Riccitiello: UK retail "more aggressive" than US
Market share war for boxed product is becoming an unfair fight in both regions, says EA CEO
Supermarket price cutting on titles such as FIFA 10 is evidence that the UK retail market is more aggressive than the US, according to John Riccitiello, CEO of Electronic Arts.
He also said that the retail landscape is becoming a "market share war" with bricks-and-mortar business putting the promotional support it gets from Electronic Arts primarily into price cuts to push out the competition.
"I would tell you that the UK is the place where retailers freelance and do their own things particularly those that are new to our sector because they are trying to drive traffic into the store," Riccitiello told the UBS Global Media and Communications Conference on Wednesday.
"What they are looking to do is increase their total basket size and take share from competition. The UK retail channel at times runs on their own a little more aggressive than usual."
Traditional retail for boxed product has become an "unfair fight" according to Riccitiello, as larger stores use their size to compete aggressively to own the market for videogame sales
"What I've been witnessing at retailing the last couple of years is an unfair fight. One retailer that has got a lot of staff on the floor was pursuing an effective share model to take share from competitors that are less able to execute that model. And those guys were taking pretty high margins on their videogames and now they've decided to get aggressive on price which is where they're strong," said Riccitiello.
"What I'm seeing right now is a market share war going on at retail. We've always provided promotional dollars for retail and they can use them in any way they want – display, advertising, etcetera – right now it's going into pricing. And I think it's designed for one retailer to win out of another in a market share war."
Leading UK supermarket ASDA cut the price of FIFA 10 in the UK at launch, admitting it was selling the game below cost price, helping the game sell over 4.5 million units since October.
Although not quite as aggressive, ASDA parent Wal-Mart has also cut prices in the US, as it takes on competition from Target, Best Buy and specialist chain GameStop.