Game Plans Social, Online Evolution As Kinect, Move Make For Poor Christmas

UK video game retailer Game Group says it must front up in social, mobile and online gaming, after it made 2.1 percent less money this Christmas than the previous year.

Xbox Kinect and Playstation Move were expected to be must-have gadgets this holiday season; Game had placed much hope in them.

Game didn’t release sales for the gadgets, but they clearly didn’t help overall Game holiday sales grow. The market is in a cyclical down phase because current-generation console sales have flattened out and Wii mania has tailed off. Kinect and Move are peripheral additions, not necessarily market movers.

“Game Group has a strong position in the video games market, but it is well recognised that the market is changing,” the company’s trading statement says. “Next year, will see further innovation in existing formats as well as social and mobile gaming, and a growth in digital and online distribution.

“Given those developments, we recognise that we need to evolve our business and deploy our strengths in new areas if we are to enhance our position as the market leader.

“More details will be provided at a strategic update next month. Our team, led by Ian Shepherd, will give an insight into the strategic programmes with which we are building a seamless, customer-centred multi-channel service for gamers in the future.”

Although 2009 was pronouncedly poor in recent gaming memory, 2010 was worse, according to UKIE/GfK ChartTrack industry data Game Group published, which it outperformed…

The mere one-percent hike in peripheral sales suggests Kinect and Move had minimal impact on the UK industry over the full year, although their impact would clearly have been limited to the last quarter alone.

In its trading update, Game says: “We expect the trading environment to remain challenging in 2011. However there will be further innovative launches in the $40bn global games marketplace including Nintendo’s new handheld 3DS, additional software for Move and Kinect, and an exciting line up of pc and console titles.”

Game now sees the need to respond to the current slump in physical sales, which – in lieu of announcements of fourth-generation consoles, and, if HMV’s woes are anything to go by – could be long-term…

It’s difficult to imagine what Game can do in disc-less, online console delivery since Microsoft (NSDQ: MSFT), Sony (NYSE: SNE) and Nintendo have the markets locked up with their own stores.

If Game doesn’t quickly show a viable online strategy, Britain’s biggest games retailer could find itself in HMV’s position when games, like music, leave plastic behind.

A tie-up in which Game adds an own-brand on-console download store whilst sharing income with console owners could be a win-win.