Jagex CEO Mark Gerhard said, as part of a panel at the BAFTA Question Time event (sponsored by GameIndustry.biz), that traditional retail will fall by the wayside within ten years. He was speaking only of retail as it relates to the sale of games. Gerhard believes this because he thinks that digital distribution channels have managed to serve the needs of consumers very well. Naturally as a fellow at the head of a company whose products are sold exclusively on the Internet, he may have some bias in the matter… but many others on the panel agreed.
"I think, 10 years out from now, we'll be talking about [physical] retail nostalgically, as a museum piece," he said. "I don't think there's much there that would give it a second life."
He believes that, because retail takes "huge chunks of margin" from developers, it's easy to see why independent developers are more than happy to walk away from it.
"That all erodes the economics for developers being able to make money," he continued. "They take a chunk – say 20 or 30 per cent – the publishers take a bit, and after inflation it's no wonder that the independent games industry isn't alive and vibrant, because they're not making any money."
"[Developers'] response is almost desperation. 'We're going to go straight to the customer. We're going to go online. We're going to bypass the sequence that's taking so much from us…' I recognise that it's sad, but I think it's a fait accompli."
"It's sad to see an institution decline, but the writing has been on the wall for quite some time – the internet didn't happen yesterday… People are still playing games. They're still doing business; they're just doing it in a different place… If you don't adapt you die. It's as simple as that."
Rebellion founder Jason Kingsley agrees, comparing retail in the UK to the sorts of specimens people learn about from fossils.
"I always thought data should go down wires and fibre optic cables," he said. "It's a reforming of an industry, and a refocusing away from selling data – which is more easily distributed in other ways – to offer a very different kind of service."
UKIE head Jo Twist warned the other panelists that they should avoid underselling the importance of retail. She says that a one-to-one retail experience with engaged sales staff is still important to consumers who are unfamiliar with gaming or shopping.
Kingsley disagreed, noting that personal recommendations through social networks like Facebook and user reviews already provide the same service in a more meaningful way.
Frontier Developments' David Braben said that major retailers in the UK like Game and HMV never offered the level of service Twist describes, and have proven instrumental in the decline of those independent retailers that once did.
"In a sense, they're just getting a taste of that medicine," he said. However, Braben also added that internet speeds in the UK weren't yet capable of supporting a full scale shift to digital retail for "the next year or two."
Braben also echoed Gerhard's belief that in 10 years it would be "hard to imagine" any games being sold in "shrink-wrapped retail."
"Whilst I am tremendously sympathetic to all of those that work in the shops, the fundamental problem is that they've got to look at their business to reposition it anyway – that's irrespective of whether it's a good or bad thing."