GameStop Following Blockbusters Path

gamestop funcoland storeI’ve always found great interest in following my industry’s leaders as they attempt to avoid the impeding doom of resaling used media.  Gamestop in particular was inspirational to me when Mx123 first started out in the used media biz.  They opened their first stores as Funcoland and set the standard on how to run a resale store here in the Twin Cities.  But now online sources may be sending them  down the same river as Blockbuster. Companies that supply GameStop with merchandise have virtual storefronts of their own now, which compete quite heavily with the real world shops. Can GameStop’s business model sustain itself in this new era of online shopping? A recent GameStop investor’s meeting revealed the push into other markets is going well for GameStop. Their Simply Mac, Aio and Cricket wireless phone shops are expanding, with expectations of growth bringing the company to billion-dollar status in time. For a company to survive, it must adapt, and GameStop appears to be doing just that, even if their main market of physical video game boxes is dwindling. The process is not new. Blockbuster pushed for diversity as well, but still ended up filing bankruptcy. The unfortunate comparisons between GameStop and Blockbuster keep piling up.

Blockbuster’s Fight Failed

Blockbuster’s retail locations all closed by the beginning of this year after first filing bankruptcy in 2010. They kept trying to find ways to stay in profit up until the very end, but the proliferation of more convenient movie watching options for consumers finally did them in. These included online streaming video, rental DVD systems like Netflix and convenient kiosks where people could instantly get the move they wanted without hassle or membership. The company attempted to join the DVD-by-mail industry in 2004, but it could not compete with other companies already established in the business. It then tried to place Blockbuster kiosks, but they failed as well. Combinations of internet-based and in-store benefits were unique in the market, but consumers weren’t interested. It did not succeed to turn its fortunes around even with exclusivity for certain films, sales of popcorn, electronics and memorabilia. The long term synonymous aspect between Blockbuster and movie rental shop ultimately spelled disaster when the industry became defunct.

GameStop’s Other Ventures

Will GameStope meet the same fate as its own main market dries up? It might be good advice to investors to approach with caution. Simply Mac, Aio and Cricket Wireless represent only the latest attempts at diversification. GameStop Kids was launched in 2012 as a way to potentially re-market to the younger crowd. They offered toys, dolls and other video game and media related merchandise for kids. The 2012 holiday season test failed to live up to expectations and the idea quietly slipped beneath the surface. During a phone call to GameStop management, the topic was brushed aside by stating non-disclosure of company planning. A year earlier, in 2011, Spawn Labs was created, which promised to give video game enthusiasts the ability to live stream video games onto any computer or other online device. Although the company hyped the concept strongly, nothing ever came to fruition and the idea was scrapped completely this year.

The Odds of a Shift Are Still Slim

GameStop has years of marketing and brand recognition under its belt that will not go away. They are a dominant force in both used and new video game sales. At present, there are no true competitors closing the gap on the volume of sales experienced by GameStop.