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EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
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Special to CNBC.com
With commercial real estate values down 37 percent compared with one year ago, a new industry is jumping in on the pop-up location trend.
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Source: EA The lending library at EA's Boston trial center. |
To promote its latest version of EA Sports Active, EA Sports Active More Workouts, Electronic Arts [ERTS
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] last week opened two one-month trial spaces where consumers can test the exercise game.
Though sponsoring standalone testing centers is nothing new for video game companies, the trend has become more popular since the emergence of hands-on music software such as Activision's [ATVI
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] Guitar Hero, as well as the launch of the Nintendo [NTDOY
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] Wii system, said Colin Sebastian, an analyst at Lazard Capital Markets.
Testing a game is always one of the strongest drivers of sales, but standalone spots offer an advantage over having a kiosk at retailers like Best Buy [BBY
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], Sebastian said.
They make the product visible to shoppers without requiring them to enter an inventory-filled electronics store, which is especially important given the 13 percent drop in video game sales this year.
"It's going to convert some people who otherwise wouldn't buy," Sebastian said.
Monique Gomel, marketing director for EA Sports Active, said lower real estate rents played no part in the company's decision to launch the standalone locations. But the execution would have been much harder before the downturn, when landlords were less willing to rent to short-term tenants.
"There's a lot of landlords, and there's a lot of desperation out there," said Michael Burden, a principal with industry adviser Excess Space Retail Services.
EA designed the lounges in San Francisco and Boston because research showed the cities had a high interest in fitness, Gomel said. At the locations, consumers can either make an appointment or walk in at their leisure to play the game at one of the six kiosks.
Testers can't purchase the game on-site, to preserve EA's relationship with its retailers, but they can order the software without the cost of shipping from on-location laptops, Gomel said. EA representatives are also onsite to direct interested testers to nearby retailers that carry the game, she said.
For those who haven't yet decided if they want to purchase the software, they can also rent it from a lending library for a three-day period.
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Sebastian said that because the software is an expansion on an already existing game, it probably won't be a blockbuster this holiday. At the same time, it will likely draw attention from new customers who are looking to lose weight as part of their New Year's resolutions, he said.
EA has sold approximately 875,000 copies of the original EA Sports Active in the US, but November and December typically make up the biggest chunk of sales for the industry, said Anita Frazier, industry analyst at NPD Group research firm.
Sales recently received a "shot in the arm" from the sales of "Modern Warfare 2," which broke opening-day sales records, but it's too soon to say whether this success will spill over into the rest of the industry, Sebastian said.
"They should be strong months for the industry as compared to prior holiday seasons because of some very big game releases and new, lower hardware prices that may spur more folks to enter the market," Frazier said.
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