Insights From GameSupply: Hardcore Players, Gesture Controls Critical To Console Market

Nick Williams, analyst at OTX and creator of the Game Plan report, noted that the purchase intent of hardcore gamers (those who play more than 20 hours a week) is what will keep the traditional retail-focused game business afloat in 2010. While casual game players (less than 10 hours a week) are much more plentiful, the hardcore folks plan to buy 6 games on average in the coming months, far more than the casual players. By VentureBeat

GameSupply: At EA, Digital Markets Bring New Risk Management Framework

Videogame developers have long been averse to working “under any regime,” notes Spencer Mott, Chief Information Security Officer of Electronic Arts. But with game publishers now reliant on a global network of developers, and gamers themselves increasingly adopting online subscriptions and other digital models, Mott says the industry needs a new framework: “we need quite mature ways to assess and address risk when working in a secure environment.”

Mott oversees global security and risk management (SRM) at the world’s largest games developer, leading a team of consists of 27 security specialists and employee “sentinels” who formally advocate SRM goals and objectives. EA’s SRM team focuses on three operational pillars: risk management services, data compliance, and security operations.

The year 2010 is seeing the publisher push further into direct-to-consumer models for downloadable game content. Subsequently, Mott points out, EA is increasingly involved in e-commerce customer details. The regulatory compliance aspects of “how we manage that relationship” encompass “a great amount of work” for the software publisher’s SRM unit.

Flowing from closer customer relationships is the need for EA to maintain an “instant response” plan for recovering from online game server outages or hacker attacks.

“We have to expect things are going to happen,” says Mott, who looks for publishers in general to promote security management “as more of a business-type function” than a back-end operation.

Continued development of open, industry-wide standards for baseline security and risk management help EA and other publishers “set an expectation level with our partners,” Mott says. But amid ever-shifting markets and consumer preferences, Mott advocates a flexible approach to implementing risk management practices industry-wide. “When the business is changing — and over the past couple of months, all of the projections were wrong on how the game business was changing — if you introduce too much policy into the process, you can stifle innovation and creativity.”

Mott will join BayTSP’s Matt Sprague in a presentation on content security at the GameSupply conference Feb. 10 in San Jose, CA. For more information, visit www.GameSupplyAcademy.com.

Future of Video Game Business To Be Discussed by Leading Industry Analysts at ‘GameSupply’ Conference

The research panel at the upcoming “GameSupply” conference will feature new data findings and insights from leading industry analysts on the future of the videogame business.

Attendees will hear how these experts think the video game industry will fare in 2010, how digital distribution will change the market and impact demand for packaged goods, how the demand for game apps on mobile devices and social media sites will transform the industry, and how gamers’ buying habits have changed during the “Great Recession.”

The industry analysts presenting at the session will be:

– Jesse Divnich, Vice President, Analyst Services, Electronic Entertainment Design and Research (EEDAR)

– Colin Sebastian, Senior Vice President, Lazard Capital Markets

– Nick Williams, Director, Gaming Insights, OTX

GameSupply, the supply chain academy for interactive entertainment, will be held Feb. 10, 2010 at the Hilton San Jose in Silicon Valley. GameSupply is jointly produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA). GameSupply

Game Distributor Ingram Offers Ways To Develop A Leaner Supply Chain

What is Ingram Entertainment’s viewpoint on the state of the video game distribution? Bob Geistman, Senior VP Sales & Marketing of Ingram Entertainment Inc. (IEI), will be providing some insights to attendees at the second annual Game Supply conference, in San Jose, CA February 10. Geistman represents the nation’s largest distributor of DVD software and a leading distributor of game software, servicing over 10,000 retail accounts. As chairman of Entertainment Merchants Association (EMA, co-producer of Game Supply), Geistman offered his industry viewpoints in this exclusive Game Supply interview.

Game Supply: Ingram is a vital link between video game publishers and retailers. How would you characterize your trading partners’ responses to the economic crisis of last year?

Bob Geistman: In 2009, our trading partners responded to the economic crisis by bringing in less depth and breadth of product and focusing primarily on new releases and top-selling catalog titles. Subsequently, the lack of depth in titles led to increased turns for the retailers and increased reorders with us. We also saw our trading partners taking fewer purchasing risks due to the economic recession, choosing instead to stay with the tried and true franchises, such as Activision’s “Call of Duty” series.

