Can Digital Downloads Save GameStop?

Can Digital Downloads Save GameStop?

In July of 2009, gaming retail giant GameStop claimed that it saw no major threat in digital distribution, and that brick-and-mortar stores would be customers’ go-to center for games until at least 2014. But as Judge Danforth said in The Crucible, “A year is long.” In the summer of 2010 alone, GameStop took two big steps into digital distribution: It bought Kongregate, a highly popular hub for indie-made flash games, and it also began installing digital download centers in some of its 4,400+ stores across America.

Why the rapid change of heart? Good business sense. Writing off digital distribution as a non-threat until the year 2014 requires wishful thinking that’s usually reserved for little girls who want a unicorn for their birthday. Last year, Arvind Bhatia, an analyst with GameStop’s Sterne Agee brokerage firm, stated that by 2014 because that’s when “25% of the population” will have access to the download technology and hard drive space that’s necessary for regular use of digital distribution. It’s true that some families across America–more than you might think–are still chugging along on dial-up. But how many have gained access to affordable broadband between the years 2005 through 2009? How many more will gain access by 2014? Probably a bit more than 25% of the population. Few areas of technology are evolving as rapidly and as cheaply as communications.

Now that GameStop has perked up and said “Oh, hey,” regarding digital distribution, will it help them retain their strong profits, or are brick-and-mortar game stores bound to lie down and die within the next decade?

If GameStop continues to work with digital distribution instead of fighting it, the chain will manage to appeal to every type of consumer: The tech-savvy teen who wants to pop in and buy some downloadable content, the mom or dad who wants to buy an Xbox Live Arcade or Wii Points card as a stocking-stuffer, and the grandmother who wants to buy a nice PlayCube game for her grandson, but has no idea where to start.

None of this accounts for GameStop’s used games trade, which kept the chain quite healthy during the economic downturn. But will gamers’ interest in hard copies eventually fade and put an end to the used games trade? That’s a little more difficult to predict at this point. Most of us still find an irreplaceable satisfaction with opening a game and putting it on a shelf when we’re done. And, much to developers’ woe, some of us like to trade and sell used games for extra cash. You can’t do that with downloadable games (yet).

Finally, there’s the aforementioned grandma. Specific video games are amongst the most asked-for birthday and holiday presents, often by kids who don’t have command of their own money. That’s when it’s time to go down to GameStop, and it’s a major reason why the chain won’t be vanishing any time soon, digital distribution or no digital distribution.

But it certainly doesn’t hurt the chain to get on the ball right now. The most impressive thing about its digital download centers is that users pay for the content they want. No more buying more “points” than necessary for downloads. This is a smart move by GameStop, as complaints about online points are loud and frequent, especially for XBLA. Sure, once you buy a game, you have some points left over to buy your Avatar some clothes, or a pet dragon. Nice, but that extra couple of bucks could have bought a hamburger for your empty tummy if it still existed as real-world cash. It’s hard not to feel ripped off.

Opinions on GameStop’s business practices vary in the gaming community. It’s not hard to figure out why, given the chain’s aggressive used games sales, endless promotion-hawking, and anecdotes about poor treatment of employees. Be that as it may, the chain seems to know how to stay current, and will probably stick around until 2014 and beyond.

About Nadia Oxford
Nadia is a freelance writer living in Toronto. She played her first game at four, decided games were awesome, and has maintained her position since. She writes for 1UP.com, Slide to Play, GamePro and other publications, and is About.com’s Guide to the Nintendo DS.

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