Retailers are saving some of their deepest discounts on Black Friday for video game products, with large chains Wal-Mart and Best Buy putting some rock-bottom prices tags on hot games to lure shoppers into stores.
The $64 billion global video game industry faces the challenge of selling an array of highly anticipated game titles that are released in a short time, while consumers do not have the cash to shell out for all of them.
“(We have) a cash-strapped consumer that could not afford all the good titles released in the (third) quarter,” Paul Raines, chief executive of GameStop, the biggest US video game retailer, said last Thursday.
To accommodate pressured buyers, retailers are heavily discounting top games, from Electronic Arts’ “Battlefield 3,” to Warner Brothers’ “Batman: Arkham City,” and Microsoft’s “Gears of War 3.”
“I would expect retail to be more aggressive this holiday, as the market is seemingly saturated with top releases, and consumer discretionary is still under pressure,” said National Alliance Capital Markets analyst Mike Hickey.
Electronic Arts’ “Battlefield 3,” a shooter game that came out on 25 October and sold 5 million units in five days, will retail for $28 at WalMart and $30 at Best Buy. The games cost $60 when they first came out.
Retailers have traditionally avoided selling video games at a loss, but this year may be different.
“With video games being on the top of everyone’s holiday list, retailers are beginning to support deeper discounts and use video games as a loss leader to drive foot traffic into their stores this holiday,” said Jesse Divnich, an analyst at video game research firm EEDAR.
Microsoft’s “Gears of War 3,” which sold 3 million copies in its first week, will also sell at WalMart for $28.
The game could still attract buyers at a higher price, said Phil Spencer, Microsoft’s corporate vice president of game studios.
“I’ve seen the WalMart circulars and they are being very aggressive to grab more and more share in the category,” Spencer told Reuters in an interview.
The fact that retailers are putting games like “Gears of War 3″ in front of people means they think it drives traffic to the store, he added.
But one deal that will be hard or impossible to find this holiday season is for the current top game, “Call of Duty: Modern Warfare 3.”
Activision Blizzard sold $775 million worth of copies in the first five days after the game was released on 8 November. No major retailer has announced a Black Friday special on it yet.
Shoppers looking for home consoles may be in luck.
Wedbush Securities analyst Michael Pachter said he has never before seen such aggressive deals for video game hardware on Black Friday as this year’s Best Buy $100 gift card given to shoppers who buy Microsoft’s 4 GB Xbox console and motion-sensor add-on called Kinect for $299.
Toys R Us is offering a $10 gift card with the same $299 bundle, according to a recent circular.
“The big retailers recognise that people who buy games could be their customers for life,” Pachter said, “and Black Friday’s the time to get them into the store.”