EMA: New tech could generate billions for video-game retailers

Encino, Calif. The Entertainment Merchants Association said Tuesday that video-game retailers could generate billions more in extra sales by implementing “benefit denial” technology that requires activation of games at the point of sale.

The trade group that represents North American entertainment retailers said it has been researching such a service. It claims that benefit denial 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 estimated that 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, which 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 said an activation-based solution would remedy problems with current shrink-prevention methods, including internal employee theft, ineffective or cumbersome physical shrink techniques such as magnetic strips, and the discouraging effects of customers requiring staff assistance to reach games.

However, the firm also outlined obstacles to implementation of 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, the EMA said it believes an activation solution -- which it calls "Project Lazarus" -- could be deployed in fourth quarter 2010, pending results of an upcoming cost analysis.