Specialist, bricks and mortar, games stores cannot survive without the pre-owned market, according to Blockbuster commercial director Gerry Butler.


In a recent discussion with MCV, Butler stated that issues with games retail essentially fall at the feet of platform providers who charge licensing fee's to publishers for the right to release their games on those systems. This then feeds down into stores and the distribution strategy employed by publishers.

“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?’”

“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.”

Admittedly this news is a week old, but it does raise some interesting questions and my own personal experiences of games retail lead me to agree with certain aspects of what Butler has to say.

It's also an interesting viewpoint considering the noise about Ubisoft considering looking at Free-2-Play software models on the next generation of consoles.