Do you buy your electronic games at Wal-Mart? Never mind, doesn’t matter. The retail games you buy at GameStop or Best Buy or online are the games Wal-Mart has decided you can buy.

Publisher sales reps inform Wal-Mart buyers of games in development; the games’ subjects, titles, artwork and packaging are vetted and sometimes vetoed by Wal-Mart. If Wal-Mart tells a top-end publisher it won’t carry a certain game, the publisher kills that game. In short, every triple-A game sold at retail in North America is managed start to finish, top to bottom, with the publisher’s gaze fixed squarely on Wal-Mart, and no other.

But how long will that last?

The Power
By consolidating many manufacturing sources and optimizing its supply chain, Wal-Mart has shifted the center of business power from manufacturing to retail. This has forced most American industries to move offshore, but the software business, and electronic games in particular, have been less affected this way. Though selected art resources are increasingly outsourced to India and Southeast Asia, games are largely still produced in relatively small, integral domestic groups. Is this because North American creators understand their audience better than overseas coders? Because the creators here are better skilled? Or is it simply that Wal-Mart customers, who unfailingly seek the lowest prices for food and appliances and shampoo and garden hoses, will still pay high prices for top-line computer games?

For whatever reason, the game business has so far resisted most competition from lower-wage workers overseas. Compared to physical manufacturing, software profit margins remain comfortable and can support professional-class salaries. Yet make no mistake, Wal-Mart’s effect remains powerful.

Tom Gilleland, with the indie developer BeachWare (which has sold casino games through Wal-Mart), says, “Wal-Mart is working from a very strong position that enables them to dictate the content of their software product line. Wal-Mart tells the distributor/publishers what they want, and the distributor/publisher goes and finds it, or has a developer make it. They certainly know what their customers want, or they wouldn’t have been so successful. They also have a very complicated situation in terms of public image, so they avoid controversial products.”

Thus, because of the company’s influence, nowadays it is practically impossible to market a game that contains nudity. “We’re not going to carry any software with any vulgarity or nudity – we’re just not going to do it,” Wal-Mart spokesman Tom Williams told Reuters in October 2002.

Developers have produced “special Wal-Mart editions” of some games, such as Duke Nukem 3D and Blood, that delete the two principal bugaboos, nudity and excessive gore. Other developers just sanitize their games across the board. As a Ritual Entertainment developer remarked in an online chat promoting their Heavy Metal: F.A.K.K. 2 game (2000), “There’s not much nudity other than statues. Wal-Mart is picky about that. When you have to decide between feeding your family or putting nudity in the game, you choose food.”

For the U.S. version of Giants: Citizen Kabuto (2000), Planet Moon put a bikini top on Delphi, the game’s topless sea-nymph heroine, after Wal-Mart refused to carry the seminude version. In an effort to gain a Teen rating from the Electronic Software Ratings Board (ESRB), Planet Moon also toned down the language and changed the red blood to green – but the game got a Mature rating anyway. (Soon afterward, a patch that removed the changes mysteriously appeared online.)

Of course, Wal-Mart, like other major retailers, pulled Grand Theft Auto: San Andreas from its shelves after the “Hot Coffee” fiasco. Take-Two Interactive revised that quarter’s financial guidance down by $45 million. Wal-Mart has since resumed selling a modified version.

Wal-Mart has shaped the field in other ways. Remember five years ago, when computer game boxes all got smaller? That was Wal-Mart. “Wal-Mart was a significant force in driving videogame producers (and software producers of all kinds) to dramatically reduce the size of their boxes,” says Charles Fishman, senior writer for Fast Company magazine and author of the bestselling book The Wal-Mart Effect. “Wal-Mart’s goal is to put as much merchandise on the shelves inside a given store-size as possible. By cutting the box size of games and software, Wal-Mart could easily increase the amount of product it displayed by 20 or 30 or 40 percent. More product in the same shelf-space. That’s good for Wal-Mart, and good for customers, and maybe even good, ultimately, for game makers. Smaller boxes cost less.

“And Wal-Mart is increasingly interested in the environmental impact of such changes,” Fishman says. “If you literally cut the packaging of gaming software and routine software in half, […] that eventually comes to forests of trees not cut down. This is something Wal-Mart works on consistently, not just in software boxes.” Fishman’s book opens with a similar story: Wal-Mart eliminated cardboard boxes for deodorants and antiperspirants to save shelf space and money and to reduce waste. (This is part of a larger Wal-Mart environmental initiative.)

More pertinent than the packaging of games is their content. Wal-Mart and other retailers display an ever- decreasing range of game types. More and more, it is difficult-to-impossible to market an adventure game, or a non-Microsoft flight simulator, or a non-Maxis city-builder, or a non-Civilization turn-based strategy game. Did the audiences for these forms simply wither away? No, they’re still out there – but they’re not sufficiently profitable for big-box retail chains. The commercial range of games shrinks because of the free market’s uncompromising pursuit of the majority at the expense of all minority tastes. We see this most clearly in Wal-Mart’s signal triumph in game design, Deer Hunter.

The Audience
In the 1990s, Wal-Mart discovered a previously unrecognized demographic: The mass market gamer, who plays while holding a mouse in one hand and a can of beer in the other.

