As the world goes digital a lot of attention has been dedicated to the fact that jobs and fields will no doubt be disrupted. It’s a fate we’ve already accepted started seeing this shift locally, as last year Standard Chartered closed 7 branches as part of their transition.
A group that has concerned me for a long time, are the guys that sell games at Avondale flea market (guys who sell physical copies). The stats show that the way people buy and play games is changing and there are some serious warning signs, that put them at risk of losing their jobs. With my view from the outside looking in I wonder how they’ll deal with the following shifts:
Earlier this year, Xbox released the disc-less Xbox One, which is the first threat to the merchants reselling games locally. If Microsoft had gotten their way from day one, Xbox One would have come out with a DRM system that made it impossible to have one disc work on more than one console. This would have wreaked havoc on the resellers way earlier than they imagine but thankfully, the console buyers resisted that move strongly and the backlash from Microsoft’s proposed move was one of the main reasons why Xbox sold far fewer consoles than the PS4 this generation.
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Unfortunately, as internet access spreads (especially in the console maker’s target markets) the consumers who resisted a digital-only console are now much more welcome to the idea than they were back in 2013.
And the data seems to support this…
Consumers buying digital versions over physical copies
In January, Eurogamer ran with a piece titled UK video game sales now 80% digital. The convenience of buying online along with the fact that multiplayer experiences can now be enjoyed online, it gets harder and harder to justify buying physical copies which can get damaged or misplaced.
Unfortunately, the way we experience games in Africa is largely different and because we don’t buy enough consoles/game copies it’s hard to justify companies making decisions with the African demographic of gamers as their primary concern.
Even though I say this, Africa itself is fragmented and not so long ago I started buying digital versions of games myself. Why? Not because I hate my local brothers but because buying FIFA 19 (not a big FIFA fan by the way) on the PS Store costs US$60 whilst buying it locally costs US$90+. It’s far cheaper for me to get it digitally and because I have unlimited internet, it’s actually a no-brainer.
Game streaming platforms
Google announced its Stadia streaming console earlier this year and best believe they are not the only company working on such technology. They are a host of other companies working on this technology and this goes a long way in entirely cutting out the need for resellers. Game streaming platforms are worse than disc-less consoles because in the case of streaming platforms the flea market guys won’t even be able to sell you any hardware thus totally excluding resellers and establishing a relationship between developers and the consumers directly.
What can they do?
In the short term (next 5 years), physical copies could still be a sustainable business models but I believe the wisest path would be to begin selling Xbox Live and PS Store gift cards as soon as possible. That way resellers will normalize the idea of digital copies to their consumers whilst keeping some of their power. If they don’t do this, consumers will discover these channels on their own and very quickly discover that they don’t need resellers (as I did).
At some point even this route might not be viable as consumers will no longer want to fork out US$65 for US$60 gift card or maybe it might not be profitable for resellers to sell the gift cards at lower profits than they are used to. Resellers at Avondale seem to have always sold high because their volumes seem to be low. Unless that changes suddenly, this might make the idea of gift cards viable for a select few, which is why it might be wise to be the earlier ones strategizing around this.
We know for a fact that the next Xbox and PlayStation consoles will come in some physical form like we have been used to in years past. This means that there’s still an opportunity to move hardware (in the short term) but hardware sells slower than the games since it’s significantly more expensive than the games. After the PS5 and Xbox Two (if they will be called that) it’s hard to know if Sony and Microsoft will still be selling hardware. Both are interested in streaming platforms and have already made in-roads with their PS Now and Xbox Game Pass services.
A rock and a hard place…
The reason why resellers are in such a weird place is because their existence was justified by the fact that consoles and the games were for a long time physical objects. With gaming going the way of the music industry and digital becoming a preferred option in the most dominant markets, it’s hard to see where the middle-men (resellers) fit in this new age where console makers and game developers sell directly to the consumers.
An all-digital gaming market is creeping towards reseller territory like a certain Night King did and unfortunately this doesn’t seem like a winter that can be stopped…