The Times are Changing: Gamestop

You may have heard the news by now, and probably reactions from apocalypse and/or desperate denial of such to celebration and elation over it. But all the reactions are based on one story reported in gaming and general journalism: Gamestop is shutting down over 120 brick and mortar stores in favor of AT&T tablet exclusive and Mac exclusive ones.

Right now as they read this, I’m pretty sure I know what to expect from the fanboy pockets of our hobby. The console fanatic is about to get very defensive, claiming that Gamestop closing “a few” stores doesn’t matter because they are still all over the place serving up discs and even if they weren’t others are now taking up the used game cause like Best Buy. And they are correct. 120 or so stores is only about 2% of what Gamestop has in the gaming world and for the moment, they are still serving a market that is pretty lucrative. But they are only seeing a part of the picture here. After all, the CEO of Gamestop has been quoted as saying this Gamestop 3.0 they are setting up is "a new phase of the company's lifespan that will see it aggressively expand its footprint into gaming-adjacent tech fields"

Now what exactly does that mean? Rather simply, it means Gamestop, arguably the biggest retailer in video games, is looking ahead in their current business focused on selling new and used retail discs and they do not like what they see. And what do they see exactly? A shrinkage of their main business. It is pretty obvious if you look at it, actually. Since 2004, PC games have been unable to be sold used, and have since adapted to the point that the platform really doesn’t even need retail to sell the systems on which play. Literally everything, including the real gaming PCs (or parts to build one as most often the case) is sold online. There’s one platform effectively lost. And the others are following far faster then anyone running a store is likely comfortable. Last generation all three consoles and one of the two handheld platforms all had portions of their libraries you could not get physically at all, and towards the end of their runs, the Xbox, PS3, and PSP all at least tried to offer every new game as a digital download as well as retail. PSP even took it two steps further, trying to sell an all digital version (the PSP Go) and getting a massive 400 of it’s retail titles online. Now as we enter the new generation, Nintendo has joined in offering similar with many of it’s retail games for both the 3DS and the WiiU being sold online as a download as well as on cart and disc with the newest offerings by Microsoft and Sony pretty much offering all retail games as digital downloads as well.

This obviously is going to cut into Gamestop’s market right now. As much as I personally do not believe digital games are anywhere near in the best interest of a console gamer (I could argue why, but that is for another time), they are here and there are a lot of gamers that like that convenience. As a result, there are now a lot more console gamers who will not bother going to the store and just download what they want to play. As this trend continues, Gamestop is going to find themselves with less audience to sell to and even less audience to buy from since you have to include collectors in the market for discs. Add to this everyone else getting into the used marked from Amazon to Walmart, and their bread and butter is getting very crowded very fast. So Gamestop is transitioning out of what will likely stop being profitable before too much longer.

So what is profitable? Apparently tablets. As they close 120 of these shops for Gamestop 3.0, the company is opening over 200 new AT&T exclusive tablet gaming stores. As much as many gamers don’t what to admit it, business is booming in tablet space, and that is not likely to stop. Even if every game on them is retardedly stupid (and there are exceptions to this rule like Infinity Blade and Plants vs Zombies), people still pick them up and play due to how many (on the surface) are a few bucks or even free. Gamestop has noticed and just as a few years ago they bought out Impulse to get back into the PC gaming market they had spurned so long ago, they are now looking to get into the next pile of money they see, and being driven by cash, they are not going to think twice to abandon those who they can not make as much cash on for it… namely those of us who want physical games for our console gaming needs.

And this is the part of the story where PC fanboys crowd together and cheer as they see bloody revenge for their favorite machine coming. After all, it looks like consoles are about to get a taste of what we saw back in 2004. If we take the way-back machine, we can see what happened the last time Gamestop saw a change they did not like and adapted. At the time, two important PC games launched and changed how business could be done with the machine. Doom 3 was noted as one of the first games to “out of the box” no longer require a disc in the drive to play the game. This was a huge benefit to anyone playing, but it came with two costs. The first was when you first started the game, it went online to the Doom 3 server lists to see if anyone else was using the same CD key. This was done as a copy-protection measure, but a relatively weak one as most had not yet reached the point of an always-on internet connection, meaning no check and you just played without even knowing the game tried. However the other megahit had a much more effective use of the online DRM: Half Life 2 with the announcement of the then only DRM and nothing else service of Steam.

Whatever you felt about these games or how they worked, Gamestop saw doom in them. For the first time, PC games could not be sold as used since the copy protection in use did not rely on the physical media. In the case of Doom 3, someone could buy a copy, install it, and turn it in and as long as they were offline they got the game for free while Half Life 2 made a used game impossible to get since the license had to be registered to an account on a server. Their business model at the time simply could not support it, so they jettisoned the platform. As a business choice, it was the logical action, but it almost killed the PC gaming as they were the dominant source of games for any gamer at the time having just bought out and merged with 5 other major gaming retailers. Stores like Best Buy helped keep it alive, but it was only by adapting and the internet becoming so prevalent that the system returned to prominence and one of the biggest platforms again.

Now PC fanboys still hurting from this are going to cheer to see the ones who hurt their beloved machine are getting squeezed. The more antagonistic ones are likely eager to see the consoles pay next. To them, honestly I have to say shut the fuck up. Gamers today should not be paying for your 10 year old grudge, and this is NOT a good day for gaming. While I do agree, Gamestop’s current model is detrimental to everyone around them (both minimizing what retail publishers/developers can get by not stocking copies as well as not giving the gamer who wants that used game (or can only get the game used due to lack of new copies) a fair price), their actions as the biggest retailer are an indicator to pay attention to… and their choice to call this lurch towards tablet exclusive stores a beginning of a new phase in their corporate lives is… disturbing.

Source: The Motley Fool: Why Gamestop is Closing over 120 Stores

1 comment:

  1. 120 is not even a percent dude...