Does Gamestop have a future?

For years, I believed that Gamestop was a smart investment opportunity.

Gamers were turning gaming into a billion dollar industry, seemingly without notice. And whether you were a PC or a console gamer, your one mecca was Gamestop.

But now?

I have doubts about Gamestop’s viability moving forward.

Nowadays, you can buy games at Best Buy, Target, Wal-Mart, Blockbuster, etc.

And while Gamestop offers some consumer incentives (their trade in program for instance), on the whole, the competition is poping up left and right. In the same way dedicated music store chains (Music Plus, anyone?) went the way of the dodo, I wonder whether the writing is on the wall for Gamestop? And if so, whether there’s anything they can do about?

I hate Gamestop for firing Jeff Gerstman!


I hope not. The faster they crash and burn, the better.

This year was like a record year in profits for them, and I believe they made the Dow 500?

As long as people want a pawn shop for their games, Gamestop will be around.

Right. But my underlying question is to ask whether this is a sustainable model moving forward. I have my doubts.

The funny thing is, I never went to Gamestop until they bought out EB.

I always went to EB and Software Etc which had walls and walls of PC Games.

Pawn shops have been and always will exist…

I see Gamestop as being with us for years to come.

Huh? They are now on the S&P 500;title;4

They also had a record 1.6 billion quarter last quarter

So I think they are doing damn well. Even with the competition. Remember that BB for example doesn’t have people who know the games/systems, and even though many of us have had interesting experiences at Gamestops, they are supposed to know the games.

That’s been true for years, though. I think a lot depends on either a) a major competitor for the used business emerging or b) the shift to games being delivered primarily via internet. Both of those seem years away.

Prostitution has been around since time immemorial. That doesn’t mean that it’s a smart investment.

I can certainly see Gamestop contracting and continuing a weakened existence, but I can’t imagine it growing at the pace it has or having the type of success it has had to date beyond the near future.

Why? Do you think people will stop buying games?

GameStop will be around for a while, I think, because they offer the same prices for games the the Big Box stores do. They offer trade-in services and pre-order services, too. They’re smaller, so if you know you want to buy a game, you can get in and out very quickly. They tend to be in malls, which attract a good number of young people.

I think I can see your concern, since after all, the Big Box stores drove a lot of the music stores out of business but that’ mostly because the recording industry is tanking and the Big Box stores used CDs as a loss leader. As I mentioned above, that $59 game will be the same at GameStop or Best Buy (maybe Wal-Mart will have it for $57.82).

Ditto. I still go to the stores branded EB Games if I have the opportunity to.

I still don’t see why you think this way, unless you are just trolling. Their profit margins are huge on the trade-in stuff and their costs are minimal with their small stores. They are going to grow just as the industry does, actually better than the industry because of the trade in stuff. BB, Kmart, Walmart are not set up to take trade ins so they don’t have to face competition on that front. No one is selling used games on ebay anymore than they used to, so their gross is legitimate. Also, they deliver PC games over the internet, just like Steam and Direct2drive etc.

As long as the industry is growing, they should be just fine. OTOH, if it stops growing then they have a problem vs BB etc, since they only sell videogames while the others are more diversified.

They’re smaller, so if you know you want to buy a game, you can get in and out very quickly.

Bullshit. It takes me far longer to buy a game from EB (they haven’t rebranded them Gamestop in Canada, yet) than from Future Shop. At Future Shop: head to the console games section, pick out game I want (which is quite easy as they leave a couple of inches on either side of a game so they don’t look all crowded together), or if they don’t have it on the shelf, ask one of the three employees working that section and they’ll almost always know for sure if they have it in stock (often without even checking their computer), and head to the checkout. The checkout process doesn’t take very long as they always have plenty of cashiers, none of whom try to upsell you a strategy guide or scratch protection or shit like that.