In an emerging lean supply chain, how have you served your trading partners with value-added services of sales, marketing and distribution?

Since product has been harder to place at retail, we have made an effort to provide more information to help retailers make better purchasing decisions. Along with managing inventory levels more closely, IEI partnered with publishers to offer more presale and incentive programs.  In the past year, we did more bundling of products on behalf of the publishers and customers to increase margins and sales, and add value for the consumer. We also partnered with publishers to offer more financial incentives to encourage sales, and increased our third party logistics services.

Recognizing the last 100 feet at retail to be the most critical in the supply chain, how do you ensure effective execution at the store for your publisher clients?

In conjunction with the publishers, we implemented early ship agreements with our retailers that allow them to compete on a level playing field with publisher-direct retailers by having product on shelves when they open for business on street date or conduct “midnight” launch events. We expanded our Advanced Shipment Notice (ASN) capabilities for retail as well, allowing them to have greater visibility of incoming shipments. Over the past year, we made further enhancements to our packing documents to include street date information and early shipping policies. Lastly, we employ third-party merchandisers with select accounts to assist with in-store inventory management and merchandising.

In the current turbulent times, what are a couple of opportunities for transformation of the industry supply chain to become leaner?

There are two ways the supply chain can become leaner and more efficient.

First, publishers need to more widely embrace early shipping, which will enable distribution to consolidate multiple shipments to retailers to decrease logistical expenses. This will also reduce reconciliation, A/P, and other labor expense for retail.

Second, we need common street dates.  Common street dates lower the supply chain cost and level the playing field at retail, and allow the entire industry to more effectively market new releases. In the heavy selling season (fourth quarter), we need to have extra product of the anticipated top-selling new release and catalog titles as close to retail as possible for rapid replenishment, not only for distributor customers, but for publisher-direct retailers as well. Currently, no one in the supply chain wants to take on the inventory risks associated with bringing in extra product. This means that publishers should share the risk of placing additional inventories that they already have made by allowing distributors to return unsold product on mutually-agreed-to titles and quantities.

In your opinion, what are the obstacles to progress for the video game industry that had a setback for the first time last year?

The industry made real progress on common street dates in 2009. Unfortunately, some retailers did not honor the street dates, which was a setback for the industry. The EMA is currently evaluating a means for the publishers to track these violations so repeat offenders can be more easily identified and addressed. Though not necessarily new for 2009, we continue to experience product shortages and allocations, which is a continual source of frustration.

How can information and information technology help address these frustrations?

Information and information technology can expand vendor-managed inventory for games. As an example, Ingram Entertainment provides full category management services for over 5,000 retail DVD departments. Again, publishers need to share some of the risk and expenses distributors face in stocking product, and in managing and merchandising retail departments. The industry also needs to work toward better adoption of standard EDI transactions. And, the industry needs to quickly adopt benefit denial technology to help reduce retail shrink concerns, decrease labor costs, increase consumer access, and reduce packaging costs.

This is an industry where a very large number of publishers, about 25 of the top 30, represent a small market share. What suggestions do you have for them to achieve cost efficiencies?

I know this is easier said than done, but putting out fewer but better games would be a start (i.e., quality over quantity). They should also recognize what their core competencies are, and possibly outsource those functions that are not core to what they do or work together to reduce redundancies.

How are you strategically positioning your enterprise for the emerging digital delivery of video games?

We recognize that we are a physical goods distributor. As with video products, we will continue to monitor emerging delivery technologies, maintain a dialog with all of our vendor partners, and study industry models and forecasts.  In the short term, we will continue to provide our retail partners with products that allow consumers to obtain downloadable content through retail products such as Microsoft’s “Live” cards.

Any closing thoughts?

The video game industry still lacks many standards that other industries rely on to get product to consumers in an efficient and timely manner. By adopting standards, the game industry can increase sales, lower expenses, and better satisfy our retail customers, and more importantly, the consumer.

The second annual Game Supply Academy convenes in San Jose, CA February 10. For more information visit www.GameSuppplyAcademy.com.

