GameStop’s Digital Push: Will it Work?

GameStop’s Digital Push: Will it Work?

At first blush, it might seem a it odd that video game retailer GameStop is throwing so much money and effort behind building up digital distribution. After all, GameStop is the baron of retail game distribution, and no small part of its fortune has been made through the used game trade–a trade that can only exist for as long as video game data is transferred onto a disc and sold in a store.

Upon closer study though, GameStop is getting in on the ground floor of digital distribution while the getting is good. Earlier this year, GameStop acquired Impulse, a digital game delivery market, and Spawn Labs, a game streaming service. Moreover, the company reported a huge jump in its digital sales, thanks in part to increased efforts to teach consumers about downloadable options. Good stuff, but is it possible GameStop will hurt itself in the long term by luring consumers away from the lucrative physical game trade?

GameStop CEO Dan DeMatteo stresses that’s not the case, as digital content and boxed retail product can live in harmony. “Do not assume that all digital gaming is cannibalistic with what we sell in our stores,” he said during a May earnings call. “For us, new packaged goods sales continue to grow. We have proven that we can sell digital products in our stores and on our website, as witnessed by the growth of digital revenues.

“We are investing for the future in digital gaming so we can own a share of these growing markets and tie them into the GameStop brand and PowerUp Rewards.”

It’s fun, if not a little alarming, to think about how the industry will look in five, ten years from now, and speculate what role GameStop will play in its shaping. The company shows good sense in investing in streaming technology while it’s still young, as fighting against the future of media distribution hasn’t done any favors for GameStop’s close relatives, including Blockbuster, Borders, and any number of music CD distributors.

However, GameStop is making a major push to ensure “Mom and Dad” know all about the digital side of game distribution. In other words, the safest corner of the physical game market–the corner that belongs to an older generation that equates game purchases exclusively with “Go to store, buy game off shelf–might eventually do their gift shopping online. What will happen to the physical market then? More importantly (for GameStop), what will happen to the used game trade?

GameStop says that it has no plans to destroy its own dominance over physical distribution, and careful marketing can ensure that the buying public understands the pros and cons of digital game purchases versus the more traditional act of jumping into a car and going to the store. In the end, GameStop will probably work to make sure this delicate balance is maintained–though we can’t help but wonder if someone, somewhere, isn’t hunched deep in some GameStop corporate office, tallying how much money can be saved if a certain number of stores are shut down, and if a certain number of employees are booted out.

Time will tell. In the meantime, game on!

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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