GameStop may operate over 5,000 bricks and mortar game outlets globally, but it has been pushing hard on downloads and online content. MCV spoke to the man in charge of its digital distribution strategy Steve Nix about how his company is helping usher in a new era for PC gaming...
All of GameStop’s activity in downloads has, understandably given its open nature, been around the PC market. What’s attracting GameStop to grow in that space?
At one point PC games were the largest sector of games for GameStop. But in the years since we saw, through retail sales and NPD figures, physical games were a smaller and smaller portion of retail sales. It was probably to do with the fact that the customer experience for gamers when buying physical, boxed products wasn’t great. That started impacting physical box sales more than anything for games.
But at the same time, there were digital distribution networks getting some traction, and that was a much better customer experience – they could go directly to a site, download games automatically, load it to the machine in the background, then go and play.
GameStop and other retailers thought PC was a declining category until publishers and distributors started speaking about the numbers more openly, and it turns out that PC gaming is a large and vibrant market that’s actually growing pretty substantially.
So what we wanted to do was really engage heavily with PC gaming again. We aquired digital distribution platform Impulse in March and things have been moving very rapidly. In July, we already integrated downloads into GameStop.com and now we’re going to start allowing the purchase of digital games in US stores. We already offer DLC in-store and that’s proving really, really successful for us.
Has the success of digital content in-store been a surprise?
It’s a little bit of a puzzle to most people – ‘Why would a digital customer want to go and buy digital products in stores?’ But there’s a couple of good reasons. One of them is obviously just the curation that associates at our stores offer. But also, in the US over 50 per cent of our sales are either trade credit or cash. Many customers don’t use credit cards, but for customers that want a digital version of the game they can pay with cash, trade credit or GameStop giftcards so a lot more currency is actually avaliable for the customers. I think this is going to open up the market and grow the PC gaming business.
Before you bought Impulse it was used by third-party developers and publishers. Is that still part of the plan with the platform under your ownership?
Absolutely. We are the world’s largest retailer of games so one of the advantages of combining Impulse technology with GameStop is what the two together can offer.
We already talk to all the major publishers, but independently-made games are important too. We’ve been planning out more independent titles through Impulse than it’s ever signed and we want to really push that forward. I was a game developer, so I understand the importance of that. The great games that independent developers come up with are where a lot of the innovation happens in the industry. We will continue to support that.
You alluded to your previous roles with game developers id Software and Ritual Entertainment. I’m keen to know: why did a guy that worked for such reputed studios go to work for, of all things, a bricks and mortar retailer?
Well, I really had my head in digital distribution for a long time – pre-games I was a CFO for a company that was focused on mobile applications and later worked with Valve on projects in the early 2000s, on Counter-Strike: Condition Zero, one of the first Steam products.
But I believe digital distribution in games is going to continue to rapidly expand. That’s what we’ve seen and I’m a serious PC gamer. GameStop came to me and said it wants to re-engage with PC, and make a massive investment in having a meaningful presence in PC digital distribution. I couldn’t think of anything greater. There was this big, amazing challenge being a part of a worldwide game retailer trying to catch up in a space that we were obviously behind in. So it wasn’t that hard a decision.
GameStop also bought Spawn, the streaming technology, in March. How is that fitting in with the digital strategy?
That’s handled by its own specific manager, so I cannot speak too much for him at this early stage – but first thing we will be doing with that technology is launching a program where customers can click a button and start trying a game immediately on their PC. They can then choose to buy it right away, either buying the PC or console versions at that point if they so choose, and either as a download or as a boxed product.
EA and Valve have locked horns over digital content lately, as they have both clearly got very different terms on how to supply consumers. GameStop also has a much-prized relationship with customers, though, so you must have a view on how that develops as rival platforms in this space emerge and compete over content and exclusives?
I think we are beginning to see gamers moving towards having multiple platforms offer them content – they are starting to get used to it. GameStop’s plan is to go anywhere those consumers want to go to buy their games. Games will be available on most channels, including GameStop’s.
There may be cases where we have some exclusive content but I don’t think that we’re ever going to actually have any primary exclusives.
However, we’re being pitched exclusives by developers more and more and more. It has surprised me, but at least half of the developer conversations we’re having are studios asking me what we want as a retailer in order to take exclusivity – they’re interested in what channels we can give them in-stores in return.
The other interesting change is that when we talk to our publishing partners, there’s a marked change in attitude around PC. It used to be just ‘What are you doing on the Xbox? What are you doing on the PS3?’ And the PC was just an afterthought. The big difference now is I’m usually in the meetings or someone from the Impulse team is and from the very beginning it’s ‘What are you doing on the PC? Tell us all about the PC version of the game.’ The industry is asking what it can do to talk to gamers about the PC version as early as possible and make it successful on equal footing to the console versions. That’s a totally new conversation.
But a company like GameStop will benefit from that halo effect that comes from there being a lot of competitors helping establish and grow a space.
Yeah and GameStop has pushed to be active in that space. So as well as digital distribution or cloud streaming we’ve got Kongregate, the world’s largest Flash gaming site. Digital will continue to evolve, and none of us know where it’s really going to land. But we see strength in PC digital, we see strength in our Flash game business, cloud is a recent development and we’ll watch that too.
Whatever does happen GameStop is going to make investments and adapt and shift. We’re not averse to more acquisitions; we’re actively out there and looking. Chris Petrovic, who runs our Digital Ventures division, is a very busy man, always looking at areas that we might move in to. Our plan is that we’re going to make sure that whatever the market does, we’re prepared.