EMA: Video Game Retail Activation Tech Could Generate Billions In Extra Sales
Video game retailers could see billions more in revenue by implementing "benefit denial" technology requiring activation of games at point of sale, claims the Entertainment Merchants Association trade group.
The EMA, which represents North American entertainment retailers, has been publicly discussing such a service for months and has been doing research into its potential effects.
It claims that benefit denial -- "a physical lock that is opened via radio frequency" -- would reduce losses from theft as well as save on operational costs currently associated with keeping games locked in cabinets or held behind the counter.
Research by consultancy firm Capgemini on behalf of the EMA forms the backbone of the group's claims. The group estimates up to $6 billion per year across the video game and DVD supply chain could be saved with the implementation of benefit denial, approximately $3.3 billion of which could directly benefit retailers, who are most heavily affected by theft issues.
"Until now, however, the lift in sales and reductions in costs had not been quantified and analyzed," said EMA CEO Bo Anderson in a statement.
"If we can utilize emerging technology to reduce the shrink in the DVD, Blu-ray discs, and video game categories and eliminate barriers erected to deter shoplifting, consumers will have easier access to the products, additional retail channels will carry these products, and costs will be eliminated from the supply chain."
Capgemini says an activation-based solution would remedy problems with current shrink prevention methods, including internal employee theft, ineffective or cumbersome physical shrink techniques like magnetic strips, and the discouraging effects of customers requiring staff assistance to reach games.
However, the firm also outlines a considerable number of obstacles with the technology: a lack of current prototypes and accepted standards, the necessity of considerable staff training and enough awareness to substantially deter shoplifters, potentially difficult returns, and costs of implementation and maintenance.
Despite the challenges (which were not addressed in the EMA's statement), the EMA believes an activation solution -- which it calls "Project Lazarus" -- could be deployed in the fourth quarter of 2010, pending results of an upcoming cost analysis.
[Update: Clarification added as to the physical locking nature of the proposed device. The EMA sent Gamasutra the following explanation:
"Actually, this is not a software-based activation. And it is not DRM or other coding of the discs. The technology to which we are referring would be a physical lock that is opened via radio frequency at the point of sale. (Think of a key card that unlocks a door.) The is a store-based solution only, to fight shrink (shoplifting, etc.). The purpose is to make it easier for the consumer to purchase the product and enable additional retail channels that have significant shrink issues to carry the product."]