Network now...FEATURE
GameStop "Not Afraid" to Compete with Publishers
By Kris Graft
September 10, 2008
See also:
Related Articles:
"All that we ask is that our customers are able to get the product [at traditional retail] at the same time for the same price ... so that the consumer has a choice."
At the GameStop Expo this week, company execs told Edge that when digital distribution of full-size games arrives on a wide scale, they expect to be kept in the revenue loop.
"Our position with our vendors has been pretty straight forward. We've been honest with them--we're not afraid to compete with them," said Bob McKenzie, SVP of merchandising at Grapevine, Tex.-based GameStop.
"All that we ask is that our customers are able to get the product [at traditional retail] at the same time for the same price ... so that the consumer has a choice."
He said the speed limitations of most broadband solutions would drive consumers to traditional retail.
"[In that scenario,] we're confident that we're going to win the majority of that business. We're not saying we won't be impacted at all by digital distribution, but the average customer isn't going to have the patience for a 72-hour download for a game on their system," he said.
McKenzie noted how presently, most console downloadable content is in the form of add-ons and expansions, while relatively few "full-size" games are available on services like Xbox Live Marketplace and PlayStation Network.
Tony Bartel, EVP of merchandising and marketing argued that brick and mortar retail offers something meaningful beyond digital shopping. "We really think we provide a tremendous value to the customer by them coming into our stores. We offer a great experience with the expertise of our staff."
Bartel also said that he doesn't see the issue of digital distribution as a "publishers vs. retailers" matter. "I don't see it that way at all. The way that I see it is I think we're both after the same goal--to offer customers a great experience. If they want to offer games digitally, we understand. But we sure don't plan on getting in the publishing business--we just want to be great retailers."
Contact Us / About Us / Advertise With Us / BeltwayBlips / TechBlips / MassiveBlips / GamerBlips / FAQ
Subscribe To Edge Magazine / Corrections / Terms & Conditions / Privacy Policy
Copyright 2006 - 2009 Future Publishing Limited, Beauford Court 30 Monmouth Street Bath, UK BA1 2BW
England and Wales company registration number 2008885
Subscribe To Edge Magazine / Corrections / Terms & Conditions / Privacy Policy
Copyright 2006 - 2009 Future Publishing Limited, Beauford Court 30 Monmouth Street Bath, UK BA1 2BW
England and Wales company registration number 2008885
When you found that they had only 50% compliance was there a penlty or any kinda of reinbusrment?
On another note, Im all about DD but I would like them to mail me a box copy also. Other wise once im done with the product its worthless I can't even sell it on Ebay for $20... Now I know that better for publishers but what if you were never aloud to sell your car or trade it in against a new one. I don't see why video games should be any diffrent..
"I think the main issue that will always hold back a complete transition to digital distribution is space."
Always? Or just for a couple of more years? Storage space, like any other technology, is seeing improvement and prices dropping over time... We'll get there. Trust me. Fact is GameStop execs know too that we'll eventually get there, sooner rather than later. Which is why they state the opposite. They are listed publicly. They have shareholders and short-term stock exchange ratings to worry about.
The only thing stopping all games going digital at the moment, is broadband networks are not fast enough yet and could not handle all that downloading at once, just think if the same amount of people that got Halo 3 or GTA IV on day one all downloaded at the same time. The network would die.
But I am looking forward to the day when we can, Burnout Paradise coming to PSN as a download, is a big step forward.
I don't know much about how far there is to go before we can download a game fast and efficiently but when that day comes I'll have mixed feelings. On the one hand there's the infuriating concept of the game store itself, whereby it is usually bereft of any intelligent life forms and has that tacky, kiddy design to it, that makes you almost embarrassed to enter. However, I do like the community spirit of a midnight opening; something that you don't really get with any other medium, you don't see people queuing for a DVD release or a Music release because people have usually heard/seen/downloaded enough of it to quell their excitement by the time it is on sale. Of course, we have game demos but most people approach these with the notion that it may not reflect the finished article and so steal themselves until they can have the proper experience.
For the time they have left, game stores need to provide a better service than they currently do. They need to move with the times and get rid of the primary colours or in some instances, the dark and dingy mise-en-scene that perpetuates in these institutions like some sort homage to the 80's. Gaming has got serious, and 'why so serious?' Mr Joker, because its bloody expensive thats why.
