing rapidly,&amp;quot; he said. &amp;quot;Introducing sophisticated new technologies into their daily lives creates new paths to purchasing which can so easily bypass the high street. &amp;quot;Our most recent study found that 38% of people who research a product on their smartphones will then go into a shop to buy it. &amp;quot;Retailers should recognise this fact and actively look at a multi-channel approach when they develop their marketing strategies - there is still a vibrant role for the high street to play.&amp;quot;  What&amp;#039;s the future for games retail? If UK games retail really is &amp;quot;a joke&amp;quot;, as Pachter says, then the bricks and mortar giants are at least able to provide their own punchline. Because however much we see digital sales rise, most analysts do not believe that in the near term online will surpass physical sales. This is largely because people will not stop actually getting out and heading to stores, unless something unforeseen - like a zombie apocalypse - should happen. Just look at Apple. This is one of the most progressive technology companies in the world yet it operates a massive retail estate of 395 stores worldwide, that generated global sales of $16 billion in 2011. Apple values its Apple Stores so highly that late co-founder Steve Jobs personally designed the &amp;#039;floating&amp;#039; in-store staircase, and the company even trademarked the interior design last month. Apple certainly does not think retail is dead, and games sellers cannot claim their goods are any less appealing than a shiny new iPad.  The retailers will be licking their lips at the prospect of new Xbox and PlayStation consoles this year, along with all associated launch titles and accessories. But that merely puts a bandage on the critical wounds mentioned above. Instead, it&amp;#039;s time for the likes of GAME, Blockbuster and HMV to &amp;#039;think differently&amp;#039;. One of the most successful aspects of Apple&amp;#039;s Stores are the Geniuses, those blue shirted experts who help people get the best out of their new Mac, iPhone or iPad (as well as subtly persuade them to spend more money). Games shops can survive and indeed thrive by harnessing their own expertise.  Anyone who has shopped for games in a supermarket or mass retailer will have found it a rather soulless experience. By contrast, those who work in specialist games shops are generally gamers; they play games and love talking about games. Retailers must become the one-stop-shop for everything games, offering advice on purchases across both physical and digital platforms.  And the signs are good that they are already on message. Dominic Mulroy, who heads up the Gamerbase operation for HMV, said on the Gamerbase blog recently: &amp;quot;Games retail cannot hope to recapture the loyalty of consumers by competing on price, convenience or relationship alone. They need to reimagine themselves to become destination spots.  &amp;quot;While parents are educated by brand ambassadors, their kids are encouraged to assemble by providing entertainment and the opportunity to compete and have fun. The games stores of the future will need to become edutainment stores.&amp;quot; He added: &amp;quot;I foresee games stores and departments being rebranded entirely for 3-4 weeks around a new product release. The XBOX Store or FIFA 14 Store could become a reality this year on the high street. This community led experience is how games retail will survive on tomorrow&amp;#039;s high street. Not choice.&amp;quot; What do you think about the state of games retail? Add a comment to the space below! "^^<http://www.w3.org/2001/XMLSchema#string>
<http://www.digitalspy.com/gaming/news/a457379/hmv-blockbuster-fall-the-beginning-of-the-end-for-games-retail/>