Video games are helping to drive retail innovation and growth, and that includes the hot area of subscription commerce.
Video games have changed a lot since the early days of home gaming in the late 1970s and early ’80s. The graphics improved, the games got more expensive and elaborate, and a whole lot more people from every walk of life are playing them.
But for the last three decades or so, the business model did not change very much. The customer bought a game and paid a lot of money for it, not to mention the cost of buying the expensive hardware required to play it. Video game manufacturers operated a different model of sorts: Create great games to get consumers to buy the hardware, then keep cranking out great games that would keep consumers on board and upgrading those devices.
It’s a model that’s being disrupted by new platforms with disruptive business models, Recurly Co-Founder and CEO Dan Burkhart told Karen Webster. Making money in gaming is no longer about selling the games for a high upfront cost, or even buying expensive gear on which to play them. Today, it’s about subscriptions and access to titles and content, he said, a baseline that provides lots of opportunities to grow revenue by monetizing in-game purchases and selling expansion packs or specialized equipment, accessories and even branded clothing. “Gaming is figuring out the upsell,” Burkhart told Webster, “and utterly changing the entire market.”
Change is also happening at the brick-and-mortar store level.
In a statement, for instance, GameStop R/GA said it is “developing and piloting new and streamlined physical store concepts, introducing new ways for gamers to try new titles before they buy them and giving stores a unique layout and purpose that appeals to gamers. From store concepts that offer competitive sessions in homegrown e-Leagues to locations that sell strictly retro gaming software and hardware, GameStop will pilot the new store concepts in a select market to present something new to players both old and new [who are] searching for experiences in gaming beyond the console.”
This is only part of the innovation trend stemming from video games.
Tilly’s, a Southern California-based apparel and accessories retailer with a particular focus on teenage customers, is hoping to tap into the trend via a partnership with the High School Esports League (HSEL), which connects more than 1,500 virtual high school sports clubs across North America.
The move is one of several that Tilly’s has been pursuing recently to draw additional foot traffic in an era when, like many youth-focused retailers, it is seeing its sales constantly shifting online.
Augmented reality gaming has been a particular area of focus for Tilly’s, which has been partnering with AR developer Zappar since 2017 on a mobile-based, AR-centric campaign centered on increasing app downloads and driving store traffic. In 2017, for example, the two collaborated on an in-store scavenger hunt with YouTube influencer Shonduras that allowed shoppers to use the retailer’s app to collect virtual coins and redeem them for prizes and discounts.
In-store sales, notably, is where the retailer needs to see growth. Consumers are buying Tilly’s products online, as digital growth was up 22 percent in 2018. But in-store sales didn’t fare as well – there was growth, but at 1.4 percent, it wasn’t as much as the retailer wanted to see.
As that happens, video games continue to attract big money, which will lead to more retail innovation. Apple, aiming to move beyond the iPhone to drive sales, is reportedly spending millions of dollars to acquire new video games as part of the subscription gaming service it will roll out later this year.
Expect more such moves and innovation, especially as the holiday shopping season starts to kick into gear.