Dixons gives games more space

Retail High street giant responds to pressure from specialist retailers and focuses on booming games market.

High street giant Dixons is launching an offensive against specialistrs and focuses on booming games market. leisure retailers with the expansion of areas within its stores dedicated to gaming.

The success of Game and Electronics Boutique has spurred Dixons to reap some of the booming games market. The market was worth #890 million in the UK for 1997 and resulted in Electronics Boutique increasing its profit from #500,000 to #8 million in a year. Game's decision to float on the stock market and expand into Europe was also a symptom of the surge in the market.

A Dixons representative revealed: 'We are increasing the space dedicated to games. In our new store in Cribbs Causeway, Bristol, we have increased games space by 100 per cent and increased titles held from 60 to 160.

It is a key part of our business and we have to increase range to sustain that.'

The representative pointed out that high hardware sales were driving the boom in game sales. The average gamer buying six to eight games a year has rocketed Dixons' sales of game products this year. 'Games are a fashionable commodity - people want the latest releases and if we can't provide them they'll go elsewhere,' she added.

She added that Dixons did not have plans to launch a store dedicated to games at this point, although she would not discount it as an option for the future.

Neil Taylor, chairman of Game, responded: 'We compete head-to-head with Dixons, but it has about one square metre for Playstation products and the same for Nintendo - we have substantially more than that. We do not see this move as a threat. The market is set to triple over the next few years and Dixons are responding to that.'

However, doubts were expressed by Nick Gibson, analyst at Durlacher Research: 'It is a booming market. But markets are cyclical. We will see the Playstation market peaking at Christmas this year and most industry watchers think there will then be a steady decline. The N64 market will peak later in 1999. But the industry will then be driven on by the launch of new consoles.'

GAMES REVOLUTION

The next revolution for the games software industry will be the DVD format.

DVD is already beginning to creep into the market, particularly in the US and Japan. Broderbund has announced that its big selling sequel to Myst - Riven - will be launched in the US on DVD in August.

Pilar Cloud, managing director of Broderbund Europe, commented: 'It will come out in Europe eventually, probably before Christmas. The US market is more advanced and launches depend on the state of the market. It really depends on how (UK) retail takes to DVD.'

Nick Gibson, analyst at Durlacher, said: 'DVD replacing the CD is inevitable in the PC games market. The console market is a much bigger decision for manufacturers. At the moment the costs are prohibitive, but they will drop, and then DVD will become available.'