The U.K. videogame industry is starting to sweat over lower retail prices on hardware and software, and has suggested to retailers that they should be making efforts to keep prices up.
Recent competitive price cuts across a number of U.K. retailers have led many industry figures in the country to ask retailers to halt the practice in order to ensure that prices of new game releases don't drop precipitously. "Price cuts in an industry which shines above the gloom [of the economy] can only be the strategy of those concerned that their mode of delivery to the consumer is facing threats, and they are doing their best to accelerate their own demise," said Codemasters CEO Rod Cousens.
Alan Pritchard of Sega U.K. echoed that sentiment, saying, "We have seen the loss-leading activities that [retailer] Morrisons ran before, and it is not something that Sega would encourage. Development costs are not getting cheaper so it is important for retailers to sustain full SRP [suggested retail price] points."
Activision's Andrew Brown suggested that instead of reducing prices, retailers should try to find other ways to ensure continued retail sales growth. "We recognize the short-term pressure on retail, especially if we are on the edge of a recession," he said. "But I believe retailers should drive growth by developing improved in-store solutions, rather than forcing the prices down. The overall strategy needs to be sustainable."
There have been several price promotions for both hardware and software at major U.K. retailers recently, including reductions of up to 50 percent on new releases at Morrisons and significant price cuts elsewhere on titles like The Force Unleashed, Wall-E, Too Human and Resistance 2, and representatives of the retail industry said the practice would continue despite the wishes of the game industry. "We feel we're offering great value for our customers," said Andy McFie, the software buyer for Asda, who said further price promotions were "inevitable," while a spokesman for GAME added, "The U.K. games market is very competitive and has been for years. We remain focused on our offer and are confident in our proposition."