The Evolution of the Video Game Market -- Retail

The Video Game Industry has gone through a number of revisions in how games have been bought and sold. For this post series, we're going to look back at the various options throughout the years with how consumers could access video games and where we are today. 

We’re going to start with retail and while it is still around today, it has been eclipsed to some extent by the digital market.

Retail:

Retail markets should be obvious to everyone reading this -- physical locations where consumers could buy video games. When the first home consoles started to appear in the 70s, one of the first stores to start selling video games was Electronic Boutique who was founded in 1977 as an electronics store. When the video game market boomed, we saw stores like Babbages appear and even department stores like Sears would sell video game consoles.

From then on, electronics and video games would go hand in hand with stores like Best Buy on top of dedicated game stores selling titles. While the number of electronics stores has declined in recent years, video game sales are still huge. Electronic Boutique of course became GameStop after merging with Babbages and we still have department stores selling video games.

When it comes to talking about advantages, it's pretty easy to see why retail is still around.

Advantages:

Despite the rise of digital and online stores, retail chains still are a popular avenue for selling video games and there is still an audience who likes to have physical copies of games.

We'll be talking about trading video games in an upcoming post but it's important to mention it here as it has to do with retail chains. GameStop, Best Buy and other stores have made a killing off of the option to trade video games in for store credit despite the Game Industry's wishes. The reason is that when a store sells a new copy of a game, the game developers and publishers receive a cut of that sale, but all profit from traded copies goes to the store itself.

Many physical stores feature the option to ship directly to stores to offer the convenience of both online and retail stores in one place.

Physical stores are also the best ways to display new titles and upcoming platforms as many stores feature displays of the newest consoles and games. This allows consumers to test them out to a greater degree than looking at it on an online store.

While products may be limited, you can quickly buy a copy of a game or console compared to waiting for it to be shipped to you. When it comes to major purchases like consoles or peripherals, it can be cheaper to deal with a local store as you're avoiding the higher than normal shipping costs.

The problems with physical stores have to do with the limitations of the store itself.

Disadvantages:

Physical stores have declined in popularity thanks to the greater accessibility of digital and online stores. It's far easier to go to a website like Amazon.com and buy a game than it is to have drive to a local store these days. Another problem is with availability as physical stores have finite limits on how many products they can offer.

Because online stores like Amazon mainly deal with warehouses of goods and digital goods have no actual weight, they can keep a lot more products in stocked compared to a local store. Physical stores also require more work around sales and promotions compared to a digital store and it's far easier and quicker to learn about the latest deals on Steam than browsing through circulars. On the storefront's side of things, there are daily operating costs and employees that need to be paid that will dip into profits.

But despite these issues, there's little doubt as to the viability of the retail market.

Retail's Viability:

Despite the growing popularity of digital and online orders, retail will still remain a major part of the Game Industry's selling practices. There are still plenty of consumers who make use of retail stores for their accessibility.

Buyer larger items like consoles are a popular option for retail stores due to not having to pay for shipping.

And the fact that stores like GameStop, Best Buy and more have dedicated online versions means that they are keeping up with the times. And being able to ship products directly to stores to save on shipping, gives consumers the best of both retail and online stores.

Up next we're going to talk about two areas that have declined over the years starting with the rental market.

(Reprinted from the Xsolla.com Blog)