Specialty media retailers have been hit hard by the growing popularity of digital media. All you need to do is take a look at Blockbuster and there is no dispute about it. They also make a great case study for what not to do with a brick and mortar niche media retailer that is expanding into the digital distribution business. GameStop seams to have realized this and has begun taking action to prevent an impending game over scenario.
GameStop is taking a different approach to entering digital distribution than failed Blockbuster by acquiring two companies that already have some of this figured out instead of just trying to figure it out themselves. They have $100 million put to the side for these acquisitions as a company that totally screws its customers should have available for that purpose. Spawn Labs and Impulse are their first victims in this process and probably not the last. Spawn Labs is very similar to OnLive in that they provide a cloud based gaming service you can use through your TV and Impuse is like Steam who allows you to purchase PC games online and download them to your computer. GameStop exec Paul Raines explained that these acquisitions are in line with the needs of their hybrid consumers.
We've got a hybrid consumer, and we are now a hybrid company. We've become more and more a technology company.
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Probably the reason why Gamestop isn't in the same position as Blockbuster right now is because they have been somewhat sheltered from digital distribution in the video game industry because large game files have been difficult and inconvenient to download. This has slowly been changing with the introduction of mobile gaming on tablets and smart phones as well as services like Spawn Labs that could lean the industry more toward cloud based gaming in the future. That is still very speculative however as quad-core mobile devices will already be hitting the market by end of 2011 and would be capable of running graphically intense games very well, if you don't believe me just take at look at the S1 gaming tablet and Kal-El.
Do you think this is a smart move for GameStop? Let us know by leaving your creative response in the comment section below.