Retail Therapy

Last week, HMV's Tim Ellis gave us an overview of the retail market during the Christmas period, and the pressures of supply and demand in what is likely to prove one of the busiest year's in the videogame business.

This week, GamesIndustry.biz presents the second part of our interview, where Ellis discusses the HMV business, and how it is experimenting with new retail ideas in order to expand its offering and become more than just a place to buy the latest products.

Well, Simon Fox, our CEO, really wanted to get behind it. We had a chat with Microsoft and they've been supportive in terms of the amount of time they've given us and the development of internal systems. They've backed our PR and events. We had a Halo 3 event and it was rammed solid, but the following day was our busiest ever day. So even after the event a lot of people came back and paid to play.

It's about creating that environment where a lot of people can come in as a group. It's early days and so far the signs have been encouraging - it does help develop a social side to gaming. But you have to pick the right sites. Edinburgh has always been a good gaming spot for us anyway, we know we do well there. It's about getting people in store and letting them stick around for a while. It's not about getting them in, selling them something and shoving them out again. People are experiencing retail in a different way, by showing off that product in action it's encouraging people to buy a little bit more. What's the best way to show off Call of Duty? Get multiple people playing it together.

GamerBase.com came to talk to us and it was a similar time to when we were planning the Edinburgh store. It's essentially the same thing — bringing social gaming into stores. There's enough room in the Trocadero and it felt like a good experiment. The great thing about PC gaming is that it's always reliable and steady. Forget about what the consoles are doing, PC is a very substantial market. Some of the biggest games sales and events we've ever done have been for the PC, like World of Warcraft, there's such a fantastic amount of enthusiasm behind it. And look at the professional gaming scene, there's a lot of growth there.

It's been very encouraging. If you think of Electronic Arts you automatically think of FIFA and Need for Speed on consoles, but they have games like Crysis and Hellgate: London that they are fully committed to. There's always going to be PC gaming, there will be PC gaming forever. Nobody knows where consoles will go next but you can safely say that PC will always lead the way in terms of technical capability.

Yes, but I think in the past we could have been accused of that as well. Because the market is always there we can always come back to it, but with console sales if you get a step behind your competitors you lose out in the long run. It's not that we've neglected it but it's only now that we've been able to take it to that next level. Concessions like this are located in the stores next to the gaming department so how can that not be a good thing for the market? Specialist stores concentrate too much on the core audience but as we're an entertainment retailer we can help open up gaming to a more mainstream consumer, which is something Nintendo has had great success in with the Wii. We can tap into the mainstream in a way that other retailers can't.

There's not a PlayStation 3 or a Wii equivalent planned, no. There's potential there to explore further interaction, and we've shown our appetite to do something like this so if a viable proposition comes up, who knows. They're early successes.

Again, it comes down to timing. With so much going on internally, there's the trading that we need to be doing here and now and then there's things that can be part of the short, medium and long-term plans. Digital distribution is something that we know we have to address in the near future, however we decide to do it. As with all these things it has to get the volumes up to the point where you can start making some money. Sony's SingStar for the PS3 looks like a very interesting model where you buy the game and then make small purchases online.

You've got to act on the things you can act on. We need to think, if we can't do it, then how do we benefit from it? With the three consoles developing stores and services online it really enhances that product and it encourages people to buy a console rather than a new mobile phone.

Gaming has expanded to create this network that players can be part of. If you pick up a box on a shelf and when you get it home it's more than just a game in a box, that's only going to attract more people to the gaming market. Nintendo are bringing in a new audience, Sony and Microsoft are attracting an audience on a different level with the high end quality and online services, so it can only be good for all of us.

I'm not at the coalface everyday, but yes, there are different consumers in the stores and we see it at head office. We notice it from the environment around us as well as anything else. It's a general interest across the board and it means more people are buying into games and gaming.

Not specifically with that in mind. It's exactly the same as the Games Domain International model — going online, into stores and buying real products. There's a lot of interesting models to look at and it doesn't make it easy to choose the right one but perhaps you need to back a few horses in the early days and see what works best.

Tim Ellis is head of games at HMV. Interview by Matt Martin.