GameStop Won't Survive 2020 (opinion)
I originally titled this article, “What does GameStop need to do to stay relevant in 2020?” My motivation to write this article was simply the presence of Stadia and xCloud at E3, as well as news about ThinkGeek. I’ve known for awhile that GameStop was having some financial struggles and sales slumps for a while now, but it wasn’t until doing research for this article that I discovered just how bad it is for GameStop. I really think the situation is more dire than most gamers realize for this once titan of game sales.
Earlier this month we caught news that acclaimed geek merch retailer Think Geek will be shutting down their online store. Now while this is a shut down of their own website, they aren’t shutting down entirely. There will still be select brick and mortar stores (for now) and they are moving their inventory for online sales and in-store entirely over to parent company GameStop. GameStop bought ThinkGeek back in 2015 and has since been drastically improving their offerings of nerdy gamer merch over the past few years. Aside from a few bumps around new console launches like the Switch or One X, GameStop has been slowly declining and struggling over the past several years. Last week, GameStop’s stocks have plummeted 40%, and GameStop announced that they would stop paying dividends for now. GameStop also started to close around 150 stores back in 2017. To really just show the scope of GameStop’s fallen empire, they have lost 95% of their value peak in 2007. They went from a value around $10 Billion to now around only $500M. GameStop failed to find a buyer early this year, showing no one wanted to invest in what is a percieved lost cause. Playstation has also recently pulled digital games sales from third parties, including GameStop.
The vultures just seem to be circling for GameStop. The obvious question is, is there a root cause to GameStop’s woes? The slow death of GameStop is NOT a sign that the gaming industry is declining, in fact it growing. The gaming industry makes more money than Movies, TV, and Music COMBINED. There is more money in gaming than any other entertainment industry by far and yet one of the biggest sellers of games in the US is failling hard. Why? Well it is a series of cumulative reasons; however the two that are the largest are the decline of physical game sales and rise of free to play live service games.
The biggest issues with GameStop is their primary business model is the sale of physical video games whether new or used. For decades physical game copies were the primary majority of the way that video games were consumed. PC gamers have been enjoying digital only games for years, but digital only didn’t really go mainstream until this current console generation where more and more gamers also went digital. There is probably several causes for this: faster average internet download speeds increasing; younger generations who grew up with mobile devices buying more games; and lastly this generation did away with many of the benefits of disc based games on console with many console games still now requiring lengthy updates and installs. A gaming store devoted to mostly selling physical games in a gaming industry that has significantly stopped buying physical games is just a losing strategy.
The second reason is the rise of free to play live service games, mega-phenomenons like Fortnite and Apex Legends have broken records and changed the game for the gaming industry. Now a days some of the most successful games are measured in terms of twitch viewers, monthly spend, and concurrent players, rather than box units sold. These are the money makers that old school game retailers can have difficulties breaching in very concept.
GameStop hoped that by buying ThinkGeek they could solve some of their financial woes by becoming a place not to just to buy video games, but also a place to buy nerd culture memorabilia like collectibles or t-shirts. Now don’t get me wrong, I very much like the new path GameStop has taken with that; it definitely helps during game release dry spells, and the new offering are really fun to hard core gamers like me. However, it has become apparent this just wasn’t nearly enough. This was a bandaid fix that doesn’t fix the core problems. Despite offering more collectibles and merch, GameStop has continued to struggle. I think there is still hope, but only if GameStop leadership takes drastic action.
Now despite whether or not you like GameStop, you can’t deny the impact it has had on the gaming industry. It is the largest gaming specific retail in the US, and without it, gaming would not be where it is today. It is also one of the largest gaming themed employers in US. Many gamers are employed by them, so their continued operation matters for gamer jobs. It is also one of the last face to face points where gaming customers can talk to gaming experts about games. Aside from online forums and social media, where else can you talk to the retailer selling you games? Target, Walmart, BestBuy, Amazon, all sell physical games, but their stores are often populated with general workers who may not have any knowledge or care for video games.
GameStop is my favorite place to buy games. Now despite the internet meme culture around GameStop’s trade in values being low, one can’t deny it is a retailer built for video games. Aside from large libraries of games and march, the biggest reason I go to GameStop is because of the staff. They are fellow gamers like me. They’re open to discussing upcoming games and chat about current games they enjoy; I am on a first name basis with the employees at my favorite location.
I am a core example of GameStop’s original demographic of customers. I have a pre-order list a mile long. I stop in frequently to browse, get information, and pick up games. I love both games and merch. I also prefer not just physical copies of games; I treat my game collection as just that, a collection which means I actually care about collector's and limited editions. However, because GameStop is largely built for me, they need to realize I am becoming a minority of gamers. GameStop can continue to cater to “just” me, and maybe go out of business, or they can adapt and attract a wider gaming audience. When I look at GameStop I see so many parallels to the Blockbuster era and the rise of Netflix. I remember watching both companies and saw how they responded differently to the changing industry of movie rentals. Blockbuster and Netflix both offered DVD rentals, granted in different ways. However, you’d be forgiven if you forgot entirely that Netflix rented DVD’s because they are THE name in home video streaming. Blockbuster ignored the changing landscape. They stuck to large brick and mortal dvd rental stores, and the company collapsed. Netflix and Blockbuster are forever the gold standard of examples when asking company’s this question. Do you adapt to industry changes and evolve or do you ignore those changes and risk failing? GameStop is quickly approaching this point of no return where they become a Blockbuster…or they become a Netflix. Maybe it is too late. While GameStop can still appeal to their core audience, they need to adapt to change the majority of gamers today. Here are several things GameStop could do to survive.