At EB, I have to squeeze my way through narrow floorspace that’s overloaded with used games and used controllers, then try to find the game I’m looking for amongst all the games crammed into a 4 foot shelf all with the spine facing outwards making things very challenging indeed. Then I have to wait about an average of 5 minutes in line as it takes them forever to process a transaction there, thanks to their policy of requiring employees to upsell strategy guides, sell their scratch protection thingie, and the fact that they gut game boxes and keeping the discs in a locked cabinet. And you have to watch them like a hawk in case the dumbass puts the wrong game in the box. It’s just not worth it to have to deal with EB. The only thing they have going for them is they get in games that Future Shop or Best Buy don’t (like the MegaTen games). But has been carrying videogames for a while now, and semi-obscure jrpgs aren’t really an impulse buy for me like some other games, so I don’t mind waiting a week or two for them to arrive.

tl;dr: Future Shop is a far better experience to buy games than EB (for me).

edit: EB, not BB

Uh, what’s changed? Target, Walmart, etc have been selling games for years now. You act like this is something new.

I don’t think Walmart and Best Buy don’t compete directly with GameStop. GameStop makes all of its money on resells, there just isn’t much profit margin on new sales (at least not as much margin as GameStop wants) compared to a resell.

The shame is that the developer doesn’t get any part of the resell, and yet that resell is competing with new sales that the developer would get profit from. Try buying a new game at a Gamestop on anything but release week, they always push the “we have a used version of that for $5 less”. Why do they push it? Because they are making a lot more profit on that used copy then they would if you bought a new copy.

Unfortunatly that means that outside of release week publishers are unlikely to see anything more than a trickle in software sales through this method even if their game is a hit.

Sure this is the same model followed in other industries, no one complains when a dealer resells a traded in car even though the manufacturer doesnt get any of that sale. But the difference with software is that there is little to no depreciation and the turnaround is so quick (the time it takes a player to get tired of the game).

Other gaming stores dabbled in resales but Gamestop made it the core of their business (one of the reasons they dont care about PC games) and they are making a ton of money off of it.

I had this conversation with a guy at Gamestop yesterday. They were selling a copy of Motorcross from a PS3 bundle. The one marked “Not for Resale” across the top. I mentioned that that may make them unable to resale that copy of Motorcross, and he argued that it only means that they cant break it from the bundle and sell it new. If they sell it and buy it back then they can sell it for whatever they want. Now this is just some kid shooting the breeze with me in a Gamestop, not any real legal arguement so Im sure we were both full of crap, but it does show that Gamestop is pressing resales and not letting anything stand in their way.

I don’t know what the answer is. I am looking forward to direct distribution of all gaming content. Let the developer control his assets from start to finish. I used ot be scared of losing the local gaming retailer, now I cant wait for that day to come.

Jake, every time I take you off my ignore list, you go and do something like this and I have to put you right back on.

Gamestop has a future. The console shortages have only enhanced their profile because many people who used to restrict their shopping to the big box stores have had to make their way to Gamestop in hopes of finding a console and/or accessories.

Aw, come on. This isn’t even a poll.

The shame is that the developer doesn’t get any part of the resell, and yet that resell is competing with new sales that the developer would get profit from. Try buying a new game at a Gamestop on anything but release week, they always push the “we have a used version of that for $5 less”. Why do they push it? Because they are making a lot more profit on that used copy then they would if you bought a new copy.

The other side of the fence is that the margins on new games are so slight that a store is hard pressed to survive by the virtue of new games sales. That not selling used games doomed other retailers, as the overhead of a retail store did not match the markup of a game.

They’d have a better future if they invested more in staff training (and presumably compensation).

Made the mistake of going into one today. Now I’m prepared for multiple root canals.

“I’m just curious, why isn’t this copy of a PC game, which you went in the back to get after I gave you this floor copy, not shrink-wrapped? It’s new, isn’t it?” “I don’t know, maybe it was on the floor as a display and we pulled it off?” “Yeah, you better let me have that receipt.”

Not even a “thank you.”

Also, six idiots crowded behind a counter, 4 kibbitzing, one checking people out, the other, a manager, paralyzed in confusion at whatever alchemy was printed on his screen, does not a good store make. But I guess they don’t care. All they want is your trade-ins, you to buy used games, and for those looking for a Wii to stop calling. Actually heard one staff brat snidely comment just out of range of a customer that ‘if you really wanted a Wii you would have got one a year ago’ - 'cause we all cool bleeding edge early console adopters.

There is nothing nice about these stores. Target is more inviting.