The tale of retail game cards is a pretty amazing one. In a recent interview Rob Goldberg, founder and CEO of GMG Entertainment, a publisher of "digital currency cards" that you see on sale at Target, Safeway and a number of other big-box shops, shed some light on how the market came to be and where it's going in the future.
According to Goldberg, sales of the game cards will be worth $75 million to $100 million this year with an expected run to $500 million by 2010. Interestingly enough, Target was the retailer that figured it out first and convinced Apple to offer iTunes cards.
GMG started in the marketing services working with retailers--specifically Target--but around the same time as that, well, it's not very well known, but it's Target who actually brought the idea of the pre-paid iTunes card to Apple and sold them on that.
The first iTunes cards were co-branded and were exclusive to Target. In terms of retailers in North America who were focused on pre-paid cards for digital entertainment, Target were ahead of the curve.
And why do retailers love these cards? The economics work in their favor.
Now, there's an interesting fact about these cards. Retailers love them over any other product they have in their store, because the cards themselves don't take up any inventory.
They're not activated until they're purchased, so they don't sit on the balance sheet of the retailer. They feel like "free money" to retailers. So it's a very positive business for retailers to get into, and it really lowers the bar for any retailers who are unsure about it, they don't need to worry about losing money on it.
The really big untapped market for these digital media companies is gift giving. No matter how much someone loves an online world no one is going to say "hey, merry Christmas. I logged into your account and gave you 25 bucks." Not to mention the impulse buy.
It's a great interview if you have even a remote interest in virtual goods and gaming. It also shows that no matter how bad the economy is, someone will figure out how to make you spend your money.