I read an article on Gamasutra recently about how GameStop could be in big trouble if its margin on selling pre-owned games takes a nosedive – which, given how we think the Xbox One will restrict used games, is a very real possibility. The author is likely correct, that GameStop would be “gravely diminished” if this occurred, but he stops short of saying that the chain will die off completely.
I’m going to go one step further and say that yes, GameStop – as well as any other big-box store that sells video games, at least in its current incarnation – is doomed. One thing the author of the Gamasutra piece doesn’t take into account is how much business GameStop is likely to lose on sales of new games in the coming years – and that could be an even bigger blow.
Decade to Destruction
I think it’s inevitable that, in 10 years or so, video games won’t be sold in large retail chains anymore, places like GameStop or Best Buy. There might be exceptions for collector’s editions, and a few smaller places might still scrape out a few bucks here or there, but by and large, the game store as we know it is a doomed species of retail outlet.
The issues with used games are numerous and have been debated to death already, even before we have a totally official answer from Microsoft on the Xbox One. Still, my time frame accounts for another wave of new consoles over the next decade, and I’d wager that Microsoft (and possibly Sony and Nintendo) will have tweaked their model even further, to make it both more profitable and more palatable – for them, at least.
The big blow, instead, comes from the loss of new game sales. Experienced PC gamers are already helping to realize that “goal.” A decade ago, if you wanted to buy a PC game, there was really only one choice: go to the store and buy it. Now, virtually every game can be purchased as a digital download, whether through a third-party retailer like Steam or Origin, or direct from the developers themselves.
This has obviously had an effect on the profitability of PC games in stores. Here’s what the entire PC games section of my local Best Buy looks like:
Looks kinda slim, doesn’t it? I counted 22 distinct franchises, all of them solidly in the “big name” category (The Sims, Skyrim, Call of Duty, the Blizzard trifecta of World of Warcraft/StarCraft/Diablo III, etc.). It’s a meager and very narrow set of games, especially compared to the wide variety of console games on the shelves (not to mention the thousands of PC games available on Steam, gift cards for which you can see on the far top rack).
And what if the revenue from those console games dries up? Consoles are becoming more and more like computers every day, and a wide variety of titles are available for direct download, eliminating the need for a physical disk. The Xbox One will install games from the disk to the hard drive; it stands to reason that you soon won’t even need the disk, as is the case with many PC games.
There’s another good reason for companies to switch to a “discless” format: money. Even if you only save a dollar or two by not producing a disc, rulebook, and box, and shipping it to the store, that’s one or two dollars that go straight into your pockets. The Gamasutra article estimates that around $12 of a new $60 game goes to the store, leaving $48 for the developers. $1-2 savings equates to a 2-4% increase in profitability, which doesn’t seem like much, but can number in the tens of millions of dollars for popular games.
It’s no secret that digital sales are on the rise. Digital game sales rose 33.9% over the last year, and there’s no reason to think this trend won’t continue. It’s going to take the better part of 10 years, though, I think, to convince people that this is the way of the future. Even I feel a little twinge of… I don’t know if I’d call it “guilt,” but it’s something… when I buy a game off of Steam, and I consider myself a pretty technical dude. Will the casual gamer who only plays Madden and Call of Duty be as quick to adapt to digital-only sales?
I think so, but it’ll take a little while longer. As even folks who don’t consider themselves “computer people” spend more time online (“Xbox! Search for porn!”), it’ll eventually become more commonplace. And if you can get all your gaming needs from your couch, why go outside to get them?
Stopping the Bleeding
Can stores like GameStop do anything to stop this seeming inevitability? They are attempting to branch out into mobile and digital gaming, and the early signs are promising (though overall earnings are down), but it will still be a long and difficult shift. In any case, the GameStop of 2023 will look much different than the GameStop of 2013.
Look what’s happened to video-rental chains like Blockbuster since Netflix came around – first in renting DVDs and, more recently, in introducing streaming, which Netflix itself thinks will soon outpace physical DVD rentals, if it hasn’t already. (Blockbuster has its own movies-on-demand streaming service, but I’ll bet you didn’t know that.)
What does a store have to offer that a simple Internet connection can’t? Not the games themselves and, less and less these days, not even previews of the games. It used to be that about the only way to get your hands on a game prior to spending money (either via rental, actual purchase, or traveling to a convention) was to try it out at a store.
Now, with online demos so prevalent – not to mention simply being able to watch the game via livestreaming – even that convenience has been usurped. (Did I mention that the PlayStation 4 is going to have integrated livestreaming?)
Put simply, unless you really want to go on a nostalgia trip and buy a box or buy a collector’s edition, or a piece of hardware, there soon might not be any reason for you to visit a game store at all. I think we’re not that far from a generation of gamers who will look at game stores the same way we look at typewriters and cassettes: nice tools for their time, but they’ve been surpassed by something that’s better, faster, and more convenient in virtually every way.
