Why GameStop's "Store Of The Future" Is Anything But

Having trialled them in select regions for almost two years now, GameStop last night officially opened their "store of the future" in Palo Alto, California. Get a good look, because it'll soon be the past.

The concept store, a prototype of the kind of changes the mega-retailer will be rolling out to its 6000 stores worldwide, certainly looks the part. Gone are the days of a pair of store assistants, a monitor and a TV on the roof, replaced with an outlet that's designed to be as modern as the medium its selling.

There will be web-connected PCs that have downloadable and flash games to play. There will be large touch-screen displays, which gamers can use both for information as well as to buy things like downloadable content. These displays will even store your customer history, activated via your customer loyalty card.

It's all flashy, and for 2010, looks fairly impressive. It's designed to maintain the retailer's dominant position in the marketplace as we move into a digital age. Yet, beset on all sides be enemies bent on its destruction, it's far from enough to keep pace with a rapidly-evolving games market, meaning it'll also be the chain's last hurrah.

The future of video game retail is in downloads. This is not up for debate. We can yearn for the heft of a box and the feel of a manual all we want, but one day, and that day will be soon, we won't be buying video games off a store shelf. At least, we won't be in quantities to support a retailer the size of GameStop.

That day may be five years away, it may be ten, but it will come. And if this is all GameStop can do to counter this fact, then they're done for.

A central design feature of these new stores is the fact you can buy downloadable content. You walk in, swipe your credit card, and you get a redeem code for the DLC you just bought. You then have to go home and download it. Sure, you'll get loyalty points for doing so, but does GameStop HQ not see the absurdity in this practice? In thinking people will leave their homes, go to a store, give that store money, then return home to download something that had they stayed at home, would have finished downloading before they'd even arrived at the GameStop?

Were this the only challenge the retailer was facing, you'd at least fancy their chances of finding a workaround. But it's not.

Publishers like Electronic Arts and THQ are waging an open, public war against GameStop's practice of encouraging the sale of used games, a cornerstone of the retailer's business plan. Other publishers, like Sony, are looking seriously at joining in.

At this early stage it probably hasn't had too adverse an effect, but the more games are released that encourage new purchases - which for GameStop carry a negligible profit margin compared to their "buy for $US10 and sell for $US30" used games - the more it will hurt them. And if people stop buying used games at GameStop, GameStop, utterly reliant on the sale of used games, is in trouble.

The boxed PC market is as good as dead, with digital delivery services like Steam moving swiftly to dominate the market with their convenience, portability and and plentiful bargains. You can already buy full Xbox 360 games on that console's marketplace, and more and more titles are being released as downloadable games, purchased directly from a console rather than a store.

The latest PSP doesn't have any kind of boxed game whatsoever, nor do any of Apple's handheld platforms, which are fast becoming some of the most important devices in the portable space.

As a brand, then, you could say that to succeed in the future, GameStop would need to evolve and become an online retailer. Steam, the PlayStation Network and Xbox Live Arcade, all rolled into one. That would be a sound business plan, and something the name "GameStop" with its current pull could probably manage. If Amazon could sell Xbox Live Arcade games, there'd be no stopping GameStop from doing more.

And it's trying. Sort of. GameStop has bought Kongregate, an online gaming portal, and Jolt Online Gaming, which does much the same thing, but these are cheap, peripheral solutions, not a meaningful means of shifting the company's business online.

This is where GameStop's nature will be its undoing. Like other outdated stores - let's use Blockbuster as an example, which when movies went online found itself adrift - it's not enough to simply cut their losses and move online, because there are thousands of stores worldwide with tens of thousands of employees on the books.

Those can't simply be tossed aside, and like Blockbuster, when the end comes GameStop will find them to be the burdens that catalogue its demise, when the only time you hear about them are when 1500 employees are laid off, and/or hundreds of stores shut down as the market the retailer once dominated disappears from beneath its feet.


Comments

    If all games will eventually become downloadable, does that mean the end of collector's editions?

