Blockbuster: Games retail would not survive without pre-owned

May 11th, 2012, 03:00 Posted By: wraggster

Specialist games retailers cannot survive without second-hand, says Blockbuster.
The firm’s UK commercial director Gerry Butler has hit back at trade-in critics, and told MCV that the current new release business model is broken and in need of a radical overhaul.
“If you’re a specialist you need certain margins to run your business,” he said. “When you are in a commoditised industry, those margins evaporate.
"And supermarkets use games as potential loss-leaders, so specialists can’t survive. That’s why there are less games shops than there were three years ago. Without pre-owned, those companies cannot survive.
“When the market was growing, nobody spoke about trade-in. It didn’t matter. Everyone was hitting their numbers. But as soon as someone starts missing the numbers, they are like: ‘Well this trade-in is killing us. How do we stop it?’”
Butler says the key to hitting the numbers again is by changing how video games are sold into stores.
“I think the distribution strategy employed by the publishing world is broken and needs to be fixed,” he added.
“It is the whole way the industry is structured. Just think about consumer brands like Coca-Cola and how they are built. You create huge pre-awareness and then make sure you have full availability in the marketplace.
“In video games, the publisher has to pay substantial royalty payments to the platform holder upfront, which makes the cost of games high. Then they go to the retailer, and the retailer has to guess the number of units it is likely to sell. Then the marketing begins, and it might turn out we don’t have any stock left.
“It’s not a good situation if the TV ads are running and you’ve no stock.
“Let’s come up with a model that is fair and equitable and long-term and sustainable. This current model is not long-term and sustainable.”
http://www.mcvuk.com/news/read/block...e-owned/095822

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