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GameStop Believes/Hopes Digital Distribution Won't Be Widespread Until 2014

JGaskill
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Posted June 22, 2009 - By Jake Gaskill

GameStopLongtime revenue scourge of game publishers and developers everywhere, GameStop, has a pretty unsurprising view of the current and future states of digital video game distribution. As Industry Gamers reports, Sterne Agee analyst Arvind Bhatia found that GameStop management doesn’t believe digital download services will pose any real threat to its retail business until 2014, when GameStop predicts “25 percent of the population will have access to the technology required to download full games.”

The two other obstacles that GameStop feels will buy them some time are broadband and storage costs, and game prices, with $39 cited as some magical number in terms of what consumers are willing to pay for downloadable games.

These predictions seem a bit dubious for a number of reasons. First of all, this past April, the Pew Research Center’s Internet & American Life Project found that 63 percent of adult Americans now have broadband Internet access in their homes, up 15 percent from the previous year, despite higher monthly prices. So clearly, paying for the kind of service required to bring digital versions of games into houses is something with which the majority of Americans are already quite comfortable.

Secondly, the install base, as of this past May, in terms of major consoles that currently support digital downloads (PC/Mac not included), was around 74 million, which is just under 25 percent of the entire U.S. population, and that's despite noticeable hardware sales declines over the past year.

So when you combine all these figures with factors such as Xbox LIVE, PlayStation Network, Steam, GameTap, OnLive (potentially) and Sony’s upcoming UMD-less PSP Go, among other services, it seems that the digital gaming revolution isn’t five years away; it’s clearly already here.

This suggests that GameStop doesn’t have as much time as they’d hope to figure to out how best to prepare for the day when it’ll no longer be able to rely on used games to generate around 25 percent of its revenue like it has over the past several years. Of course, GameStop will still be able to rely on sales of new hardware, accessories and peripherals to bring in revenue, but without that added chunk provided by used games, the company will have some serious strategizing to do if it wants to stay relevant.

So it’s no wonder then that GameStop has predicted (perhaps a bit wishfully) such a delay in digital adoption on behalf of gamers. Because once those digital downloads start flowing on a wider scale, the once mighty game retailer’s reign will be over.

Do you think GameStop can find a way to fill the gap that will be left when digital distribution kills the used games market?

Source (via Ars Technica)

GameStop Believes/Hopes Digital Distribution Won't Be Widespread Until 2014
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