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Sony consider retailers important for success of PlayStation 4

By: Jason McCarthy

  |   July 10th, 2012   |  
News, Uncategorized
Games E3

Despite the surge in digital market in recent years, Sony has no plans of completely disconnecting with the retail distribution channel.

The head of Sony Computer Entertainment (SCE) United Kingdom (UK) Fergal Gara confirmed that his company plans on boosting the currently-declining brick-and-mortar business with their next generation console.

The Japanese technological giant recently completed their purchase Gaikai for $380 million. The cloud-gaming giant makes it possible to deliver full games and demos to websites and digital devices. While the purchase reveals very little about what Sony has planned for the future, it does not pose any real threat to the relationship between Sony and its retailers. The physical market will continue to play a crucial role in the success of the future hardware.

Gara admitted that the retail business has been on a steady decline over the last few years, but that can hardly be interpreted as a slow and steady death of the channel. Instead, it is a period of re-adjustment rather than complete disintegration and thus Sony has not overlooked the retail space in its plans for the PlayStation 4.

“We’d love to see as many of those retailers as possible maintain their interest in servicing the space because clearly down the road many of us are going to be doing our best to give another injection into the market whenever the next cycle starts,” he said.

The future of retail business has been under been a lot of debate lately. With the game industry showing a keen interest in the digital channel, which allows it to sell its product directly to the gamers through its online store, the role of retailers have been seemingly losing its importance since the past few years. Recently, Electronic Arts (EA) Games announced that it plans on going 100 percent digital in the future, though it admitted that such a thing would not be happening overnight. The gradual transition to the contemporary distribution channel is hardly a relief for the retailers, which rely heavily on the sale of video games for profit.

While the video game developers are inclining towards the digital distribution channel, some of the industry giants such as Sony and Microsoft are showing a bit of reluctance to declare either of the two channels as a preferred distribution channel. While selling the games directly to consumer may allow them to cut down costs, it may put them at a risk of jeopardising their relation with the retailers, who play an integral role in their business as far as the sale of consoles is concerned. There is very little profit margin on the consoles, while the price of video games is quite flexible, allowing retailers to earn better profit off it. Stripping them of their goldmine could possibly lead to their decision to stop selling the consoles, which is something that companies such as Sony and Microsoft would want to avoid at all costs.

Gara has neither bothered to downplay the importance of retail distributors in the success of their PlayStation 4, nor remained subtle about maintaining relationship with retailers in the years to come.