GameStop’s Tony Bartel And Microsoft’s Owen Roberts To Keynote ‘GameSupply’ Conference

Tony D. Bartel, Executive Vice President, Merchandising and Marketing, GameStop, and Owen Roberts, General Manager, North American Operations, Microsoft Entertainment and Devices, will deliver keynote addresses at next month’s “GameSupply” conference, the supply chain academy for interactive entertainment. Bartel will provide his insights on the video game market in 2009 and prospects for the future, as well as how greater supply chain efficiencies can impact those prospects. Roberts will address the operational challenges of synchronization of the video game hardware and software supply chains in light of the long lead time and high cost of game development, decreasing life cycles, and retail marketing strategies.

The one-day GameSupply event brings together video game retailers, distributors, publishers, and their service providers to share knowledge about new developments and technologies in the interactive entertainment supply chain. The conference, which was inaugurated last year, will be held February 10, 2010 at the Hilton San Jose in Silicon Valley. GameSupply is jointly produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA).

Tony D. Bartel has been Executive Vice President of Merchandising and Marketing since March 2007. Prior to that, Bartel was Senior Vice President of International Finance, a role he held since joining GameStop in 2005. He has also held executive positions with NCH, PepsiCo, and Yum Brands, Inc., including Chief Financial Officer of Pizza Hut.

Since 2006, Owen Roberts has been responsible for end-to-end operations and launch management in North America for Xbox 360, associated software, and other Microsoft products. During his 11-year tenure with Microsoft, Roberts has spearheaded the European launch of the Xbox console and bridged gaps between the company’s various business units and worldwide retail teams as head of the Redmond-based “WW Retail Go to Market” initiative.

“Tony Bartel’s expertise in the retailing of video games and Owen Roberts’ experience in synchronization of hardware and software supply chains make them ideal choices to put in perspective the opportunities and challenges of video game supply chain management,” noted GameSupply Conference Chairman and MESA Chief Strategist Devendra Mishra.

In addition to the keynote addresses, GameSupply will feature seven sessions that will focus on the entire video game supply chain, from manufacturing, through packaging and distribution, to the sales floor.

Registration for GameSupply is $395 and is open to content holders, publishers, retailers, distributors, and service providers. Member companies of MESA and EMA, receive a $100 registration discount. For more information about the GameSupply conference or to register, please see www.GameSupplyAcademy.com.

The advisory committee for GameSupply consists of: Kurt Fischer, Vice President of Operations, THQ Inc.; Kim Motika, Vice President, Worldwide Sales and Operations, D3Publisher of America, Inc.; John P. Quinn, Executive Vice President, Worldwide Operations for Warner Bros. Interactive Entertainment, a division of Warner Bros.; and Murray Weir, Senior Director – Strategic Planning & Analysis, Nintendo of America.

Companies interested in sponsorship opportunities at the conference should contact Margaret Sekelsky at (310) 823-5805 or margaret@mesalliance.org.

Microsoft’s Owen Roberts On Syncing Software And Hardware Supply Chains

The synchronization of videogame hardware and software supply chains has become a unique operational challenge, considering the high costs and long lead times of game development, along with increasingly shorter product life cycles and shifting retail marketing strategies.

Owen Roberts oversees North American Operations of Microsoft’s Entertainment and Devices Division as General Manager. During his 11-year tenure with Mircosoft, Roberts has spearheaded the European launch of the Xbox console, and bridged gaps between the company’s various business units and worldwide retail teams as head of the Redmond-based “WW Retail Go to Market” initiative.

Roberts will address entertainment supply chain issues in greater detail as a speaker at the GameSupply conference in San Jose, CA Feb. 10. For more information, visit www.gamesupplyacademy.com.

MESA: How did the economic crisis impact supply chains in 2009, and how did you meet these challenges?

Roberts: The number one challenge was inventory management, as retailers shrank their open to buy and managed inventory down. Clearly we did not want to lose sales, so we had to engage with the retailers to ensure we had sufficient inventory on shelves. Intense collaboration between the supply chain team, sales and category marketing, and the retail buyers themselves resulted in high in stock percentages while turns increased.

Obviously this could have had a negative impact on our fulfillment costs, as we were essentially doing smaller deliveries more frequently. However by planning with our warehouses and logistics each week we were able to adjust picking patterns that ensured no cost increases.

How do you synchronize the supply chains of the consoles with games from product development to delivery to retail?