"We really think we provide a tremendous value to the customer by them coming into our stores. We offer a great experience with the expertise of our staff."
HA! This guy should do stand-up.
"All that we ask is that our customers are able to get the product [at traditional retail] at the same time for the same price ... so that the consumer has a choice."
What gets me about that is 'the same price' expectation. Most people would rather 'own' a real copy of the software (if it's going to cost the same price). I'm a big fan of Steam games, but not for $5 less (or the same price) than retail. For example, Steam is just now offering Age of Conan for a measly $5.00 discount off retail. Big deal. No wonder Gamestop isn't worried.
Wait until publishers start selling their game for whatever and whenever they want; then we'll see a different opinion from Gamestop execs.
If I were a developer, I'd certainly want to take my chances with the digital distribution model. Screw retail.
What Gamestop is saying doesn't match with their inventory if you are a PC gamer. There selection is never more than 40% of what is on the market, and often, even new titles. If you want a PC game, the easiest and quickest way to get it is either online or thru a large online dealer, never at the Gamestop retail outlet. It would seem that their inventory in the store tells you that what they are interested in selling is not new retail but pawn.
This is appalling. For years GameStop (and before the merger, EB) threatened to drop product if publishers went online with digital distribution - I should know, I worked at a lot of those publishers.
Now, in order to punish the people who have gone online - PC publishers - they've radically diminished the store space available to PC games and have gone crazy over console stuff.
However, as a publisher, I'm sick of having to pay anywhere from 2 - 5% of my entire projected revenue to GameStop so I can participate in their usurious POP programs to launch a game succesfully:
-Pay 10K to have store managers mumble into the phone "thankyouforcallinggamestopwouldyouliketopreorderdecapitator3000forps3foronlyfivedollars (deep breath) thisisTravishowcanihelpyou"
-Pay to have a poster hung in the window next to a competing game or have a standee placed in the front of the store behind another poster, or have the standee placed on an "endcap" that faces the rear of the store, behind the used UMD movies...
-Pay to have the little change pad at the counter with your logo on it
-Pay to have your game in the flyer
-Pay to have your game listed on the website as a "featured title"
-Pay to have your logo on the shirt the store manager might wear that week.
Seriously, at one publisher we paid out the NOSE to have aggressive GameStop POP merchandising. When we followed up, we had only 50% compliance. We threw HALF our money down the drain because Travis couldn't be bothered to stop checking in used games to actually put together the stuff we paid for.
So, sure, if their business model is going to get stronger by having suburban housesows hold up the line asking for the "Nintendo HD with the thing" while hardcore gamers fume in line only to be told "Uh, Crysis, uh, that's not out yet," then sure, that's fine.
We'll download away.
Wait until hardware guys (and it could even happen in this generation) publish a major release completely online, and Travis is stuck sitting on 300 used copies of Darkwing Duck for GBA...
Sure, they say, GameStop will still be needed to sell the hardware. Right, because nobody else sells hardware, except Wal-Mart, Best Buy, Target, Circuit City, Amazon, NewEgg, Dell, and none of those have any brand strength with suburban housesows, who actually prefer the sweatsock redolence of the strip-mall Gamestop over the place they can also buy shoes for the kids and Redken conditioner...
Let's face it, used sales are what is making Gamestop big, it is also where publishers can hurt them most. If people sell Bad Company for 40€ on Amazon, then that's what it is currently worth. But publishers continue to sell their product at full price as if this was the stone age and modern user-to-user trading with the help of Amazon, Craig, or even Gamestop was not an option. Most video rental places do have games, that's also a reality publishers ignore.
If publishers simply recognized that their market was not just full price retail, but also used trading and rental, they could grasp those markets themselves. Not just digital full-price distribution, but digital trading. Steam can enable my account, they can disable it as well while giving me some space bucks to use in their online store. Gamestop made that leap of faith and their used games section is by far the most profitable. Undercutting their used game prices via digital distribution should be easy as pie, buying back games is also not a cost issue since publishers would still be in full control and whatever game totally flooded the market will not yield great buybacks. Just keep track on your buybacks and the more boughtback games are "in stock", the less you will pay. Don't consider it a loss, consider those players as people making use of an online rental service. Movies can already be rented online, games are the logical next step.
