This year, the Interactive Games & Entertainment Association (iGEA) widened its market measurement ability to capture close to 100 per cent of New Zealand’s physical computer and videogame retail data for the first time, but conceded that the growing blind spot created by digital sales makes for an increasingly incomplete portrait.
Following this news, MCV spoke with Mark Goodacre, director of the iGEA in New Zealand and managing director of distributor Total Interactive (Activision-Blizzard; Futuretronics), to find out what steps can be taken to ensure physical distribution and retail remain competitive in a market trending digital.
To start with, what differentiates New Zealand from other markets for games?
Our local industry seems to have weathered the global economic crisis considerably well compared to other territories, particularly the US and Europe. If we look at last year’s sales data from NPD Group, the interactive entertainment industry sold a staggering NZD$179.6 million in retail sales.
In the past, different consoles have been released into the New Zealand market at a later time than other countries, therefore the flow on effect from the software has impacted at different times. This trend does however seem to be changing as we operate in a truly global marketplace these days. The bigger software titles are usually launched on the same day in New Zealand as they are in the major markets, which is fantastic for consumers.
When we look at the best-selling games across the world, New Zealand consumers do not seem to vary that much from consumers in Australia, the UK and the USA – with the exception of Rugby Challenge of course. You would expect a rugby game to do well in New Zealand, and this game had the benefit of also being developed here.
And recently, the iGEA highlighted the extent of digital games sales in New Zealand. What does this mean in the longer term for physical distribution in New Zealand, and how do you believe local distributors should adapt in this changing climate?
It’s hard to speculate how demand for a product may change in the future or predict future revenue models but I do believe there exists a place for both the physical and online distribution of videogames in the long-term. However, this may mean there needs to be a change in how retail operates. We’ve seen over the years how retailers have adapted to changing consumer trends. Whilst PriceWaterhouseCoopers predicts that roughly only 50 per cent of sales will be for ‘traditional’ products in three years time, it must be noted that this is 50 per cent of a much bigger pie. We also need to consider that retail sales still represent the lion’s share of the industry and most Kiwis are currently buying from a physical retail store rather than online (according to the latest Digital NZ report).
That said, we are starting to see a growing trend towards Kiwis buying and engaging with games in an increasingly “hybrid” manner. For example, someone might walk into a retail outlet to buy a physical copy of the game, purchase extras online to enhance the game play and then buy a slimmed down version of the game to play on their smartphone. Like the music and publishing industry, I believe local computer and videogame distributors need to increasingly embrace online as a vital factor in staying competitive and relevant in today’s changing landscape.
Do New Zealand retailers, both high street and online, need to evolve faster in order to curb the volume of sales lost to offshore retailers? How do you believe they should do so?
Bricks and mortar retailing is facing challenges in all sectors and the interactive gaming industry is not immune to these changes. As technology continues to converge and the industry advances in leaps and bounds, the fact that much of what is sold exists in digital form means that change will continue to happen rapidly.
That said, the latest Digital New Zealand report found that the majority of people are still buying computer and videogames from a physical outlet. There still exists a big place in the market for physical outlets, as they are a terrific place for consumers to get advice, feel and play with the latest games, hardware and peripherals, and compare products in one location. It’s also a place where consumers can purchase a game to take home and play straightaway rather than waiting for the post.
Publishers and distributors continually work with retailers to examine new ways to partner in a digital environment. Examples that spring to mind are timecards and pre-sell offers with additional digital content. No doubt these offers will continue to evolve as technology and retail/publisher partnerships evolve.
PriceWaterhouseCoopers suggests that New Zealand’s annual digital growth rate is below average for the region. Why do you believe this is the case, and what do you believe is the best course of action for correcting this discrepancy?
The geography and population of New Zealand coupled with the availability of a reliable and fast broadband network would certainly help propel the digital growth rate.
What do you identify as the iGEA’s greatest successes in New Zealand over the past 12 months?
Last year, we launched Digital New Zealand 2012; a report conducted by Bond University that provides insight into how Kiwis are playing computer and videogames. The report revealed that videogaming is well and truly mainstream, and Kiwi gamers are growing up: they’re parents and even grandparents. Through this report, collaboration with New Zealand game developers and other government engagement opportunities, we have heightened the awareness of gaming’s economic contribution in New Zealand.
We’ve also built and continue to foster greater relationships within the community and other stakeholder groups such as parent associations, the development industry and government.
What are the iGEA’s primary objectives or goals in New Zealand for the next 12 months?
We are continually identifying avenues to work closely with community groups, businesses and government to advance the interactive entertainment industry. This year, we are looking to work more closely with local game developers, especially those who are creating ‘serious games’ that are used not only for entertainment but health, education and training purposes. Of course, we maintain our focus on informing and fostering relationships with the public, business community and governmental bodies on matters affecting the industry.
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