We have a function within our Supply Chain team called Launch Management. This team has a critical role for all our significant launches as they act as the one central point where all of our various functional teams — Manufacturing, Planning, Sales, Retail Ops, Distribution, Trade, etc. — come together as frequently as necessary to ensure the flawless launch of both software and hardware across the channel.

The key is frequent good communication and the ability of our launch team to have a 360-degree view of having the right product on shelf at the appointed date. Some of the volumes we are moving are staggering at times, thus tight coordination is critical across all elements of our supply chain.

We of course also avail of Microsoft Project a great deal, as there is no better tool to ensure we have identified the correct critical path of every launch.

How do you integrate retail distribution with online and digital delivery of videogames?

Right now I would say we are at the beginning of this journey. Clearly the conundrum we all face is how to optimize for our customers in such a way that enables all channels to be effective and efficient. Microsoft’s stated objective is to be the leader in connected entertainment – another way of thinking about this is three screens connected in the cloud. With that as our guiding star we need to collectively figure out how we deliver content, services and subscriptions wherever and however the consumer would like to consume it.

We need to be able to offer choice to our customers – where they buy and how they buy. My biggest focus right now is ensuring we have the correct infrastructure to identify and recognize a customer no matter what channel they elect to buy through. At the end of the day they are a Microsoft customer and we need to ensure their buying and consumption experience is best in class, thus ensuring a loyal and valuable long-term relationship.

Tell us a real-life story from your own enterprise about how the supply chain performed well (or poorly) and what lessons you learned.

This year we made some significant adjustments to our supply chain supporting the Americas. At the same time, we had some very large launches including Windows 7 and the opening of our own Microsoft Stores. The ’09 calendar year saw us migrate our entire Distribution and Logistics network to a new partner, CEVA Logistics. As part of this we brought up a green-field site in California that coincided with the Windows 7 launch, the peak sell in month for our Xbox business, and the MSFT stores opening on October 22nd. With perfect hindsight, it was not the smartest decision I ever made as the potential for something going wrong was probably pretty high!

That said I was blown away with how well the team performed. The key to our success was great planning and great collaboration across our supply chain teams and our IT team. We have of course planned before and collaborated before, but this time it went a level deeper.

For the first time, I saw a complete blurring of the lines between our outsource partners and MSFT. I have long strived for getting the entire supply chain team to act as one. This is hard when you outsource every aspect of the business, but I was happy to see with the right partners, the right leaders on both sides, and a common customer view just what we were able to achieve. Was it easy? No. Was it perfect? No. Was it transparent to our customers? YES, and that was really all that mattered.

We certainly over-communicated throughout the process and our senior management team worked hard to lead the huge amount of change that was necessary to ensure the successful launches.

Sessions To Address All Aspects of Videogame Supply Chain At ‘GameSupply’ Conference

The 2010 “GameSupply” conference, the supply chain academy for interactive entertainment, will feature seven sessions that will focus on the entire videogame supply chain, from manufacturing, through packaging and distribution, to the sales floor, according to the conference organizers. The one-day event brings together videogame retailers, distributors, publishers, and their service providers to share knowledge about new developments and technologies in the interactive entertainment supply chain. The conference, which was inaugurated this year, will be held February 10, 2010 at the Hilton San Jose in Silicon Valley. GameSupply is jointly produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA). GameSupply

‘GameSupply’ Interactive Supply Chain Academy To Be Held February 10

EMA- AND MESA-SPONSORED EVENT MOVES TO SILICON VALLEY

The second annual “GameSupply” conference, the supply chain academy for interactive entertainment, will be held February 10, 2010 at the Hilton San Jose in Silicon Valley. The announcement was made today by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA), who jointly produce GameSupply. The one-day event brings together video game retailers, distributors, publishers, and their service providers to share knowledge about new developments and technologies in the interactive entertainment supply chain. GameSupply

GameSupply – Let the Collaboration Begin!

GameSupply, the first ever supply chain academy for the video game industry, brought together the publishers, retailers, service providers, research organizations, management consultants and thought leaders in the interactive entertainment industry! It is certainly very opportune that the stakeholders of the industry were there to explore how we can collaborate, particularly to address the unprecedented challenges of the current somber and turbulent times. After all supply chain strategies are fundamental to improving liquidity of enterprises and enhancing earnings.

