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GameStop Admits Fear of Digital Distribution

| 7 May 2010 19:05
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Will digital distribution kill retail? GameStop, one of the world's largest evil videogame retailers that is often jokingly referred to as evil, seems to think so.

GameStop has under-valued the effects of digital distribution on its business in the past, but now publicly acknowledges that it's concerned. In an expanded fiscal report, GameStop has detailed that digital distribution could be very, very bad for the retailer. "Technological advances in the delivery and types of videogames and PC entertainment software, as well as changes in consumer behavior related to these new technologies, could lower our sales," the report says.

It continues: "While it is currently only possible to download a limited amount of video game content to the next generation videogame systems, at some point in the future this technology may become more prevalent. If advances in technology continue to expand our customers' ability to access the current format of videogames, PC entertainment software and incremental content for their games, as well as new types of browser and casual games through these and other sources, our customers may no longer choose to purchase videogames or PC entertainment software in our stores. As a result, sales and earnings could decline."

And it gets even more negative, as the report also states that despite GameStop's current strategies to compete and assimilate with digital distribution, it "can provide no assurances that they will be successful or profitable." Especially due to the mention of browser and casual games here, one such strategy has been to acquire Jolt Online Gaming, with GameStop pushing Jolt's Legends of Zork browser game recently. For all we know, GameStop could eventually become a game developer instead of a retailer.

It plans to keep pace with digital content delivery through methods such as PC downloads and digital kiosks, but as we see with Xbox Live Arcade and the PlayStation Network, the big boys have the power make games flow directly from console to customer, cutting out poor li'l GameStop. Key to GameStop's wording is the admission that new technologies could change consumer behavior in general, even if Microsoft, Sony, and Nintendo don't switch to a purely digital format.

Honestly, it would be a little sad if GameStop and other retailers hit the bricks, because the used videogame market holds such a great value for consumers. Can't find a random PlayStation 2 game new? GameStop probably has it at three nearby stores for $4.99. I'll be the first one to say that I don't want used games to negatively impact developers and publishers, but the physical retail store will likely always hold a value for consumers somehow. Then again, maybe not, as in a digital world every game would ideally always be available no matter how old.

Source: Gamasutra

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