• Jeffrey Ryan

Gamestop's Secret Strategy In The Digital Age

The topic of physical video games versus digital game purchases has rightfully been contested across the gaming community for years. With the release of next generation consoles, the industry may have found themselves at an ever approaching impasse. How can the industry service a gaming community long term that wants to purchase physical copies when digital is so cost effective? If GameStop’s recent moves are any indication, we could have witnessed one strategy hidden within plain sight.

As a retailer highly reliant on physical sales, GameStop has struggled as of late with the market shifting towards a digital-first mentality. In October of this year, according to Ars Technica, GameStop will establish an undisclosed digital revenue sharing agreement designed to assist in stabilizing the company’s market position. Naturally, the first question that comes to mind is, “How can a brick-and-mortar location so reliant on physical sales remain above water with a digital agreement?” There has to be more to this, right?

This is where things get interesting.

Fast forward to Black Friday 2020. Sales ads were as expected with countless video games available at incredibly low prices. Even newer installments including Watch Dogs: Legion and Assassin’s Creed: Valhalla had a seat at the table. After browsing games of interest, I then began price comparing available versions. As usual, pre-owned editions were slightly lower than newer copies which are likely designed to maximize sales margins. What caught me slightly off guard was the price differential between physical and digital versions of Star Wars Squadrons.

  • Physical: $16.99 USD

  • Pre-owned: $15.99 USD

  • Digital: $19.99 USD

To understand my pause, we must step back to the agreement between Microsoft and GameStop. I found it incredibly perplexing of a move for GameStop to undercut a new agreement in favor of physical copy sales. As we are aware, digital versions cost much less to both distribute and produce, as they are traditionally printed cards with download codes. This pricing tactic can go a long way in influencing gamers due to its potential to affect the barrier-of-entry for digital-only consoles. Over time, you could be spending more money on games for a cheaper console. On the flip side, if you are wanting to shell out $500 for an Xbox Series X or PlayStation 5, you could be saving money over time to instead play the physical version. What does that say for the future? Should we expect to pay more for the convenience of a digital library? What does this tell us for the new generation?

"Collectors and retro gamers alike can rejoice."

Overall, this strategy could very well translate to greater competition between both physical and digital game sales in the short term. Gamers should welcome the competition as it means creative pricing strategies that could benefit parties on both sides. My concern, however, is the long term. If the gaming community is conditioned to pay higher prices for digital versions and consoles continually inch towards digital-only, there becomes a greater risk of increased prices. Regardless, my takeaway here is that physical games are not going anywhere anytime soon. Collectors and retro gamers alike can rejoice. Surely, in generations to come, it will be an interesting situation to witness unfold.

What are your thoughts on the market today? Do you still enjoy buying physical copies or prefer the convenience of digital downloads? Let us know!

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