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.
