How does the UK retail market work?

[alfie]

How does the UK retail market work?

Is it typically: Publisher, wholesaler, distributor then retail? Is there different market models for non-game shops like supermarkets?

Any insights would be appreciated.

[princec]

Greatly different. You have broadly speaking 3 major retail outlets in the UK: the supermarkets (eg. Tesco, Sainsburys), entertainment specific outlets (eg. Virgin, HMV), and independents (yes, there's an indie retail scene, too).

As to the precise mechanics of how they work, that's probably no concern of yours as a developer or even a publisher. We're way down the food chain.

Cas :)

[alfie]

As to the precise mechanics of how they work, that's probably no concern of yours as a developer or even a publisher. We're way down the food chain.

Cas :)

Not really interested in the precise mechanics, but the generic models (if there is such a thing) for non-game shops like supermarkets.

Even though indies are way down this food chain, it does not mean we have to stay there. It may be that there is an opportunity to bypass publishers, through self publishing. It's only intuition at the moment and that's basically why I want to understand the models in the UK market, in case there is an oppurtunity.

[princec]

Well, consider this then: I've been following the retail trade over the last year thanks to a free subscription to a trade magazine I picked up at ECTS last year. An interesting editorial on the state of the market points described the plight of the independent games retailer: more or less, the market, as they generally do, is experiencing one of its consolidation phases and many of the indies are being squeezed by being unable to offer something different or rare to differentiate themselves from the supermarkets and entertainment outlets.

The supermarkets and entertainment outlets have very diverse businesses to back up and subsidise their games divisions. A failure on a couple of products won't sink them. But the indies of course tread a very thin line between sink or swim, and being independent they have almost no clout in making deals with the publishers.

Generally speaking, the publishers pay the retailers to put their products on the shelves of the store.... that is, if the retailers are major franchises. An independent typically won't be seeing that kind of treatment, and may even have to crawl begging to wholesalers to buy a small quantity of games.

I see an interesting possibility with the indie retail channel to get indie games out there on the shelves. You'd be looking at a wider audience to be sure and certainly low profit margins - I'd expect to make no more than £1 on a copy. When indie games are sold in the shops they truly are in direct competition to games that have had millions spend on them and it shows. The retail consumer is just as fickle as the internet consumer.

Cas :)

[alfie]

Well, consider this then: I've been following the retail trade over the last year thanks to a free subscription to a trade magazine I picked up at ECTS last year. An interesting editorial on the state of the market points described the plight of the independent games retailer: more or less, the market, as they generally do, is experiencing one of its consolidation phases and many of the indies are being squeezed by being unable to offer something different or rare to differentiate themselves from the supermarkets and entertainment outlets.


Was the above mag MCV?, because that article rings a bell.




Generally speaking, the publishers pay the retailers to put their products on the shelves of the store.... that is, if the retailers are major franchises.


Publishers paying the large retailers is an issue. They probably look at propositions and think what is in it for them? As an indie I can always have a branded splash screen on each new game session, eg Tesco, Sanisburys etc which would be set from a first run dialogue ie where did you buy this game from?





I see an interesting possibility with the indie retail channel to get indie games out there on the shelves. You'd be looking at a wider audience to be sure and certainly low profit margins - I'd expect to make no more than £1 on a copy. When indie games are sold in the shops they truly are in direct competition to games that have had millions spend on them and it shows. The retail consumer is just as fickle as the internet consumer.

Cas :)

For me personally, I could live with that £1 profit per unit to reach a wider audience, especially if it enables the cross-promtion/cross-selling of other downloadable games in the longer term.

[princec]

MVC, yes, that's the one.

I'd be very happy with £1 a unit too. However it's very, very difficult and time consuming to build up a rapport with the necessary numbers of indie outlets and get them to take up their shelfspace with your games. Especially as your (our) games are likely to be boxed in a cheapy jewel case and will be more or less competing with the budget 2 year old AAA titles that the indie retail scene seems to thrive on.

I expect you'd have to press, what, twenty, thirty thousand copies to make a decent profit at £1 a pop - the more you press, the less they cost, each, of course. And then you've got to get it onto the shelves of a couple of thousand retail stores. And I expect that the deal will be the same as it is with the big boys but on a smaller scale: eg. you pay the retailer money to put it on their shelves, say, a fiver, and then there's the cost of pressing the units - maybe £1 each at those volumes? Dunno - and distributing them, probably just in the post for a quid for 10, so that's relatively insignificant. So to get your 30k copies pressed and on the shelves for £180,000 and they retail for £9.95 inc VAT. This leaves £8.50 or so per copy, so with any luck you'll be making £2.50 per copy - nice. Except that you'll be spending multi-thousands on administering the whole deal.

And so enter the real purpose of the retail indie publisher, whose job is to get your title in its crappy jewel case into the hands of the indie retailer, and cream off a % for their not insignificant efforts and risk involved.

I think this is how it works. DavidRM might be able to enlighten us more.

Cas :)