3 ms·

It's pretty interesting to see Gamestop do this deal. In the industry, the consensus seems to be that in 5-8 years Gamestop is going to get killed as we move to

by jakarta 16y ago

It's pretty interesting to see Gamestop do this deal. In the industry, the consensus seems to be that in 5-8 years Gamestop is going to get killed as we move towards digital distribution platforms. So the question is, what do you do in the meantime? I don't think keeping brick and mortar stores around but changing the revenue mix will make a big difference. There isn't anything left to really change to. Hollywood Video had some success with Game Crazy (a Gamestop competitor). But now the gaming biz is set to go away too. I see it as two options: A. Go out and do deals (Gamestop is debt free and has hundreds of millions in cash) -- Gamestop appears to be doing this with the Kongregate deal B. Start releasing cash back via dividends and buybacks. Game Group in the UK (similar to Gamestop) pays out a big 7% dividend. I'm interested in seeing which one ultimately works out. Gamestop could make (A) work, but only if they do more deals, make the right hires, and give them the kind of autonomy and support that is needed to build out an entirely new business from within a dying one.

muhfuhkuh 16y ago
The obvious is to make the transition from retailer to publisher/distributor. Valve was once a pure developer, but they made their transition to digital distribution and publishing and I'm _pretty_ sure they're doing much better now than when they were doing 1 game every other year distributed by Sierra or some other publisher. It's definitely out of Gamespot's comfort zone, surely, and Kongregate might look like an odd purchase from a fanboy/consumer point of view. But, casual gaming is incredibly lucrative, especially when linked to social networking sites and mobile. I'm sure Gamestop won't stop (ha-ha) at Kongregate. Perhaps they should next go after a big name in mobile, like Gameloft, ngmoco:) or Glu. I'd actually like to see some consolidation in the casual gaming industry, if for no other reason than to see if casual gaming can be a place for heavy hitting AAA-type publishers the size of EA or Activision, or if it's just the land of the indies and one- or two-hit wonders.
- barrettcolin 16y ago
  They've already purchased another browser game company; Jolt Online, based in Ireland: http://www.next-gen.biz/news/gamestop-acquires-jolt-online-gaming http://www.next-gen.biz/news/gamestop-acquires-jolt-online-g...
cookiecaper 16y ago
I don't think that people are going to just flat-out stop patronizing Game Stop et al. People like physical stores. You are probably right that they will need to adjust or tone down as digital distribution will take away a chunk of their regulars, but I still see the brick and mortar stores being relevant for a long time, especially as PCs become less and less relevant. People will go to Game Stop to buy controllers or accessories that they want to see and touch before they buy, they will go there to buy old games that don't have a reliable digital distribution platform, they will go there to trade-in for store credit.
- hugh3 16y ago
  It won't happen in this console generation, and it probably won't happen in the next, but I'm guessing that by the time the Playstation 5 (or whatever) rolls around it won't have a disc slot at all. Game publishers have no interest in producing, transporting and selling a physical disc if they don't have to, and once consumers get used to the idea of downloading huge games to their hard drive they probably won't be that keen on having a physical disc either.
afterburner 16y ago
Digital distribution isn't awesome for console games; the prices are exactly the same but you can't trade in a physical copy or loan it to someone. Not that your points aren't good. The real competition for Gamestop seems to be Future Shop/Best Buy and other big boxes, who seem to offer better used game prices than Gamestop. Given that, I'm not sure why Gamestop's prices are so... unexceptional... Maybe if they lowered their prices they wouldn't be in trouble.
- jakarta 16y ago
  Right, Gamestop used to have an advantage in being the retailer that did trade in games, but from what I've seen -- both Best Buy and Walmart have expressed interest in getting into that end of the business. So I think that not only will that advantage eventually go away, but they might become less competitive. Gamestop derives all their business from games whereas competitors do not. They might be able to offer better trade in prices than Gamestop.

by jakarta 16y ago

muhfuhkuh 16y ago

The obvious is to make the transition from retailer to publisher/distributor. Valve was once a pure developer, but they made their transition to digital distribution and publishing and I'm _pretty_ sure they're doing much better now than when they were doing 1 game every other year distributed by Sierra or some other publisher. It's definitely out of Gamespot's comfort zone, surely, and Kongregate might look like an odd purchase from a fanboy/consumer point of view. But, casual gaming is incredibly lucrative, especially when linked to social networking sites and mobile. I'm sure Gamestop won't stop (ha-ha) at Kongregate. Perhaps they should next go after a big name in mobile, like Gameloft, ngmoco:) or Glu. I'd actually like to see some consolidation in the casual gaming industry, if for no other reason than to see if casual gaming can be a place for heavy hitting AAA-type publishers the size of EA or Activision, or if it's just the land of the indies and one- or two-hit wonders.

barrettcolin 16y ago
They've already purchased another browser game company; Jolt Online, based in Ireland: http://www.next-gen.biz/news/gamestop-acquires-jolt-online-gaming http://www.next-gen.biz/news/gamestop-acquires-jolt-online-g...

cookiecaper 16y ago

I don't think that people are going to just flat-out stop patronizing Game Stop et al. People like physical stores. You are probably right that they will need to adjust or tone down as digital distribution will take away a chunk of their regulars, but I still see the brick and mortar stores being relevant for a long time, especially as PCs become less and less relevant. People will go to Game Stop to buy controllers or accessories that they want to see and touch before they buy, they will go there to buy old games that don't have a reliable digital distribution platform, they will go there to trade-in for store credit.

hugh3 16y ago
It won't happen in this console generation, and it probably won't happen in the next, but I'm guessing that by the time the Playstation 5 (or whatever) rolls around it won't have a disc slot at all. Game publishers have no interest in producing, transporting and selling a physical disc if they don't have to, and once consumers get used to the idea of downloading huge games to their hard drive they probably won't be that keen on having a physical disc either.

afterburner 16y ago

Digital distribution isn't awesome for console games; the prices are exactly the same but you can't trade in a physical copy or loan it to someone. Not that your points aren't good. The real competition for Gamestop seems to be Future Shop/Best Buy and other big boxes, who seem to offer better used game prices than Gamestop. Given that, I'm not sure why Gamestop's prices are so... unexceptional... Maybe if they lowered their prices they wouldn't be in trouble.

jakarta 16y ago
Right, Gamestop used to have an advantage in being the retailer that did trade in games, but from what I've seen -- both Best Buy and Walmart have expressed interest in getting into that end of the business. So I think that not only will that advantage eventually go away, but they might become less competitive. Gamestop derives all their business from games whereas competitors do not. They might be able to offer better trade in prices than Gamestop.