Does GameStop have a future?
As the next generation of consoles nears their respective release dates, the push toward digital distribution of video games becomes more obvious. As Sony and Microsoft struggle to match Steam's wildly popular platform, the traditional notion of a video game store seems to be getting left behind. Does GameStop have a future in a world dominated by downloads?
For a long time, purchasing a video game necessitated a visit to a physical, brick-and-mortar store. This wasn't (and still isn't) the ideal experience for consumers, who often complained about being pressured into sales, or even being low-balled on used game trade-ins. As internet ordering and having games shipped directly to your home became more common, trips to stores like GameStop became less of a requirement of video game purchasing and more a requirement of video game selling. Trading in used games has always been a hassle that usually leaves consumers feeling played. There has to be a better way.
Steam has been huge for the PC gaming industry. In fact, Valve has done a lot to keep the industry alive, and have done so well that the console giants are starting to adopt many of their solutions. When Microsoft announced their controversial policies for the Xbox One earlier this year, many of them were designed to make Xbox Live more like Steam. Though immediately frowned upon by many video game enthusiasts, processes like internet check-ins would have meant, ironically, a new type of freedom for the consumer. Unfortunately, the mass market saw the requirements as too restrictive, and Microsoft did away with almost all of them in an attempt to win back the favor they lost.
This is where GameStop comes in. A lot of their current profits come from the selling of used games, so they're largely dependent on the desire of consumers to be able to trade in those used games. So, as long as games are commodities that can be bought and re-sold, GameStop isn't dead yet, but their time may be coming.
It will take some time to turn customers on to the benefits of all-digital distribution (not to mention the fact that it will take some time to equip consumers with internet access capable of supporting it), but it will happen. Not only is our society more and more interested in being able to access products without having to go to a store, but the financial impact of physical distribution would surprise many customers. A recent study found that eliminating the used game market (essentially eliminating brick-and-mortar stores) could result in a 33 percent decrease in new game prices, placing them right around the $40 mark.
Unfortunately, many people are of the mindset that they have to be able to re-sell the things they own. Though not everyone does, and they do have the legal right to do so, eliminating the used game market has its benefits. Games would be cheaper, you still share them with friends and family, you can access your save games anywhere, they could be designed to take advantage of advanced internet technologies -- the list goes on and on. Video games aren't physical goods like cars. The desire to resell physical goods is understandable, but video games are digital items masquerading as physical goods because of the current method of distribution. Take away the disc, and video games still exist. They just become more portable.
At this crossroads, GameStop doesn't have too many options. But, with enough planning, they could stay relevant through a transition to mobile sales. Engadget recently interviewed some of the top minds at GameStop in an attempt to delve into their future plans, and Joe Gorman, VP of GameStop's mobile division, "was very clear about the company's increasing reliance on mobile phone and tablet sales, pointing to that industry's rapid product cycle as being a healthy driver of revenue." If the company is able to successfully pivot from their current, console-based strategy to an intense focus on the convergence of mobile gaming, they might be able to come out of the physical to digital transitionary period unscathed.
Digital distribution and the end of brick-and-mortar retailers can be good for both gamers and the video game industry. It eliminates a middle man with significant power and, like the transition from CDs to digital music, creates a whole host of new opportunities for producers and consumers. GameStop will likely stick around for this upcoming console cycle. But, come the next generation of consoles (if there is one), digital distribution is going to play a dominant role, whether we like it or not. It's already begun, and will only grow as consumers reap the benefits.
Image: Stephan Mosel