Game designer Harvey Smith wrote in 2002 about his meeting with Robert Westmoreland, “the cool redneck biz exec behind Deer Hunter“:

“He claims that he looked at data on how much software Wal-Mart was selling at the time, thought about the average Wal-Mart shopper, thought about what kind of games the average Wal-Mart shopper would want to play (which, with the exception of Bass Fisherman, was at odds with the kinds of games being sold in the store), and then pitched the concept of Deer Hunter. Multiple publishers turned it down, calling it ridiculous in some cases. It cost about $110,000 to make. The franchise has allegedly sold 10 million copies. I bet Robert drives a really nice truck.”

Hardcore gamers derided Deer Hunter (1997) and its many imitators because they were dull and looked like crap. (The most recent version, Deer Hunter 2005, looks better.) So what? The games cost $20 and ran on low-end hardware – and their subjects spoke to far more customers than did Quake or Command & Conquer. Programmer Zac Belado wrote at the time, “It’s not just computer nerds and simulation freaks that are buying computers and games. Deer Hunter [buyers] haven’t seen a product that directly appeals to them, have been largely ignored by the game market (or, worse, ridiculed by games like Redneck Rampage), and have finally proven that they have not only the desire for software products, but the money to pay for them.”

Several publishers, running entirely below the industry radar, have found excellent business catering to the Wal-Mart demographic. Clay Dreslough, former executive producer at Midway Games, now runs Sports Mogul Inc. in Middletown, Connecticut. Dreslough’s sports management sims, like the new Baseball Mogul 2007, are sold at Wal-Mart, though most of his sales are online. “I think people in the hardcore market are frustrated with Wal-Mart because they might only carry the very top-selling FPS or [MMOG] titles. But for small companies like us, Wal-Mart creates a lot of upside without much downside. That is, even if Wal-Mart drops us one year, we still have other retail outlets, and we still have a strong fan base online.

“I have heard a lot about Wal-Mart hurting the industry and hurting innovation,” Dreslough says, “the theory being that you have to write a specific kind of game to get the scarce shelf space at Wal-Mart, and if you don’t get into Wal-Mart, you can’t be profitable. My experience has been different. I think there’s tons of room for innovation without Wal-Mart. Specifically, even with retail distribution, we still make most of our money online, through downloads of the product and through our popular Baseball Mogul Online. Publishing online, without worrying about the retail market, gives you more flexibility to innovate.”

The whole industry is learning that lesson. Game publishers are working hard to create online services that trump Wal-Mart the way iTunes has trumped the music cartels.

The Escape
Many game publishers are already chafing to move to online distribution, not least because it cuts out the used-game market. They also believe online distribution will reduce file sharing – anyway, hope springs eternal.

As national availability of broadband grows, Valve has already started its Steam distribution network. Ritual Entertainment – which ran afoul of Wal-Mart not only for Heavy Metal, but also for its hyper-gory 1998 shooter SiN, is using Steam to distribute its new SiN Episodes, almost as if it had been waiting for online distribution before making a sequel. Lead designer Shawn Ketcherside blogged, “Episodic gaming, because of its faster turnaround, offers the ability to react to consumer feedback (this has been talked about endlessly already), but it also offers flexibility to try new and really innovative ideas. […] Basically, it’s giving all gamers more choice. Gamers can pick and choose titles, options and gameplay that really appeal to them.”

All the next-gen consoles embrace online, to varying degrees. Xbox Live is already up and running, and Nintendo has said the Revolution will offer downloads of classic NES games. Sony’s PlayStation Network Platform will offer a free service similar to XBox Live.

On a Gamasutra “Question of the Week” feature about digital distribution, most respondents predicted eventual victory for online distribution. BioWare’s Rob Bartel wrote, “The shift to digital distribution is coming to all platforms, and we now find ourselves at the start of that lengthy transition. It will be complete within a decade.” And where is Wal-Mart then? “The big players in the Digital Distribution Era will be those who own the unified portals that will serve as the digital marketplace, and those who own the big-budget games that will serve as development platforms and delivery mechanisms for future content.”

But don’t interpret that to mean Wal-Mart will just fade away. The company owes its current supremacy to its embrace of high tech logistics, and that attitude remains strong; Wal-Mart, along with the Defense Department, is the chief force behind the imminent adoption of radio-frequency ID tags (RFIDs or “arphids”). So it’s possible Wal-Mart itself might move into online games.

But in the digital distribution era, Bentonville’s unquestioned domination of electronic games will still decline. It’s simply too easy to get online without their approval; online is the realm of the infinite shelf. “New opportunities will open up at the micro-studio level,” Bartel says, “where small teams, both casual and professional, first-party and third- party, will be able to develop, market and sell compelling gameplay and new intellectual properties within the frameworks created and supported by the larger players.”

Then, like the great trusts and monopolies of the early 20th Century, Wal-Mart’s dominion will finally fade.

Allen Varney designed the PARANOIA paper-and-dice roleplaying game (2004 edition) and has contributed to computer games from Sony Online, Origin, Interplay, and Looking Glass.

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