GameStop’s secret weapon: people who can’t get, or don’t want to use, credit cards
GameStop is dependent on the high margins of used-game sales for much of its profits, but many hardcore gamers are surprised to find out how much digital content the retailer sells via its stores. You can buy season passes, specific games, DLC, or just Microsoft points in the store, and then enter the code when you get home to access the content. GameStop has managed the neat trick of turning the sales of what used to be purely digital content into a physical purchase.
And GameStop can do something no digital distribution service can: Accept cash.
“We… have been a huge seller of those points in the marketplace,” Shawn Freeman, GameStop’s once SVP/GM of Digital, told me back in 2011. “As I understand it, we’re neck and neck, or we sell even more, than they sell directly through Xbox Live or the PlayStation Network. Which speaks to our access to gamers who care about playing those games.”
Since then GameStop has been able to expand into the sales of other digital content. You can even buy money for your Steam account at the store, an option that has proven to be popular. “I would say that Steam is gaining in significance,” Brad Schliesser, director of digital content for GameStop, told Gamasutra.
“We did extremely well in the Steam summer sale. They’ve been a fantastic partner, coming together with an agreement to sell the currency. They’ve also promoted the currency on their platform. I think they also are seeing the benefit of being able to reach out to customers that aren’t able to pay with a credit card,” he explained.
The credit card issue
The Gamasutra article is interesting for a number of reasons, but it’s fascinating to see that GameStop is in fact expanding the audience for items like DLC. Most of us are comfortable going onto Xbox Live and purchasing content, but there is a giant market of gamers who refuse to give up their credit card information. They may not even have a credit card, which is an issue with younger gamers or those who simply don’t use credit.
GameStop is more than happy accepting your cash and trade-in credit and giving you a card for Steam, or selling you the latest PlayStation Network release. It’s not a matter of eroding the number of customers who buy content online, it’s actually expanding the number of people who consume that content.
If you wonder why Steam is comfortable cutting in GameStop by selling cards in the stores, it’s due to the fact that it’s likely many of those customers wouldn’t have bought games on Steam to begin with. Giving GameStop a taste of the action in exchange for bringing in a new demographics is a smart move.
Hell, you can even buy copies of MineCraft at retail stores, and then go home and download the game. MineCraft is already successful, and it’s seems odd that Mojang would give up a percentage of sales in order to get into GameStop locations.
“We get a lot of feedback from players who can’t or won’t pay online. This is a way to reach those players,” Mojang’s Carl Manneh told me when I asked about the move. “I wish I could elaborate more than that, but basically that’s it.”
I did an informal poll about this on Twitter, and was surprised at how many people simply refuse to use their credit cards online. They go to physical retailers for Steam funds, or buy a voucher for a year of Xbox Live, or purchase months for their favorite MMO. They purchase vouchers for Journey at the store, instead of simply buying it through the PlayStation Network. They either don’t have a credit card, or don’t like using their credit card in systems they don’t trust. They may not buy MineCraft online, but once it’s in stores they could become loyal players.
But how do you get the content?
It still seems cumbersome though. You buy a card or a code at the store, go home, type the code into your system, and then wait for the download. There are a few steps that GameStop wants to remove. “Ultimately, we want to reduce even more of that friction, so when you buy that map pack in our store, we’re going to be able to associate your Xbox profile with your GameStop profile, and then automatically push that to your download queue,” Freeman told me in 2011. That goal remains elusive.
“We thought we’d have to have that in place,” Schliesser told Gamasutra. “Making this a little easier for consumers is the icing on the cake. Our goal on this is ‘let’s make it a better process for the consumer.’ … Our goal in 2013 would be to get one partner to convert to a ‘push to box’ model.”
Getting Microsoft, Sony, or Nintendo to allow a retailer to connect their customers into each company’s network this way is going to be a challenge, but it would be a large coup for GameStop. You could stop into the store, trade in some games, use the credit to purchase the latest Black Ops 2 maps or content, and have the download finished by the time you get home.
Or, at least, that’s the plan. It remains to be seen if GameStop can make it happen.
More gamers are downloading their games than they have in the past, but that doesn’t mean they necessarily want to “buy” games online. GameStop is finding a lucrative business in turning purely digital content into a physical purchase, and taking methods of payment that digital distribution services can’t match.
GameStop also has a physical sales force that turns shopping from a passive experience, such as looking at games on Steam, into an active sales pitch, when they push a season pass for a game on customers at the register. Digital content is now an add-on sale for the retailer.
This is good news for a retailer that can smell the digital future in the air, and even mighty companies like Valve and Mojang have been more than willing to put their content in GameStop’s stores in order to get at the cash-only crowd or trade-in credit that flows through each location. GameStop has found a novel approach to dealing with video games going digital only: They’re going to accept cash for them.