Tired of that copy of Call of Duty: Black Ops you downloaded on PC? GameStop might buy it back from you someday soon.
The video game industry is in upheaval. Console makers are staring down a future where they’re replaced by mobile and streaming devices, while game makers rush to capitalize on growing markets like social gaming. And even as they rush to those markets, that apparent fiscal security seems all too fragile. Just look at Zynga. No player in the broader video game business is as imperiled as GameStop though. This is a retail empire whose entire foundation is based around cutting out the middlemen of game designers and publishers by buying used products and selling them back for massive profits. GameStop isn’t huge because people like buying video games like Call of Duty. It’s huge because people like buying Call of Duty for $55 instead of $60 and GameStop is willing to sell them a slightly used copy it bought from someone else for just $35.
How does that business survive in the changed game market though? How does it adapt to digital distribution, a model that will see its business turned into the middleman by developers and publishers that can sell their product directly to the customer.
GameStop says that its business will be kept alive by selling consoles and other devices. After all, people need a machine to play video games on. Vouchers for digital downloads and credit at digital retailers like Steam are also increasingly a focus for the company. That won’t be enough though. GameStop lives and dies by the sale of its used goods. Paul Reins, GameStop CEO, told people gathered at a refurbishment center in Texas that his company will get in the business of selling used digital games.
“It’s very interesting. There are some technologies out there in Europe, and we’ve looked at a couple that are involved,” said Raines, “We’re interested; it’s not a meaningful business yet. Right now we’re not seeing that as a huge market, but I think we’re on the leading edge. There are a few companies, a few start-ups, out there that we’ve talked to that are doing this.”
Who are these companies that GameStop is watching with a careful eye? It won’t say in particular since it doesn’t want “competitors rushing in.”
Used digital game sales have been rumored on Steam and other services for months now. The trade back business is a key source of revenue in the video game industry and the disappearance of physical goods will leave a void. It has to happen sometime, but how remains a mystery.