New Product, Old Retail

A few folks have asked what I think of the recently announced Catalyst RED program (where Catalyst games makes their PDFs available through games retail shops), so rather than answer a bunch of emails and tweets the same way, I figured I’d sum up here:

I wish them success, but I suspect that the program won’t grow much past the Alpha Test stores.

After literally YEARS of beating my head against that particular wall in conversations and seminars at the GAMA Trade Show, talking with the best and brightest in the retail field for this industry, I’ve come to the conclusion that, as a rule (with the usual exceptions), games retailers don’t want PDFs.

They don’t want them affecting their bottom line (which is the common complaint — PDFs are “stealing their business”) — but, strangely, they don’t really want to SELL them either. Too different from their current model, too much of a hassle to implement, too much of a change in approach, whatever — they’re just not interested.

The Alpha Test stores for Catalyst’s program are members of the Exception category to that, of course — just like the one or two retailers that I’d find every year at GTS who were willing to consider it. Which is why I suspect that the program will not expand much beyond those stores, and why I think that similar attempts to include games retailers into the electronic-delivery supply chain are not worth pursuing.

To put it another way: Apple isn’t trying to figure out how to sell iPhone apps in electronics stores, and Netflix isn’t spending time working out a way to cut Video Stores in on the internet streaming of films.

New Product doesn’t fit into Old Retail, and it’s a waste of time and energy trying to make it do so.

I still think the best way to approach this is Apple’s iTunes model. They know that people are moving from CDs to mp3s, but that it’s not anywhere near total yet. So they offer iTunes Gift Cards, sold at stores that offer CDs. This is a product that Old Retail can sell (which makes them happy), but which brings the customer to the iTunes store online, and gives them their first experience with downloaded product. When they come back for more (which most will), those sales are all Apple’s. The cards are sold, essentially, to move customers online.

THAT is what OneBookShelf, the largest PDF vending company, should be doing, in my opinion. Offering Gift Cards through distribution. Yes, they’ll end up eating costs, and will end up paying out more earnings to publishers than they made on the discounted-for-distribution Gift Cards. But those costs are directly creating new customers, which makes the entire Gift Card program a marketing expense for future sales from those new customers.

Not exactly Rocket Science. And yet…..

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