Wednesday, January 14, 2009

Game rental business and what (not) to do about it

There is much talk about the game rental business and what a threat it can be to the revenues. Despite the call for defensive maneuvers from the games industry, the rental sector is continuing the expand. The most recent news on it are from the UK, and the reactions to the retailer GAME's announced move into the rental business.

After reading about a variety of ideas on the matter, I decided to share my own opinions and suggestions here.

  • Do not jump the gun for defensive measures.
The worst you can do is fighting change without understanding the factors that have brought it. You may find yourself winning a battle against the symptoms, but not the real cause of the issue.
  • Do take time to understand 'why.'
Why are people renting games instead of buying them? Why do they think the product is not worth the retail price? Why do they not feel attached to the physical product? These are all very important questions you should be asking yourself.
  • Do not see the rental business as the enemy.
They would not be in business if there was not a demand for them from the customer. Go back to the 'why.' Why is there a demand for the value they provide? Where does the value come from? Their very existence should give you hints about what you can do better.
  • Do understand the concept of 'value added.'
Look for the gap you have left in your own value offering that led to a demand for rentals. People are burnt out from paying $59 for a few hours' worth of cheap thrills. Ask yourself whether all the price-inflating features you pack in a game really get appreciation from the consumer. (I still cannot believe they had hired Kiefer Sutherland for Call of Duty. I had to pay for his voice and I didnot even know --let alone care-- until somebody told me. There's a golden example of a non-value added feature.)
  • Do not fall back to primitive, backwards ideas to block/restrict/limit/fight the consumers' access to value.
In a time when consumers are crying out en masse against DRM schemes, such actions to put limitations on content will hurt you in the long run. The modern business philosophy is all about providing value, not taking it away. If you think you can win by 'legally exploiting' your customers, you do not have a place in the future.

  • Do look into ways of improving the value of your product at retail.
Pack some jam into those DVD cases. My disappointment with the game itself aside, Fallout 3 Collector's Edition is a great example for how to differentiate one's product from the masses of plastic, soulless vessels. For me, a bobblehead made all the difference between rental and retail. I am sure brilliant minds can come up with many different ways of making the retail value worth the price again, if only they take the time to think on it.
  • Do not just hold your breath until the digital delivery revolution.
The consistent move towards digital distribution may just be the solution you want, at first glance. However the fact remains that it would only remedy the symptom of revenues bleeding to rentals, and not cure the true cause of it. The underlying issues will surely surface again sooner or later.
  • Do read about the music industry versus mp3 format again.
There lies an example of how much ground you can lose, simply by arrogantly and ignorantly fighting change instead of learning from it.

And do remember; ultimately it's the customer who puts the price on your product, not you. It was never some royal decree that you should be making money, and it will never be.

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