GameStop.com feels like 2009 not 2019.
I enjoy brick and mortar GameStop, but I will be the first to express that their digital online presence needs a significant revamp. Gamestop.com and the GameStop App are simply put, just awful. To really illustrate just how bad they are, the app doesn’t even let you click on an image and expand it. GameStop expects you to leave and google that collectors edition, or spend 130$ off a tiny low-res thumbnail. The app is not even optimized for the resolution for newer larger 2019 smartphones making everything stretched out and distorted on my XS Max. The inability to click on images and the obviously distorted enlarged app just gives off this impression of an old outdated app built for 2009. The descriptions of games are walls of small text, with almost no formatting, and understanding differences between editions of games is near impossible. The app (and website) needs a top to bottom overall by anyone with a web design experience not from a decade ago. The App offers poor trailer integration. You should be able to click on a game and have a really smooth experience for watching the trailer in app. You should be able to choose to preorder at a specific store and manage your pre-order list. I can’t preorder, cancel, switch editions, platforms, or anything. Making it EASY to buy is key to online purchasing. The app regularly deletes the shopping cart and signs you out for no reason. The App has almost no social media integration, features no news or poor notifications. If I have a game pre-ordered and a special edition is announced I should be able to get a notification, with details, and the ability to upgrade my game. The entire experience isn’t even optimized for core gamers buying physical copies, imagine how much worse it is for digital sales. It’s clunky, old, and offers little to no benefit over just buying through one’s console store. GameStop needed to work with Sony on an exception on Digital sales keeping PS4 digital sales at GameStop. In fact, GameStop needed to take digital sales and dial it up to 11. Netflix or Blockbuster? Embrace Subscription/Streaming
E3 2019 headlines this year was populated with game streaming and gaming subscriptions. GameStop isn't just stuck in the past, the gaming industry is already moving beyond just buying games digitally, it is also moving forward even farther with all you can play subscriptions and streaming games to any device beyond the need of consoles. Stadia and xCloud promise us a future where AAA games can be played on smartphones, tablets, and low end PC’s with cross play and cross progression becoming more and more widespread. Xbox’s GamePass Ultimate and Ubisoft’s new Uplay+ promise us a industry where you play a low monthly fee and access a huge library of games, even brand new games, without having to drop 60$+ on each. Even me, the steelbook junkie, collector’s edition buying hardcore gamer is succumbing to things like Stadia and GamePass. I recently went all in on GamePass Ultimate and pre-ordered Stadia’s Founder’s Edition. This is the future. Why is GameStop content to keep “just” selling physical game discs? Where is the subscription or streaming successor? Someone in GameStop leadership needs to take over and show off the next-gen buying experience for GameStop customers. GameStop has the largest catalog of partners for distribution as they are not a publisher or platform maker. They would have had a huge advantage in a subscription/streaming system over the likes of Google or Microsoft that have platform restrictions or Publishers like EA or Ubisoft that only have their games. Imagine how competitive a truly high quality next-gen subscription or streaming service that brought Switch, PC, Xbox, PS4 games from multiple publishers? “GameStop Online” could have been the biggest baddest most competitive service that they are failing to at least try.
I may be naive, but in the age of Amazon, I think GameStop could have been saved simply by a modern sleek website and app, that made shopping easy, and offered simple subscription, digital, or streaming options as well as physical.
Only at GameStop
Every major store front for gaming also made games. Epic Games was only able to make a competitor to mega giant Steam thanks to the success of Fortnite. Even Valve of Steam, back in the day made video games. Every other storefront, Xbox Store, Playstation, Uplay, Origin, eShop, Bethesda, Blizzard, GOG, etc… they are run by companies that not only published games, they helped develop games, and top it all off with that sometimes dirty industry word: EXCLUSIVES. GameStop is missing an opportunity to have “Only at GameStop” games. Now it is true they have this term already. They have items only available at GameStop. However, this has been limited to special editions of games available elsewhere, collectibles, or small indie titles. There has never been a “must have” AAA game only available only at GameStop, even during its peak. Like it or not, this industry could not survive without store or platform exclusives or at least first party titles. (I can hear the Epic haters chanting, but it is true). Halo sold the Xbox. Epic owes their store’s existence to Fortnite. Valve wouldn’t be the PC monopoly empire with 30% takes without being built on the back of HalfLife or Portal. The truth is, GameStop doesn’t make games, publish games, or have any “real” exclusivity deals. This is a huge disadvantage for the argument to go buy at GameStop. After a full website overhaul and rebuild, this is their next step. Buying studios is working for Microsoft, and getting easy exclusivity deals by slashing percentages is working for Epic. These strategies could work for GameStop.
In the end, I see a dark future for my favorite place to buy games. GameStop is closing stores, losing stock and profits, and many predict a total collapse of the company before 2021 with no salvation in sight by next-gen consoles. Some say GameStop wont even be here to see the next generation launch. What is infuriating is this brand and store doesn’t need to fail. They need to adapt. The things needed to do seem so simple to me and yet the company doesn’t give any evidence of changing. I hope I am wrong, because without GameStop there's no where to go to talk to a gamer in person, and browse a store made for video games.