What will digital games mean for GameStop?
Tom Dougherty, CEO – Stealing Share
13 February 2012
GameStop is best positioned to take advantage
Film has done it. Television has done it. Music has done it. I’m speaking of the shift towards digital distribution. Gone now are the Tower Records and Blockbusters, replaced by Netflix, iTunes, and Hulu. It is a path that, given the consumer’s need for instant gratification and their wireless lives, is a natural progression. What then do digital games mean for GameStop if/when this trend makes its way to game consoles?
“GameStop is the only one with permission, presence and a brand. Its brand still needs work, but it is at least playing the right arena.”
GameStop has a strong presence in the market. It has a lion’s share of all games sales and its wide distribution of used games has helped it grow the market in the process. Gamestop has its own magazine, thousands of stores, and a strong media presence. But it all is at risk if the console market transitions to digital distribution. Given the progression of other industries using similar media formats, that seems likely.
This brings me to the importance of brand as an idea rather then brand as simply a description of benefits. GameStop’s themeline, “Power to the players,” is a bit more about GameStop than about the customer (Gamestop is “giving” the power). But at least it does not limit what the value to the customer is. “Power to the players” gives enough permission to Gamestop to create value in new areas, provided it remains consistent to message. It would have to explain that digital distribution is giving players power.
If digital games are the future of console game purchasing, it means success as a digital distributor depends heavily on market presence, brand permission and, of course, brand identity. In thinking about who could best meet that criteria, GameStop seems best suited of any in the market. But only if it takes advantage of timing and its current position.
Walmart has presence and the brand, but lacks the permission. Best Buy has presence, a little permission, but its brand is lacking. Onlive certainly has permission, but is short on presence and its brand is still evolving. Steam has permission, enough of a brand, but is short on presence, especially when you consider its lack of a presence in consoles.
GameStop is the only one with permission, presence and a brand. Its brand still needs work, but it is at least playing the right arena.
The risk for GameStop is the folly of Blockbuster. It must understand the business of its brand and not just the business of its business. Gamestop appears to see the importance of digital games by purchasing Impulse, a digital distributor of game titles for the PC. Gamestop cannot be slow at leading the market change. If it is not the first mover, its presence will be reduced too much for it to respond effectively.
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