Last week, during the third annual GameStop Expo, executives at the nation’s leading game-focused retailer met with Ars behind the expo’s floor of playable game kiosks to detail their plans for life—and revenue—beyond the sale of physical video games. As gamers have begun cozying up to a brave new world of downloadable, triple-A games, GameStop has responded with the recent acquisition of non-gaming, hardware-focused companies Simply Mac, Spring Mobile, and Cricket Wireless.
That’s not to say the company is preparing for an imminent departure from the gaming space; between DLC card sales, next-gen hardware, and a 2013 victory over the threat of one-time-use codes, GameStop still has enough physical product to push in its 4,400 American stores. But our conversations with multiple GameStop executives revealed a somewhat surprising desire: to begin buying and selling used downloadable content.
“One of the questions, frankly, the industry is going to have to address going forward is [this]: ‘Is the value of a digital game less than the value of a physical game?'” Executive Vice President Mike Hogan told Ars. “If you can’t trade in a digital game—which you can’t, at this point in time, but maybe you can in the future—there’s less residual value.”
After hearing that, we took the opportunity to press Hogan about whether GameStop was specifically interested in extending its successful buy-sell-trade model for physical games to used digital content. Currently, downloadable games and content are typically “licensed” to users on marketplaces such as Steam, Xbox Live, and PlayStation Network and can’t be transferred openly after use.
“It would require a partnership between retailers and publishers, but absolutely, it could go that way,” Hogan said. “We’re absolutely interested in pursuing that. There are lots of examples where people have taken digital content and made it transferable from one consumer to another. Think of World of Warcraft [and its third-party item sales]. There’s no fundamental or technological reason why that couldn’t happen [on other platforms]. If the consumer wants it, and it provides value, then we believe it will happen over time. The consumer will speak for that.”
A war between physical and digital?
GameStop Senior Vice President of Pre-owned Business Jason Cochran echoed the same hopes. “[There’s] potential to continue working with our vendor partners, publishers, and even developers on what that would mean to play in that space—how we’d continue to keep the value of digital content as tangible for our consumers, so they can continue to stay in the game, enjoy more gameplay, and actually buy more titles and more IP,” Cochran said. “The possibilities are endless as to how we could leverage our buy/sell/trade model and continue to give our customers what they want.”
As of now, GameStop’s partnership with each major digital download storefront mostly revolves around selling codes that can be redeemed for store currency, subscription services, and specific downloads. Steam was the most recent of the storefronts to play nice with GameStop, starting in 2012.
“A lot of people would’ve said, digital and physical are going to be at war with each other,” Hogan said about that partnership. “We found a solution that said, Steam’s gonna do what they’re really great at, which is on the Valve side making games, and on the Steam side running this marketplace. We’re gonna do what we’re really great at, which is discovery, curation, and customer acquisition. We provide that value to Steam.”
When asked whether that implies a hope for collaborating with Steam on a used sales model for downloaded games, Hogan replied very affirmatively. “We’re having that exact conversation with lots of people. With Microsoft, Sony, et cetera. Make no mistake, GameStop is very bullish on digital gaming. We do not see it as a threat to us; we see it as an opportunity.”
As of now, GameStop doesn’t have a game-publishing model beyond Kongregate, a web-based, free-gaming portal, but Hogan took the opportunity to hint at games eventually being published directly through the company, as well.
“If GameStop is already going to represent the majority of the units of a game that gets published anyway, are there a lot of games out there that the world wouldn’t see otherwise because they can’t assemble the capital that’s necessary to develop and publish a console game today?” Hogan said. “If you could bring the power of GameStop to that… We’re not going to be game developers, but what we’re really really good at is the consumer side of it. Making the market for it, acquiring consumers, helping consumers find the right game at the right time, which in a digital world is frankly becoming increasingly difficult.”
Hogan also repeatedly pointed to GameStop’s PowerUp Rewards program, which currently enjoys a membership of over 29 million users. “All of that data?” Hogan said. “That didn’t exist five years ago. We created that. The value of that in a digital world is huge. Any given games publisher has only one little perspective on people who play games, they don’t see the whole piece. There are a lot of ways we can add value in the digital world.”