My first interview choice was postponed due to scheduling so I decided to take advantage of the training I was attending this week and ask some questions about the video game market for Best Buy.
It is no news that retailers are focusing on the video game market. At E3, we saw the introduction of the PS Vita (Sony) and the Wii U (Nintendo). As for XBOX’s big release, I think that was more about the next addition to the Halo franchise with Halo 4 as well as more titles for Xbox Kinect and a slimmer version of the Xbox console. For the Top 10 releases from E3, check out: E3 Top 10.
With more news of other gaming retailers acquiring companies with digital distribution models, it becomes even more important that actual stores capture customer loyalty and revenue with those shopping.
This week I spoke shortly with one of the Project Managers for Best Buy who has worked with their Musical Instrument team, Media, and now their Video Game initiative. My goal was to get a clearer answer on what Best Buy might be doing to compete with retailers like Game Stop. He mentioned that right now, the focus is on becoming more knowledgeable in the video game department and the first strategy is landing the selling culture in the stores.
Continuing our conversation, I asked if Best Buy had any plans in expanding into the digital distribution world. This is where we started talking about the negotiation piece. He informed me that they are currently in talks with an entertainment software company about providing digital services. The two companies have been going back and forth in the negotiation process, which is why digital content is becoming more of a focus.
Without revealing too much information, there are a few different things happening. First, while they are in negotiations, there might be some issues separating the people from the problem. With one specific retailer trying to collaborate with a specific software company, there will always be concerns about how other companies in specific industries will react to this partnership. No one wants to lose business, or their status/reputation. The other is Best Buy’s current backup plan, offering more “gaming cards/points” for games through Xbox live, Nintendo or PS3. You have to have a BATNA and right now, I do not see if as a full back up plan as it is not a permanent solution to the problems on the table, but it does still provide a revenue stream and involves more than the on company they are currently in negotiation with. The goal to any negotiation is mutual benefit. At this point, it sounds like that has not been clearly defined for both parties, causing a delay in the agreement.
I cannot stress the importance of digital distribution in the gaming realm. As I spoke with new gaming associates about my graduate business plan for video game console digital distribution, I had several people give me additional ideas and even ask if they could work for me if I can make this business happen.
Video game console digital distribution is coming sooner than I think anyone is willing to admit. Much like the music industry, if these big companies do not jump on the digital distribution expansion, they will be gone faster than free Napster. It sounds like Best Buy is slowly getting there, but Game Stop and GameFly have officially made more steps in that direction than the number one consumer electronics retailer.
