The Spanish Game Market

AUG. 31 , 2007 •  Spain is a medium sized country of about 42 million people, or the same population as the West Coast of the United States. There are two major international cities: Madrid, traditionally the seat of government, and Barcelona, traditionally the seat of business interests. Spain is a melting pot of cultures and prominent culture groups include Castilians, the Catalans, Basques, Valencians and Balearics and Galicians.

About 80% of Spaniards live in urban areas, although only 50% of the total population lives in a town of more than 100,000 people. Interestingly for a European country, it actually has long expanses of rural areas, especially in the dry center of the country.

The median household income in Spain in 2006 was €21,551. By comparison, the US average household income is $49,747 (around €39,000). As elsewhere in the world, city dwellers, especially in Madrid and Catalonia, earn more money than the poorer rural regions like Andalusia and Extremadura. The income per person in a Spanish household is also seemingly very low, with the national average at €7,591.

The video game market in Spain exceeded $1 billion in 2006. This revenue comes almost entirely from the console and portable game systems. The PC and online game revenue has been a smaller portion of the pie when compared with other countries in Western Europe and the U.S. In the last generation, the PlayStation 2 (PS2) was far and away the dominant system, selling over 5 million units. The PSP got off to a very strong launch and by early 2007 had sold over 1 million units in Spain. This compared with total lifetime Game Boy Advance sales of only about 2 million units. However, as is the case in many markets it looks like the DS could be the strongest system on the portable side.

Spain is still very much a retail centric country and unfortunately distribution is a fairly complicated enterprise in the country. However, many large publishers have chosen to tackle distribution via wholly owned subsidiaries. Only one large distributor, Proein (a wholly owned subsidiary of the UK’s SCi), exists and it seems to hold no more power than an average foreign publisher like Ubisoft or Activision.

Among the big three console manufacturers, Sony clearly has the strongest brand in Spain. Stemming from the overwhelming success of the PS1 and PS2. Sony is the company that really built the video game market in Spain, Sony is video games. Sony’s products receive at least 50% of shelf space in most stores, although the higher end and specialty shops tend to offer a more equal distribution of space to Nintendo and Microsoft. Nintendo has had success with its DS brand and its low prices could appeal to cost-conscious Spanish consumers. The Wii looks like a strong contender in Spain. Microsoft had little success with the first Xbox and is clearly playing catch-up.

The biggest difference between Spain and many other countries is that first-person shooters and fighting games have had little success in the Spanish market. Spain’s console charts have been dominated by many of the same games that have scored big in the North American market. Racing and sports games are especially popular, with the obvious cultural swap of soccer games for American football games like EA’s Madden franchise. Grand Theft Auto has been a phenomenon and Need for Speed has dominated the racing genre. One interesting facet of Spanish video game taste is the popularity of “party games”. Buzz!, a quiz game, Singstar, a karaoke game, and various EyeToy products have done remarkably well in the market. These games took 4 of the top 10 slots on the PS2 charts in 2006.

There are many video game retailers in Spain. The most important are Spanish department store El Corte Ingles, GameGroup subsidiary GAME, French hypermarket Carrefour, and GameStop’s Spanish subsidiary, converted from the acquired Spanish PC/electronics chain Jump. El Corte Ingles dominates the “high street” locations while GAME has staked out mall territories. Carrefour positions like Wal-Mart’s, serving outer suburban and rural populations. GameStop’s locations are more like GAME’s, although the chain has been undergoing big changes under its new American management.

Largest are the hypermarkets of chains like Carrefour, Eroski, and Alcampo. These stores are like Wal-Mart’s in the broad range and value pricing of their products. Some stores belonging to El Corte Ingles approach 50,000-plus square feet like a hypermarket, but tend to more upscale merchandise and locations. El Corte Ingle’s Hipercor brand competes directly with the other hypermarkets. There are also two game specialty chains, GAME and GameStop, both owned by foreign multinational corporations. Big box electronics retailers like the German-owned Media Markt have been taking share from Spanish home appliance stores like Menaje del Hogar. FNAC could be called a “media superstore” featuring large stores filled with books, music, DVDs, and games. Among the other types of video game retailers in Spain are toy stores, computer superstores (which often sell consoles too), and video rental locations, which took a major blow when Blockbuster pulled out of Spain in 2006.

As the top international chains come into the market, the smaller players have been pushed out by the scale and consistent quality of the bigger stores. The Spanish government passed laws in 2004 restricting the growth of hypermarkets to protect “traditional” retailers, but the market power of the international retailers has proven overwhelming. One unintended consequence of the law to restrict hypermarkets is that it opened up an opportunity for MediaMarkt, a German consumer electronics powerhouse, to grow quickly in Spain. Despite the difficulties the competition is causing native Spanish retailers, the move towards international retailing standards can only be viewed as a positive from the video game industry’s perspective. Distribution is becoming an easier task with fewer, more international players.

Another trend impacting Spanish retail is the long-term growth of the American “mall” concept taking market share from the center/high-street type stores. Over the last 10 years, many malls have opened across Spain. From 1999-2005, this led to an increase in rentable surface area in shopping centers from 5.52 million m2 to 8.21 million m2. They provide a natural location for game specialty retailers like the UK-owned GAME chain, who have about 85% of their locations in malls.

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