GameStop is Not The New Blockbuster

By Christopher Canadeo

GameStop has too many devoted customers and promotional deals to follow the same fate as Blockbuster. (Courtesy of Flickr)

GameStop has too many devoted customers and promotional deals to follow the same fate as Blockbuster. (Courtesy of Flickr)

GameStop is without a doubt the number one store in the United States for purchasing video games. From consoles to magazines, GameStop boasts 6,900 stores in 14 countries across Europe, Canada, Australia and the United States. Other franchises such as EB Games once coexisted in the same space, but GameStop asserted their dominance by absorbing them into other gaming industries and has cemented themselves as virtually the only place to purchase video games.

One might think that a monopoly such as GameStop would continue to dominate the gaming industry and grow their empire for years to come, right? Well, not quite. According to The Wall Street Journal, GameStop and its shareholders are in some serious trouble. This is not due to the emergence of a video game store chain the field, but something even scarier.

GameFly and Amazon are two companies that allow gamers to rent and buy video games without the hassle of visiting the stores. GameFly is an online service in which customers can order a new video game to rent for a certain amount of time and can even buy or ship the game back to the company once the allotted time is up. Customers can play the games they want without the commitment of purchasing that game.

Amazon, the online retail giant, has the ability to ship any game in stock to the customer’s house within a two day span. This convenience is unparalleled and presents major competition between themselves and GameStop.

Because of this, one might think that GameStop is in line to become the next Blockbuster. However, unlike Blockbuster, GameStop will not go extinct for a few reasons.

GameStop does have a major advantage over this rapidly growing trend of buying games online by allowing customers to sell back their games to GameStop for another game or store credit.

This system is exclusive only to GameStop and allows customers to actually make money off of their used games. Furthermore, customers can also purchase old and used games at far cheaper prices than brand new games on the shelves.

According to GameStop’s website, GameStop provides more than $1 billion in trade credits, with more than 70 percent of these trade dollars being applied toward the purchase of new products each year.

This is a huge advantage for GameStop over their competitors. It allows them to retain their customers more easily because they bring value to the customer aside from just being a place to buy video games.

If a gamer does not have the means to purchase a brand new PS4 game (which is usually over $60) they are able to still leave the store with a game by purchasing an older video game at a lower price.

GameStop also allows the consumer to pre-order games that have not yet been released. It allows a loyal fan base to be the first ones to play a game and guarantees that the game they want will be in stock for them on the day of the release.

Although customers are now able to perform this operation on some consoles such as Xbox One and PS4, the servers for these networks often crash because so many games are being downloaded simultaneously worldwide.

Fortunately, the concept of downloading games through your system has only spread to two consoles: Xbox and Play Station. This means that in order to receive new games on consoles such as the Nintendo DS or Wii U, the customer must visit their local GameStop store or purchase the game from Amazon.

Rather than declining, GameStop believes they are still expanding and still have much more room to grow in the global video game and tech space.
GameStop recently completed the acquisition of Geeknet, Inc., the parent company of ThinkGeek, a major computer and computer software retail chain.

With this acquisition, they are expanding into a growing $20 billion worldwide category as the premier global retailer that features exclusive and unique collectible products. They are showing that the company is more than just a classic video game store and that they have evolved into something much more and plan to be giants in the tech space as well.

GameStop also generates revenue by selling exclusive promotional items to consumers for the hottest games that are not yet in stores. For example, if there is a new The Legend of Zelda game that is coming out, customers can visit that specific GameStop store weeks before the game is released and can reserve a game.

As incentive to reserve, the customer may receive a free The Legend of Zelda hat if they reserve for the game. Another promotion, which is a bit newer and just as effective, is the Deluxe Deal promotion. If a new game is $60, customers have the option to buy an $100 or even $120 package deal often called “The Golden Edition,” or “Everything Pack.”

These packages often include, but are certainly not limited to, the game-with some unlockables that are exclusive only to package deal owners, accessories (such as a The Legend of Zelda replica Sword and Shield), and game manuals that help you get the most experience out of every game.

