Sunday Thoughts: Price Wars

Price drops, prices rises, better bundles; pricing seems to keep cropping up with increasing regularity since Activision decided to raise the price on Modern Warfare 2 above the then average RRP. Although there does seem to have been a slow price increase this generation, it’s not the increases from publishers that are fuelling much of the discussion; it’s the supermarkets.

Of course I don’t need to tell you about what stores such as Tesco and Asda are doing with game pricing in an attempt to get you to pick up a few loaves of bread at the same time. I’ve no idea just how effective these price incentives are as a loss-leader; to me it doesn’t seem likely that I’m going to pop into Asda, pick-up a copy of whatever new game I want and then do my shopping just because I happen to be there.

Picking up food typically doesn’t pop into my head when buying games, even if I’m in a supermarket. However, they keep happening so the supermarkets must be gaining something out of it.

[drop2]What’s brought this all up is the price war that seems to be surrounding the launch of the Vita, although the same thing seemed to happen when the 3DS launched a little under a year ago. It now seems that the cheapest place to pick up the Vita on launch will be at Asda, although I wouldn’t be surprised if that has changed once again by the time the console launches.

It might be easy to blame this aggressive pricing from the supermarkets for the issues that the Game Group chain of stores seems to be suffering from right now, but it does seem they’re just piling on tops of the problems caused by the internet. It’s not even that internet stores have lower overheads resulting in lower prices, although that’s certainly one aspect of it. No, the real key is in the growth of comparative shopping and price comparison services online.

Although there’s always been an element of comparative shopping on the high street, the internet makes it so much simpler. If I’m shopping in brick and mortar stores, something I try and do regularly as it’s far more enjoyable than shopping online, I may well try and have a look at more than one store’s price if I can.

This takes at the very least the time of walking to another shop or two, and then searching for whatever you were after. It’s not always the quickest of approaches, but you can still get a bargain that way. Of course, it’s become a bit tougher since the choice on the high street have become sadly narrowed in the last few years, but you can still shop around if you chose to.

However, online it’s pretty trivial. Google’s shopping search is generally the first stop, but browser plugins in like Invisible Hand make it even more simple; search on one site and get an instant response as to whether or not there’s somewhere else offering the same product for less. Beyond even that there’s the crowd sourced sites like HotUKDeals and Cheap Ass Gamer, which don’t just get you the best deals online but in person as well.

The problem for physical stores is that they just can’t compete with the internet on price, particularly when it’s become so easy to check if an option is cheaper. I don’t think the internet will ever totally drive the physical market to die, but it’s clear that the situation right now (coupled with the massive price drops at supermarkets) is causing problems for many independent retailers and is even troubling the bigger chains.

These price wars and constant one upmanship between various retailers may be good for consumers but it does seem that ultimately it may be to the detriment of the market and games overall. Oh, there are certainly other factors at play (like the back and forth between retails and publishers over pre-owned games), but if this constant competitive pricing were to force someone like Game to step out of the market the effect would be significant and, in all likelihood, to the detriment of gaming as a whole.

Hopefully this is all just a phase, like the previous issues over the price of clothing and CDs in supermarkets, and we’ll see things stabilise soon. If we’re lucky it might be soon enough to stop anyone going out of business.

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21 Comments

  1. Game’s monopolisation of the High Street has been part of it’s own downfall. In Norwich we have 2 Games and a Gamestation within 400 yards of each other, each offering exactly the same prices as each other. If I’m buying a first-hand game there is little point in me mooching between the shops to find the best deal. So I’ll buy it a few quid cheaper online. Sadly the same applies to second-hand games, by the time I’ve paid the bus fare/petrol/car park fees – I may as well flip open the laptop and search Ebay….

  2. It’s always happened and will continue to do so and I can see the Internet swallowing up a lot of specialist retailers leaving just the big chains to fight off against online competition.

  3. Chain stores (like Game) squeezed out the indie shop. Internet shopping is putting the squeeze on chain stores in the high stores. I don’t want to sound horrid but there we go.

    Supermarkets see how lucrative the market is and have positively bottom-spanked the percentage of the market dedicated chains (like Game) once had.

    Hardcore gamers really do know their stuff before they purchase (or at least a lot of the time) which makes the likes of Game pretty redundant. Casual gamers don’t need the expertise as their purchases are often knee-jerk reactions or for someone else. They can pick things up at Asda, Tesco, etc. Anyone in between can find out more online or ask a staff member in the supermarkets. If the staff sound clueless I don’t doubt that behemoths like Tesco will address that too.

    There’s little to stop this erosion continuing but it depends on whether we see it as erosion in the first place or just good ol’ natural evolution of the retail industry and how it deals with the world of video gaming.

  4. For me there are two things that put me off GAME.

    One thing is the overbearing selling policy that GAME impose on their staff. If a customer says no there is literally a list of 20 things to say to them to try and turn it into a yes. I don’t want the hassle and therefore I never shop in GAME. I’ve seen first hand (I used to work at a GAME store) the technique work and help some customers, usually the elderly, but I’ve seen it annoy and chase away far more customers

    The other is, as this article is discussing, the price.

    I love the price wars, in any market. The one for broadband at the moment particularly interests me with Virgin and BT doubling speeds and I realise that the UK is one of the best countries for price wars, especially in areas such as phone network providers, games and broadband.

    However I wouldn’t want the price wars to damage businesses to the point where they go bankrupt, and not just because that would mean less competition.

    So no matter how much I dislike GAME and the fact i’ll never shop there, i’m happy that they exist and i’d still like to see them on the high street as an option.

  5. I just dislike GAME due to the fact if you buy a game off them, it has that sticker policy about return in 28 days but after you remove that sticker you cannot return them for a refund which I think is unfair cause gamestation gives you 10 days with the game and you have a 10 day guarantee refund full money back or exchange the game..

    I Should get Dom on them Dont get done get Dom lol

  6. GAME need to close down stores in town so there’s only one GAME or GS store. Allow either reward card to be used at any store. Lower the price of new games from £44.99 to £39.99.

  7. Supermarkets enter a market, undercut established retailers in the market, force them out of business & then they control the price, entering into a phoney pricewar with each other often enough to keep the regulators at bay.

    Take petrol, there are now only a quarter of the petrol stations they used to be, 75% of them have closed down, same for most other product lines too.

    CDs, DVD & Blu-rays are expensive in supermarkets apart from the occasional launch week offer.

    Anyone who thinks supermarkets will be cheap once they control the whole market is in for a very big shock indeed.

    • Best answer. Completely hit the nail on the head.

    • Agreed, fella. It was the one thing I forgot to tack onto the end of my reply. Their buying power is already causing concern and it looks like it’ll continue for a while yet.

    • When I used to work in a shopping complex, a supermarket within the complex used to dictate the opening hours of my shop, and many of the others. Hence we would have to open on bank holidays, which was fairly unprofitable for us, to drive footfall up for the supermarket. Showed the amount of weight they had to throw around.

  8. There is one big problem I see with Game, they don’t actually take part in the price wars. They seem absolutely oblivious to the fact other pose a better deal. This is why they fail and may end up going out of business. A shame, but in the end their own fault for not staying competitive.

    • I think they do compete in the war… but they do it via incentives and trade offers. stuff that they can make money on later. not on the initial price tag…

  9. Ultimately though, we’ll be in the unfortunate situation where games are solely sold digitally, through the manufacturer’s own marketplace/store, with no choice whatsoever. And I highly doubt that publishers will knock the RRP down to £15 (which is the publisher’s taking on a title) once the £5 for distribution and £20 retailer markup has been eliminated.

  10. I’ve paid less per game this generation than any before.

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