      No, they'd simply offer pre sale bonuses or other exclusives for those who purchase early. I guess instead of tin cases and art cards you'd end up with more in game bonuses which I personally prefer...

    The problem is that GameStop CAN'T become "Steam, the PlayStation Network and Xbox Live Arcade, all rolled into one". Because PSN and XBL are monopolies for digital distribution on their respective platforms. Steam is different because there are alternatives for digital distribution on that platform. But on PlayStation / XBox it's PSN / XBL or nothing.

    If you look at the pricing of full games which are available on PSN/XBL as well as on physical media in stores, the digital version is invariably MORE expensive than the physical. As long as this is the case, there will always be greater demand for physical media. And if you have any doubt whatsoever about that, let me leave you with this parting thought: PSPGo.

    This article is wrong on a few things. The boxed PC market is far from dead. It's massive. It's just not the titles that Kotakuites lust over that are selling. Popcap titles, Find the object adventure games, backcatalogue PC. These lines sell extremely well and have higher margins than even used games. What we have to acknowledge is gaming is no longer the tech savvy teen. It is middle aged women, families, seniors. These are demographics which are still reluctant or simply inconvenienced by shopping online.

      That Starcraft II Wings did ok for a dead format...
      And Cataclysm will top it. Easily.

      But overall, yes retail, boxed PC sales are weakening year on year. To be honest what is actually killing PC gaming is DRM... CIA-style registration AND constantly needing to be online to play an OFFline game really pisses people off. Why cant you play Assassins Creed 2 when your internet is down, or indeed, you are off-grid for whatever reason?

      In my (Australian games retail) experience however, THIS year is the first ever that we are seeing any overall stagnating or even negative growth. This is almost exclusively due to the sharp downward spike in Wii hardware and software. Otherwise, every other current format EXCEPT PC and Wii are strengthening. Even PSP- for all intents and purposes a teminal console, is selling hardware with next to no games releasing. Look at how fast Red Dead hammered out the door on both platforms, even selling out with all retailers several times. My issue with retail at the moment is the sheer saturation in the market. I have trouble finding time to play the dozen or so AAA titles I get my mitts on each year, never mind having to endure some of the chaff and ballast that gets released these days. It is a very big ask to expect people to spend literal thousands a year on their games. We are already sitting on the plateau, and Australia has apparently avoided a recession. The change is coming. And the next 4 months will not be a true indication, as half a dozen of the biggest games of all time are being released, as well as 2 format-changing controllers.

      Personally I applaud Gamestop for utilising their marketleading position to try to futureproof themselves. Those who do not, will die a quick and painful death.

    @Braaiins
    Isn't a monopoly illegal?

      I'm not a lawyer, so I'm not sure, but probably. But in any case they could argue it's not a monopoly because you do have a choice of consoles. You just can't choose where to download from once you've chosen your console.

      I think you'll find it varies from country to country, and in this case the monopoly reference is to someone selling something through something else they created.

      Monopoly fits the case, but it's not literal.

      If Microsoft / Sony owned ALL consoles, or one particular entity had to be dealt with to release something on ANY console, then that would be a monopoly. It would counteract fair trade, something most western countries police fairly actively.

    Luke I respect you, and I usually love your stuff, but to say that there is no future in boxed copies is absolute crap. Why would gaming companies give up the chance to overcharge people for branded stuff in collector's editions? Whether or not standard edition games will be stocked in stores is debatable, not definitive, as you said, but I think the presence of physical collector or special or super editions will never die out.

    Also, even if boxed games /do/ die out, as you suggested, that's hardly the end of Gamestop. It's called adaption. They'd just be a cross between this new store of the future and an internet cafe.

    They can repurpose themselves and start selling more game themed merchandise. Im sure that action figures and the like could be quite profitable.

    As much as I love gaming stores and hard-copies, Digital distribution's growing in leaps and bounds. Give it 10 years and it'll probably eclipse the brick and mortar stores. Obviously such 'physical' media aren't going to disappear overnight, hell we'll probably see them well over a decade down the track. There's always a market for hard copies: Older gamers, housewives, kids without credit cards etc.

