By Milos Varaklic, VP of Operations at MDG
“Out with the old, in with the new,” has defined this past decade more than anything else. As we trade paperback books for e-readers and self-driving cars start to dominate the roads, it’s clear our technological habits are becoming more digital-friendly.
Therefore, it would only make sense to assume the gaming industry is following suit – especially with the rise of free-to-play mobile and PC games. A downward trend would appear to be self-evident, considering the rapid decline of brick-and-mortar video game retailers like GameStop.
Nonetheless, this doesn’t mean video game console sales are on the decline. It only means that online video game console sales are thriving more than ever. In fact, online tech hub MDG saw a 50 percent increase in video game console sales this year versus last year, leading up to the holiday season. Considering the holiday season is the mecca for gift-giving, this goes to show that shopping habits are shifting online.
This begs the question – how is this possible? Below are three key reasons the video game industry has survived the “dot-com” era, and will continue to do so.
Demand Is Alive and Well
Whether you’re a self-proclaimed “gamer” or not, most of us have fond memories of playing video games on our friends’ living room floors. Whether it was Pac-Man, Mario Bros, Wii Sports or Call of Duty, video games strike a sense of nostalgia you simply can’t get on a smartphone.
Subconsciously and consciously, data shows customers have a sense of loyalty for their favorite consoles and hands-on games. Consoles have the unique capability to allow gamers to connect with their friends, online and offline. You play alongside each other, yell at each other through a headset or watch your friends play without breathing in their ear – three things iPhone and PC games can’t offer. The appetite for this experience only grows, as we’ve seen amidst recent gaming epidemics like Fortnite and NBA 2K19.
With high demand comes high supply – and companies are responding with innovative solutions to meet the “hands-free” generation in the middle. The Nintendo Switch, for instance, allows users to play on and off their TV monitors. Most games are even sold digitally now, with physical game sales showing a 63 percent decrease since 2009.
Retailers Are Bundling Bargains, And It’s Working
Thanks to psychology and marketing research, retailers have found a mutually beneficial way to boost net gains – the bundle.
When you buy a video game console, you need a TV to use it with. This is simple logic. It’s also simple logic to sell video game consoles and TVs together, which is why retailers are adapting to sell bundles at bargain prices.
Even in 2012, before bundling became common practice, video game giants (such as Nintendo) used mixed bundling to boost the sales of video game consoles up by 100,000, and video game sales by over one million.
Today, bundling HDTVs with gaming consoles makes for MDG’s top sales each year, seeing a 40-50 percent increase in sales in 2019 from 2018. The bundles usually come with a couple of games and accessories, making it a full starter kit.
The traditional “rent to own” model of video game financing (i.e. monthly payment with interest) give customers less for more. The bundle, on the other hand, offers more for less. This method saves the consumer at least one to two hundred dollars, adding exceptional value compared to buying everything separately. They also help the retailer by ensuring more products are sold, eliminating dead stock and profit loss by encouraging people to spend more.
Brick-and-Mortar Is Not a Tell-All
GameStop is set to close nearly 200 underperforming stores in 2020. Naturally, many would see this as a decline in the overall success of video game related sales.
However, this is just a sign that the way in which consumers purchase video games is evolving. The e-marketplace for video game retail is thriving. In the 21st century, convenience is everything – so why would I drive 25 minutes to BestBuy when I can order the new PlayStation online?
Instead of ruminating over store closures and wasting money on strip mall rent, video game retailers should embrace their customers via the e-marketplace. The demand for the newest tech will never change. In order to attract and retain customers, retailers should focus on streamlining return processes, providing consumer financing models, and ensuring ease throughout the purchasing process.
It’s important to remember that despite all but one Blockbuster video store closing, the movie industry is not suffering. Despite international closures of Forever 21 stores, people are still flaunting Forever 21 clothes.
In sum, video game console sales aren’t suffering apocalyptic consequences simply because GameStop is closing its stores. People are still buying consoles, they’re just doing it differently. Thanks to games like Fortnite, bundles and e-retailers, the video game console industry is alive – and thriving.