These package deals are for all consoles, but are not for all games. The reason is because most well-known games have a large enough and a dedicated enough following that these luxury deals are profitable. Die-hard fans that have been following the major gaming stories for years will purchase these Deluxe Deals at GameStop rather than shop online for games.

Furthermore, other than buying games at GameStop, customers who walk in the door are able to converse about video games with the employees at GameStop, all of whom are knowledgeable about all things gamer.

The expertise of the GameStop employees is something that GameFly and Amazon will never have. This is also a major factor as to why GameStop has a solid loyal customer base that Amazon and GameFly will never be able to ruin.

GameStop also plans to place more stores in France and become a larger part of that market share abroad. This move was indicated by GameStop’s acquisition of Micromania, the former French video game and tech giant that dominated the French gaming industry.

GameStop could possibly grow their business by attaching GameStop sections in lager tech and retail stores such as Best Buy or Walmart. This could increase GameStop’s foot traffic, given that places like Walmart already have huge customer inflow.

Although most GameStop stores in the United States are located in malls, which obviously have a lot of foot traffic, to have a GameStop branch in the major stores directly would greatly increase the amount of purchases and even conversations between the customer and those working in the stores.
Stores like Best Buy and Walmart would also gain in this partnership because they would share the wealth of GameStop’s rich gaming expertise and probably make commission the profits of the GameStop store within them.

Blockbuster collapsed because they stopped growing as a business and did not expand to any online venture. Netflix managed to swallow up Blockbuster’s customers because Blockbuster did not offer any customer value other than a place to buy movies and snacks.

Blockbuster also never sought out to acquire new businesses like GameStop did when the bought out Geeknet, Inc. and Micromania. Blockbuster was also not a global business like GameStop and only had stores in the United States.

This is a major advantage of GameStop as they are not only emerging in the tech industry of gaming in the United States, but also in countries abroad.
GameStop offers expertise and a complete buying experience that differs from that of Amazon and GameFly. GameStop also has a massive online presence that allows customers to chat and blog about their latest products as well as converse about new ones to come. There are so many more dimensions to GameStop than just a store that buys and sells games.

As long as GameStop continues to be the overwhelming monopoly in the gaming industry,and take advantage of promotional deals exclusively to GameStop, they should be free from extinction. GameStop’s loyal customer base and magazine revenue stream should prevent them from becoming the next Blockbuster.

Christopher Canadeo, GSB ’19 is a marketing major from Long Island, New York.

There are 6 comments

  1. du890

    I was a shareholder, am no longer,no plans to be ever again. Very happy it came back up so I could get out with profit. Lured by attractive div,p/e.

    Amazon game- $47. $50 if you must pay tax. Free 2 day ship. I’ve personally shopped Amazon for my game wants a long time. Agree with Ricky. No matter the cyclical nature of game business, they are losing market share. They can NOT compete with Amazon on prices with their retail overhead. They have not even tried yet. Collectibles will only carry them so far, until Amazon takes notice of interest and starts throwing them in free with preorder as a bonus if they have pricing deals they can’t go under. I mean really who has more pull. A currently healthier version of Sears or freaking Amazon. They will win whatever they take aim at and they have taken aim at game business. All aspects. They can’t diversify their way out of this mess. It’s all under fire.

    The only thing that could save gamestop is something like VR. I don’t mean the beta toy versions out now. That would be a tech that could make a physical location in game sales,try before buy,etc valuable. As combination shop/community center LAN vring or something. Even then, it can all still go digital and Amazon could rent the damn things/ provide them free as long as Prime continues. Amazon has the teeth in every scenario, because it’s structure and it’s market share!

    What is protecting Gamestop from this digital doom right now is

    -Digital game greed. It’s no cheaper to consumer, only to produce. With no incentive people still like a thing in hand. Make it $30-$40, oh my that dies. Used games too, which represents a big loss for them they don’t like one little bit. Far worse than piracy. Largely digital pricing being no good is to sate the physical sellers. Their biggest customers,ie Amazon work out a digital deal. Game over for toothless gamestop.

