Why game streaming services and next-gen consoles could destroy GameStop

GameStop is walking the path of Blockbuster and it could easily go down in flames. The game retailer announced last April they would be shutting down 120 stores this year, which doesn’t come as a surprise as new technology in next-gen consoles hint at the possible death of the retailer.

Sony Computer Entertainment announced in April the latest update to the PlayStation 4, system update 1.70. The update included pre-download and auto-download options for pre-ordered titles. This even further cuts out the need to purchase a physical copy of a game. Soon after the PS4 update was announced, GameStop CEO Paul Raines confirmed they would be shutting down 120 stores.

The goal of shutting down the stores is to double the company’s Spring Mobile and Simply Mac stores. The announcement doesn’t come as a surprise and isn’t disconcerting considering there are 6,457 GameStop locations worldwide. However, Raines is looking at another retailer that branched out of its original market as an example to grow their company:

As for how GameStop plans to extend itself into these new markets, Raines said the executive team had been paying close attention to previous companies that made similar leaps. He cited Williams-Sonoma as one such model, as the kitchen equipment retailer has successfully established or acquired brands such as Pottery Barn and West Elm.

He also pointed to VF Corporation, which began by making underwear, but now owns Lee, Timberland, Wrangler, Jansport, and a number of other clothing brands. Interestingly, Raines’ presentation slide pointed out that VF Corporation eventually exited its original field when the company sold its underwear business to Fruit of the Loom in 2007. (Source: GamesIndustry International)

Simply Mac is an Apple product retailer while Spring Mobile sells mobile devices, plans and accessories. It isn’t a good sign GameStop is attempting to expand elsewhere.

If automatic downloads aren’t enough of a blow for GameStop, Comcast and EA were reportedly nearing a deal for a video game streaming service in the beginning of May. Reuters reported the two companies were close to reaching an agreement to launch the streaming service beginning with family friendly games such as EA’s FIFA and Madden franchises.

Comcast reaches more than 22 million customers in the United States. The launch of Netflix brought down the age of move rentals; a game-streaming service could mean the demand for physical copies will decline and with it the need to head over to GameStop.

Tags: Comcast EA GameStop Gaming

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