February 20, 2013 was indeed a very exciting day for the gaming industry with everyone expecting Sony to officially announce the PlayStation 4. In the days leading up to the announcement, the gaming blogosphere was rife with rumors ranging from the hardware specs, the software, the controller, all the way down to the new Eye Toy. But while hardware was first and foremost in everyone’s mind, very few could have imagined that Gaikai would be Sony’s and the PlayStation 4’s Ace in the hole. Now for those of you who are not up to speed, Gaikai is a cloud-based gaming service that allows instant access to high-end games by streaming them directly onto your computer, tablet, phone, and now the PlayStation 4. Think of it as Netflix for games, the difference being that you purchase the game and it downloads onto your hard drive while you play.
Well not too long ago, Sony shelled out some $380, 000,000.00, (yes, that’s 380 million) for the acquisition of Gaikai, and on February 20th we found why. Ladies and gents, instant gaming has come to the PlayStation 4 and the ramifications of such a feature are going to be detrimental to GameStop. Being the largest dedicated video game retailer worldwide, GameStop relies heavily on the physical sales of video games hardware (consoles) and software (game discs). But the real money-maker for GameStop is the second-hand market where they buy and resell used video games for huge profits, something that a lot of game developers frown upon as they don’t get a cut from their intellectual properties being repackaged and sold.
Recently, a new trend started engulfing the gaming industry, spearheaded by none other than Valve’s Steam. Steam is a digital distribution network for PCs that sells video games, but also provides a complete ecosystem where gamers can communicate with their friends and play games. This new movement was spearheaded by Steam marked the beginning of the end for GameStop and similar dedicated video game retailers worldwide. The PS3 with its PlayStation Store, and the Xbox 360 with Xbox LIVE have exponentially increased the rates at which gamers consume digital contents nowadays. But there was always this barrier that gamers faced when deciding between physical and digital content. Digital contents on the PS3 and Xbox 360 for major games takes a long time to download, sometimes upwards of 4 hours. While going to GameStop takes you some 20-30 minutes.
All of that is set to change with the PlayStation 4 and Gaikai, as Sony has promised that every single PS4 games will be available digitally, and instantly. Meaning that the minute you want to play a title, it becomes a simple matter of “click and play”. One can imagine that this is the last thing that execs at GameStop wanted to hear. Numbered are the days when gamers would line up in the cold winter nights outside their local GameStop for midnight releases of big titles. To make things worse, Gaikai and the PS4 have the potential to completely destroy the used game supply that GameStop heavily depends on, as digital copies of games are tied to a specific user account.
So where does all of this leave GameStop? They could make the jump to being a digital distributor, but quite frankly I don’t see how that’s even a feasible option given that the PlayStation 4 and the next console from Microsoft will already feature their own digital marketplace.
What do you think of all this? Are we seeing the last of GameStop?