Gamestop is not afraid of publishers selling online, but they will be afraid of publishers re-enacting their business model in an online environment. Some juicy Steam and D2D features later they might not spit out such big words.
When you found that they had only 50% compliance was there a penlty or any kinda of reinbusrment?
On another note, Im all about DD but I would like them to mail me a box copy also. Other wise once im done with the product its worthless I can't even sell it on Ebay for $20... Now I know that better for publishers but what if you were never aloud to sell your car or trade it in against a new one. I don't see why video games should be any diffrent..
I think the main issue that will always hold back a complete transition to digital distribution is space. Certainly on the PlayStation 3, if you believe that supposedly Metal Gear Solid 4 used up all 50Gb of the available capacity on the disk. Certainly a game like this will never be a viable option for digital download. Of course as time presses on more and more developers will begin the use the full capacity of the media available to them, already we hear rumours of disk storage issues with the Project Gotham series. Ironically though, sticking to DVD media could have turned out to be quite an advantage for Microsoft in terms of digital distribution. Let's say they release Gears of War 2 via retail and Live. At a maximum of 8Gb for a downloaded copy and with new 360 buyers most likely having the 60Gb SKU it would seem to be a pretty irresistible option, especially for those hard core fans who'd rather not queue up in the cold for a midnight release party. Microsoft could even significantly reduce the cost of the games distributed in this fashion whist also increasing their profit margin on each unit. They'd be keeping the cut usually taken by brick and mortar middle man whist also negating the cost of packaging.
For Sony then digital distribution seems more likely to stay the home of smaller budget titles. As for Microsoft it seems as though they have missed a lucrative opportunity. Especially with most people already owning the 20Gb 360 it could be a long time before they could seriously implement a digital distribution platform for their high profile titles.
"I think the main issue that will always hold back a complete transition to digital distribution is space."
Always? Or just for a couple of more years? Storage space, like any other technology, is seeing improvement and prices dropping over time... We'll get there. Trust me. Fact is GameStop execs know too that we'll eventually get there, sooner rather than later. Which is why they state the opposite. They are listed publicly. They have shareholders and short-term stock exchange ratings to worry about.
"...the average customer isn't going to have the patience for a 72-hour download for a game on their system."
They have the patience to wait that long if they order the game online (e.g. Amazon), and even longer if they're at the mercy of the Royal Mail.
Who keeps talking about 72 hour download times? I've mentioned before with my 360 (just me, I can't speak for everyone) I get a little over 1mb/sec (I've timed it) on average. That would be per hour, 3.51 gigs. Even if a game really does take up 50 gigs (c'mon, that's just lazy programming) that would be just 14 hours for the entire 50 gigs with 1mb/sec actual download speeds. If you're taking 72 hours, you need to get better internet service (or xbox live's networks are really that much better than PSN's). And, at that speed, a 7 gig game would take 2 hours. I'll wait two hours past midnight to have the game available as opposed to going to a midnight launch as someone prior already mentioned. And I think Stefan King mentioned wanting to be able to trade or sell his stuff when he's done, and he's right, DD would take that option away, but I'm sad to say I think that's a reality we're going to have to accept when gaming goes the way of music. Do any of you buy CDs any more???
Once the network in the USA reaches the same speed levels as in Japan and Sweden, the download time of a full game is in the same range as going to the shop, park your car, buy the game, pay for it, come back, scratch the plastic from the box and boot it up... Plus, it's never raining or snowing on Xbox Live.
Statements like these may blindfold stock exchange investors who are far away from games for a little while longer... but fact is and remains that the current business model of GameStop will not be sustainable as we dive deeper into the digital era.
Looking at how download sales eat up retail sales on the PC side of things will give you a glimpse of the future for the console market. Just a glimpse.
The Internet bubble did burst not because it was wrong to assume that "online is the future". Analysts and investors were only naive about how long it takes to reach that future... A decade later, we're getting much closer from seeing the prophecy fulfilled.
Which limitation of broadband? Which game will take 72h to download? Even on a slow 1Mbit broad band the largest Steam games will take no longer than over night. If one buys broadband today, one can get very affordable 20Mbit and that would result in 632 potential Gigabyte in that ominous 72h period. Provided the online retailer can handle that speed, it should be enough, even for a Kojima collection.