Black Friday: Great Sales, Or Great Hype?IndustryGamers talked with analysts, game companies and retailers to find out just how significant Black Friday and Cyber Monday are to the game industry, and what specific things companies are doing to take advantage of the opportunity.
Colin Sebastian, videogame analyst for RW Baird, sees Black Friday and Cyber Monday as the anchor points for a key selling period: “I think both days are important - in fact all five days from Thursday through Monday are going to drive a lot of sales. In addition, this period provides more visibility on consumer buying patterns for the rest of the holidays, and retailers can reorder games that are selling well.”
The growth of digital distribution in the game industry has had its effect on buying patterns for Black Friday, though, cautions Sebastian. “We have seen a shift in the casual game market from disks to digital, and so this week may not be as important to the industry as in years past, when deals on second tier games on Black Friday drove a lot of unit volume.” Despite digital distribution, Sebastian believes that AAA titles are unaffected. “People are going to buy core games such as Call of Duty regardless of Black Friday special offers,” he said.
Ubisoft agrees with Sebastian that the Thanksgiving weekend is both a strong selling opportunity and an indicator for the rest of the season.“Black Friday and the Thanksgiving holiday weekend in general are the true kick-off of the holiday shopping season. This weekend will provide a strong indication towards what video games the more mainstream game buyers are gravitating towards,” said Tony Key, Senior Vice President of Sales and Marketing at Ubisoft.
Electronic Arts is planning a big sales event for their Origin digital distribution service to take advantage of both Black Friday and Cyber Monday. More than 200 EA games will have 50% or greater discounts on Origin for Black Friday. Two of their newest releases, Battlefield 3 and Need for Speed: The Run, will have $30 off of each if purchased on Black Friday. In addition, there will be a one-day additional 10% discount on some collections as well, including the Need for Speed collection, The Sims 3 collection, or the EA Sports collection, which includes Madden NFL 12, FIFA Soccer 12, and NCAA 12. The Black Friday deals start at 9pm PT Thursday/12midnight ET Friday, and will run for a full 27 hours until 12midnight PT Friday. This is for North America only - other sales will be running concurrently in other regions of the globe. For Cyber Monday, the sales essentially repeat, starting at 9pm PT Sunday/12midnight ET Monday, and running until 12midnight PT on Monday.
GameStop, as a leading game retail chain, naturally sees Black Friday as a great opportunity, as evidenced by the extensive list of specials offered by the chain. Wendy Dominguez, spokesperson for GameStop, put it this way: “This time of year everyone jumps into the gaming category. We know that's going to happen every year. As always, GameStop will offer the broadest assortment, the best value with buy-sell-trade. You will see us use that in unique ways. Over the last 12 months, GameStop has developed millions of personal relationships with our heaviest buyers ahead of holiday.”
GameStop's CEO Paul Raines pointed out on the company's Q3 earnings call how GameStop is using their PowerUp rewards program to drive sales. “The types of things you'll see us do is identifying individual consumers' buying behaviors. If you bought X game there's DLC available or add-on for it, or if you have Y game there's a similar sports genre title you may like. And you'll see us doing individual offers around that. You'll also see us do some things around exclusivity of certain times and places when you can shop. But all of that is going to be happening on an individualized personalized basis for competitive reasons. We believe all of this will drive a greater share of wallet during the holiday. Last year we were in the market with (roughly) 4 million to 5 million PowerUp members, at holiday. This year we are at 14.5 million and counting... the power of the program is significantly enhanced through greater membership.”
John Taylor, videogame analyst for Arcadia Investment, says that the importance of Black Friday is not the same for everybody. “Black Friday is typically important for more casual and family gamers, less so for the core audience.” The retail section of the industry is of course focused on Black Friday for more than just the one day traffic. “Retailers use Black Friday deals to stake out claims to bragging rights for best value , lowest price etc. Sometimes this early advantage can impact consumer traffic patterns as the season progresses,” notes Taylor.
The importance of Black Friday as an indicator of what the holiday's overall sales will be has changed, believes Taylor. “Black Friday used to be a decent indicator of overall holiday patterns but that hasn't been the case for many years. Rather many people really splurge on Black Friday to get things done and it can actually pull sales out of December,” he warns.
With all of this in mind, who's going to be the overall winner? Taylor thinks there's no question: “The most effective vendor during Black Friday is usually Nintendo. Many records have been set by their offerings over the years. The Walmart Blue Wii deal at $99 is going to be hard to beat.”
There are some excellent deals on consoles this weekend. GameStop, Best Buy, Sears and Radio Shack have a PS3 with 160GB bundled with Little Big Planet 2 and Ratchet & Clank 4 for $200; Target has a 4GB Xbox 360 for $140; and Best Buy and Fry's have a Nintendo 3DS with either Super Mario 3D Land or Zelda Ocarina of Time for $180.
What are you planning to get?
