GameStop Making Serious Cash with Digital Initiatives!

The Appetizer

GameStop has expressed its interest and willingness to invest into the digital distribution spectrum instead of ignoring it, and thanks to this stance, the videogame retail chain is looking to generate close to a quarter of a billion dollars by the end of 2010 in digital related sales alone.  GameStop is generating revenue through products such as point card sales for XBox Live Arcade/PSN/Wii, downloadable content, and even the distribution of digital games.  In regards to the latter, the company is expanding to platforms outside the traditional Sony/Microsoft/Nintendo/PC systems, and venturing into platforms such as cell phones.  Thanks to the much talked about success of videogame sales on products such as the iPhone, it has caught the attention of GameStop, who is now making a conscious effort to take advantage of this and further maximize their digital revenue generation by releasing products (ie-games) over the system.

The Main Course

The Dessert

I have to say it first– and then you read about it after: I told you so!  Upon launch of this site, I wrote an article in regarding GameStop’s willingness to embrace digital distribution and suggested that they may get into digital revenue generating projects such as the distribution of digital games– and sure enough, here they are releasing games for the iPhone and selling downloadable content.  It was inevitable– however, if you told me they were going to make around $200,000.000 off of it, I would have laughed a little to myself, thinking that it is way too early for them to generate that type of money– clearly I was wrong.  Right now, there are a number of companies aside from GameStop, including EA, that have been announcing profitable gains from digital revenue generation.  However, EA and GameStop are two different beasts because as of now, they both rely on the other, but in the future, one will not need the other.  GameStop, in its current popular presentation only exist if it has physical products to sell– EA makes those products and is in a position to slowly but surely start distributing them on their own digitally if wanted.  This is where what GameStop is doing with the digital distribution services, not the point cards, will really pay off.  When the time comes and the majority of gamers choose digital distribution for games, I cannot imagine players coming into GameStop just to buy point cards or used games from old systems.  No, ultimately GameStop is starting what I would like to call a smooth transition into being a digitally based retail company.  What that means is that when that shift hits, which they have a few years before that happens, they will be ready and still profitable.  However, as long as hardware still needs to be purchased and systems still use physical disc/cartridges for their games,  GameStop’s current presentation will remain relevant, and thanks to the company’s efforts, it will evolve gracefully and not painfully (ie- Blockbuster). Kudos to them for embracing and not running away from the digital evolution!

The Overall Meal

3 Stars!

The Doggybag

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