    Collector's Editions will remain as they are now. Since they obviously include memorabilia, art books, figurines etc, it's very much a 'physical' product you're purchasing. Compare this to a regular PC game where you essentially buy an empty box. You don't even need the installation disc, just the key.

    Smaller gaming stores will probably begin dying out. We've already seen it with Blockbuster and other videostores. They never changed their business practices, and acted surprise when they were bleeding customers and cash, which were turning towards TiVo, Hulu, Youtube and Netflix. If they want to make it worth our while to drop in on a store, then shake it up. Maybe a gaming couch, free coffee, game screenings etc.

    I'd just say this. Name one thing that's gone completely digital distro, where there is literally no market for a boxed product.

    And before anybody says "digital photos" that's just how we make them, last time I checked the industry for printing them was booming. Humans will never let go of being able to "hold" the weight of their items.

    In fact just now, the only thing I could think of that was shifting to digital so forcefully way print NEWS media, and that's only because it is consumed in a throwaway manner, much like we buy food and poop it out everyday without thinking.

    I disagree that everything will move to digital distribution that quick, at least not in Australia. Paying around $90 a month only allows us to download maybe 2 games a month otherwise our quota gets too low for day to day use. Even with filters to get it on the freezone it can take weeks to get a connection to download 10gb worth of game. It's a tough situation and it could go either way but I'm hoping I can still heft a collector's edition box out of a store years from now.

    Is it just me or would everyone else's internet get capped really quickly if they turned to digital distribution? That's the main reason why I still continue to buy boxed games.

    Well i guess if your a person under 18 and you wanted to get your DLC with cash, without your parents card, you can go instore no?

    ppl will eventually turn away from the internets, so boxed gaming will never die

    Honestly i think The gaming industry isnt Ready to go all Digital Download IF you think about it Games Today are like 10gb Plus well Not Everyone Who cna jus trun down to the Store is Going to have the inter Speed to Take 30 mins to download that and in alot of Country the ISP are Real Crappy here in australia ISP are a Fucking Joke i have 30gb a month of Downloads For 100 dollars Thats a Rippoff and i dont want to Spend 10gb of it for 2 days downloading a game i can go to the Store and buy in 30 minutes Digital Download will Come But not until ISP and the Tech for Fast Downloads is There To support it

    I've seen a few 'experts' say 2020 will be the year that people will be ready to go majority digital. I think thats a fair call.

    Retail chains are really preventing this advancement to digital distro. As long as digital distribution prices are catering to the retail chains and their RRP's then we'll see little to no progress.

    Indies are the ones benefiting the most from digital distribution and it will go unchanged for a very long time.

    As long as the major developers plan on even creating a retail / boxed copy of their product then stalemate is the only real outcome.

    I will never buy a digitally downloadable game. Why pay when you can find it for free. This will only increase piracy as people become more technical and under stand its just as easy to pirate/download the game than it is to use your credit card to purchase than download.

    I have purchased 50+ games just in the last few weeks. Of course i did not pay full reatil price and almost all of them were on sale.

    I got my tax back and bought a PS3, Play TV, 8 new and second hand games $750.00. Got 5 360 games, 2 PSP games and 1 PS3 games all up for $70 from K Mart. I bought the Mage Drive console from K Mart $50.00. I bought a Neo Geo Pocket + 11 new games for $100.00 total delivered. Also got a 2 x Wonderswan consoles and 15 games + 7 new Dreamcast games delivered for $200.00. Got BlazBlue with arcade stick $39 from Big W. DJ Hero Renegade for $53 second hand EB.

    When you can get deals like i have above why would you pay for a downloadable game. The only reason would be price.

    Will a downloadable game increase in value like all the collectable games i have. I don't think so.

    "The latest PSP doesn’t have any kind of boxed game whatsoever, nor do any of Apple’s handheld platforms, which are fast becoming some of the most important devices in the portable space."

    The PSPGo tanked and games on Apple's handhelds and other digital devices are of a less complex nature than games made for dedicated gaming machines.

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