It’s bound to happen: GameStop becoming the new Blockbuster

Physical media simply has little future

News from the 2013 Electronic Entertainment Expo (E3) is in. The upcoming PS4 and Xbox One will allow used games to be played on their systems, a rumor that would have laid immediate repercussions on the nation’s top gaming reseller, GameStop.

Nonetheless, it’s only a brief reprieve before the oncoming onslaught of digital downloading turns GameStop into another Blockbuster.

Think of it like this. Blockbuster sold tangible copies of media and scoffed at online streaming services. It had (or, in a few cases, still has) brick and mortar stores that sit empty with archaic merchandise. Blockbuster attempted to become more relevant by expanding its selection of merchandise (such as games) and only entered the digital era begrudgingly.

“But developers are also creating additional downloadable content to prompt players to keep their games longer. That works for the developer’s business model, which makes no money on resale.”

Sounds like both the present and the future of GameStop.

The end is still a ways away. Developers are offering download passes for their online services, which means the purchaser of a used game at GameStop can buy an online pass to play portions of the game.

But developers are also creating additional downloadable content to prompt players to keep their games longer. That works for the developer’s business model, which makes no money on resale.

That’s why it was significant when Microsoft, the manufacturer of Xbox, said it was up to the developer to decide what limitations are put on the games.

“Third-party publishers may opt in or out of supporting game resale and may set up business terms or transfer fees with retailers. Microsoft does not receive any compensation as part of this. In addition, third-party publishers can enable you to give games to friends. Loaning or renting games won’t be available at launch, but we are exploring the possibilities with our partners.”

The lesson for GameStop is this: Blockbuster was king of the hill and responsible for shutting down many local video rental shops. But its failure to adapt to the changing market led to its swift fall from grace.

GameStop must come up with a solution – and not wait too long to do it. Otherwise, it is doomed to repeat Blockbuster’s blunder.