 

Pundits assure us that the interactive entertainment industry is poised for continued growth, albeit at a more modest pace than what we saw the last two years. While the industry is expected to continue to capitalize on technology, and its creativity and innovation on the content side, a proactive approach to pursuing elimination of waste, increasing efficiency and growing the category is a mandate.

 

The conference program was designed to bring the experience and knowledge of industry executives and research organizations, focus on technology-driven solutions to reduce stock outs and in-store product shrinkage, embrace the emerging digital and online gaming, understand the execution challenges in the last 100 feet of retail, and address our responsibility to ensure sustainability of the environment in a profitable manner.

 

It is our collective quest for the shortest, fastest and greatest results throughout the supply chain that will usher in a healthier industry and a greener planet. The conference marked the first steps where work has only just begun. It is our mission to establish task forces to address opportunities in the supply chain, based on your support and ongoing commitment. As a participant, attendee or sponsor, you have a unique opportunity to join an online community specifically created by MESA, Media & Entertainment Services Alliance, which is designed to facilitate collaborative efforts.

 

 

Striving for the greater good will transform the corporate mindset, establish new business bench marks for success, and create an inseparable bond between content creators, suppliers, vendors, retailers and the consumers demanding interactive entertainment. Let us collaborate for the benefit of our individual companies, the betterment of our industry, as well as for the greater good of mankind.

 

The over-capacity attendance demonstrated that supply chain management is everyone’s business.  In the coming days we invite you to join our cause, participate, ask a question and continue networking for a better tomorrow.

 

Devendra Mishra

Conference Co-Chairman, GameSupply;

Chief Strategy Officer, MESA; and
Professor, Decision Sciences
Graziadio School of Business and Management

The collaboration begins…register and join the GameSupply community!

NPD reported a record year for the video game industry for 2008 with sales of $21.33 billion, a 19% increase from 2007. Software sales of $10.96 billion registered a 26% increase, hardware of $7.81 billion with an 11% increase and accessories of $2.57 billion with a 14% increase. Pundits assure us that the industry is poised for continued growth, albeit at a more modest pace than what we saw the last two years. With the existing installed platform systems at an all-time high, optimism about growth prevails.

The GameSupply Conference, which is gathering publishers, retailers and service providers for the first time, appears to be positioned strategically to anticipate and address the challenges to be faced in the current turbulent and somber times.

While the industry is expected to continue to capitalize on technology and its creativity and innovation on the content side, a proactive approach to pursue collaboration, cost reduction and efficiency in the supply chain, from end to end, is going to be the cornerstone for the coming together of all the stakeholders of the interactive entertainment industry.

When you register for GameSupply, you have a unique opportunity to participate in an online community specifically created for attendees of this conference.  When registering for the event, please be sure to say “YES” to the community question on the registration page.  Once registered, please submit your questions to ask the panelists of operations and supply chain executives, the retailers and service providers in the last 100 feet at the upcoming conference on the 11th of February in Burbank.

In addition, I welcome your discussions on some of the following subjects, which I believe have the potential of ensuring the continued profitability of the industry:

The loss of sales to competitors due to out of stocks measures about $800 million.  How can collaborative sales planning, enhanced store execution and B2B connectivity with POS data reduce the loss?

Considering that the industry has no returns policy, are the open to buy dollars constrained, forcing suppliers to replenish in a characteristically volatile market?

Is the level of resource deployed by the retailers adequate and qualified to manage a category that is unpredictable and short-lived?

Do we have something to learn from direct to store delivery and vendor managed inventory, successful a practice of the home entertainment industry?

Is unavailability of store-level POS data a serious detriment to allocating and managing store-level inventory?

How can business intelligence and real time, in-store inventory visibility reduce markdowns?

Both from the viewpoint of sustainability of the environment and overall cost, how effective is packaging of video games?

What can be done to alleviate the product theft and the loss of potential sales due to merchandising constraints?

I believe that supply chain practitioners, who are coming to the GameSupply Conference, are executives who play a pivotal role in improving liquidity by reducing inventories while ensuring decent earnings by reducing waste, particularly in recessionary times. So let us hear from you.

Devendra Mishra

Chief Strategist, MESA; 
Conference Co-Chairman, GameSupply; and
Professor, Decision Sciences
Graziadio School of Business and Management

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