GameStop Vs. Microsoft And Sony: The Battle Over Digital Delivery

GameStop is not happy with some of the publishers that stock its shelves. The retail chain made its name through buying and selling used games, usurping part of a market developers have long felt they was their own.

Now, Microsoft and Sony have begun selling games direct to gamers via digital delivery. Even worse for GameStop, the two industry giants have recently included valuable games for free as part of hardware bundles and subscription services like Xbox Gold.

This change in delivery method has GameStop worried. As reported by Yahoo! News, GameStop president Tony Bartel was critical of Microsoft and Sony and their digital retail strategies.

“We want to help ensure that our industry does not make the same mistake as other entertainment categories by driving the perceived value of digital goods significantly below that of a physical game.”

GameStop may be right to be concerned, as the brick and mortar store model leads to increased overhead costs that affect the price of the games. As digital delivery increases the overhead costs will reduce significantly, most likely leading to cheaper games across the industry. GameStop is not set up to compete with these changes.

Digital delivery also hurts GameStop’s used game market. After all, if a game only exists as data installed on a gamer’s console, it can’t very well be traded in at the local retail store. Cinema Blend reported this summer that GameStop is increasing their trade-in value to combat this issue. GameStop executive Jason Cochran claimed the increase in trade-in value will be well received by customers.

“GameStop made the decision to simplify the trade-in pricing structure that is part of our buy-sell-trade program based on positive feedback we have received from customers and store managers…. We anticipate this change to be well-received by our customers as they experience the added value we are now offering them for their pre-owned video game and consumer electronic products.”

The used game market has long been a hot button topic. Many in the industry feel the sale of new games is integral to the health of the gaming industry. As the popularity of gaming has soared in recent years, so have the budgets. Game developers need direct sales to recoup these costs and to earn the profits necessary for future game budgets. What they don’t need is possible new sales going to retail stores in the form of used sales.

In June 2013, Gears of War producer Cliff Blezinski took to Twitter in support of the industry’s attempts to root out used game sales.

You cannot have game and marketing budgets this high while also having used and rental games existing. The numbers do NOT work people.

— Cliff Bleszinski (@therealcliffyb) June 12, 2013

With the holiday season ramping up and new games released weekly, GameStop needs players to trade in physical games towards the purchase of new physical games to they can trade in used games, and so on. Conversely, Microsoft, Sony, and other publishers need those sales to go directly into their own coffers. It’s a battle that’s been waged for years, and it doesn’t seem to be going anywhere anytime soon.

What are your thoughts on used games? Do you trade games at GameStop, or do you prefer digital downloads?

[Photo courtesy of glassdoor.com]