With the acquisition of Impulse announced last week, GameStop is poised to compete with Steam and OnLive.
Digital distribution of games has come a long way, baby. Back in 2003 when Valve launched Steam it seemed like a pipe dream, but the service soon grew into the huge behemoth marketplace that we enjoy today. GameStop, the U.S. game retail giant, realized that if it was going to compete in the future it had to go digital, too. Purchasing the casual game website Kongregate and brokering deals with major game publishers to sell DLC through its retail outlets increased digital sales at GameStop to $290 million in 2010. Last week, GameStop announced it was set to acquire the Impulse marketplace from game developer Stardock and the streaming technology company Spawn Labs. I sat down with Tony Bartel, CEO of GameStop, and he pledged that by 2014 digital sales would equal $1.5 billion, or 12.5 percent of GameStop's total revenues.
"Two years ago, our board challenged us to adopt a strategy to evolve our business into the digital gaming world. These acquisitions are a continuation of that process," Bartel said. "Our customers are beginning to consume games in a hybrid manner, both physical and digital, so we are becoming a hybrid company to meet their needs."
GameStop will fold the Impulse marketplace directly to work with GameStop.com, which will continue utilize GameStop's "Power Up awards," aka "achievements." The tech derived from Spawn Labs will also allow customers to play any console game from anywhere, without the need for publishers to port them to PC. The business model seems similar to that offered by OnLive, except that GameStop will be able to put any game disc into a console somewhere and stream that experience to the customer instead of requiring publishers to alter game code.
Part of GameStop's strategy is to offer the ability to try a game briefly and then purchase that game later. "Let's say you're at work, you have a lunch hour, you pull out a Bluetooth-connected controller, and you have a highly immersive experience playing one of the latest games that have come out," Bartel said. "Because there's no need for porting, we can literally have first-release games and thousands of games that can be available to our consumers so they can play a very recently-released game, and if they really like it then we'd have a 'buy it here' button, and they move forward and enter into our sales process."
Bartel also said that GameStop wants to stream games to all kinds of devices including tablet PCs like the iPad. "We're very excited about a subscription service that we would offer to our PowerUp awards members where, based on the amount of games or based on the games that they've purchased from GameStop and have in their library," he said. "We would offer them a subscription service to stream those games and play them on any internet-connected device. PCs, we already demoed that we can stream these games to PCs, we also have on our roadmap to be able to stream to tablets in the not-too-distant future."
Players would be able to control these games with a Bluetooth enabled game controller or GameStop's "gamepad virtualization technology" which would ostensibly put the buttons on the display. David Adams, GameStop's vice president of online technology, admitted that such a control scheme isn't perfect for all games, but that it would well enough for titles such as Wii Sports Resort or even older console games.
And even though the streaming technology begs the question, GameStop has no plans to compete with Netflix in streaming movies to game consoles. "We really are totally focused on gaming," Bartel said. "That's what we know, that's who we are and we have no plans whatsoever to enter into the movie streaming space. It's not a space that we have the expertise in like we do in gaming."