    -Internet suck. Yes,yes. In the cities you get not great but ok internet at not great but ok prices from definately not great American isps, compared to most of the world. A huge portion of America is cut off. Still the dark ages. I know it’s not you, not your problem. No game maker wants to isolate off an equally large (much more spread out) pool of potential customer. Current format supplies all. Future format cuts off customers if thats the new order.

    They get a little smarter about digital pricing and America invests in it’s internet infrastructure. Those are the death nails that destroy all hope for the company and that’s a pretty progressive tech to bet against. They may not be willing to lay the cables, but that doesn’t mean there aren’t a million and one startups trying to be the google of isps by finding a new way to reach out and offer service at low to no cost. Not cozy with lack of internet being the protection for a companies future.

  2. darkrage6

    Plenty of people would much rather shop at Gamestop for games over Amazon or Best Buy, I save more on games with Gamestop then Amazon. With Gamestop I get a discount with my Powerup Rewards Pro membership, store credit with games I trade in, and the occasional coupon I get from redeeming my points online, all that adds up to me saving lots of money in the long run. Plus the employees at stores like Target, Best Buy, Toys R Us, Walmart etc just aren’t as knowledgable about games as people in Gamestop are from my own experiences.

    So Gamestop’s not going anywhere for a good long time.

    1. CrackKing911

      I have Amazon Prime and get discounts for buying games and preordering games. I can sell my games online for more than GameStop will give me, and their shitty point system now auto-deducts points to shit out coupons that expire in a month. I wouldn’t trust most employee’s knowledge with products that are outside of AAA titles or consoles because most of the time they work there for a paycheck. Not to mention employees only make hourly pay and don’t get comission but still have to meet a sales quota.

      1. darkrage6

        I don’t bother selling my games online because it takes too fucking long for someone to actually buy them(I only really sell books and DVD box sets online), and Ebay and Amazon both charge listing fees and I frankly don’t feel like dealing with that crap. Yeah I might be able to get like 5 dollars more at Amazon or Ebay, but because of listing fees it ends up being the roughly the same amount I would get from trading the game in at Gamestop anyways, so it’s way more convenient for me to just bring my games to the store and trade them, rather then waiting weeks or months for somebody to actually buy them online and then having to ship them out, it’s just too much of a pain in the ass to me to really be worth the effort.

        I buy used games from Amazon sometimes, but never new releases, because Amazon has a tendency to not ship items to people on release day and there’s always the chance that your stuff will get damaged in the mail. So because of that I prefer to buy my new releases at Gamestop.

        Also no, Gamestop’s coupons actually do NOT expire within a month, the coupon I have right now was printed out last month and it does not expire until April 15th, which is more then enough time for me to use it.

        Speak for yourself, then employees at my store know plenty about all types of games.

        Also it’s really hypocritical for you to be using the employee argument to justify shopping at Amazon instead of Gamestop when the former treats it’s employees FAR worse then Gamestop ever did:http://www.salon.com/2014/02/23/worse_than_wal_mart_amazons_sick_brutality_and_secret_history_of_ruthlessly_intimidating_workers/

  3. Rickey Mcclendon

    As someone that worked for gamestop for 10yrs I can tell you that their buy, sell, trade program is not exclusive to them. Best buy does it, amazon does it and in some locations so does walmart. Yes their pre-orwned and collectible revenues will keep them afloat for awhile, but this can only last for so long. As a company that encouraged change, they are terrified to compete with best buy and amazon, who offer the ability to get games 10-20% cheaper on new and used games. The two things that will ultimately spell their demise will be their lack of competativeness and stretching themselves thin. Everytime Gamestop faces a crisis they buy into a new venture like cricket or simply mac. The problem is that eventually those too will fail to bring income all the while their trying to dig themselves out of the hole that they’ve failed to realize how wide the hole has gotten. And when that time comes, you netter believe they will become the next blockbuster.

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