Game Marketing Tips, Analysis, and News

Tuesday, August 31, 2010

GameStop Not Going Far Enough

GameStop is trying to hedge their bets by getting into digital distribution. It's not looking so good for them, according to industry analysts. GameStop is taking tentative steps, and crowing loudly about it, but it's not like they're trying to replace Steam or something. They are facing a big problem, because if they push digital distribution they will hurt their in-store revenues (or so they fear, and it's a well-founded fear, I think). Yet digital distribution is currently only a small part of total sales for games, and GameStop probably worries that the damage to their store business might be more than they would pick up from digital business.

Bzzt! Wrong answer. Look, if your market is getting eaten by something, it's better that you're doing the eating and not some other company. Digital distribution is inevitable; the upsides are so huge (convenience, margin, price flexibility, lower costs) that it will take over the majority of the business, and sooner rather than later. It's already grown far faster than earlier publisher estimates (see how EA is scrambling?). Take a look at the music store business... yeah, what music store business? It used to be huge. Now look at what's happening to video stores, and bookstores. Game stores are next (it's already been happening to adventure game stores). GameStop has to figure out what a brick-and-mortar presence looks like in a post-apocalyptic future, and get there as soon as they possibly can. There are some interesting possibilities in having a robust digital distribution operation coupled with a strong store presence... but they will never realize them if they can't resolve their internal conflicts.

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