Game Development Reference
4.4 GameStop: Friend to Social Games
Ask any professional game developer (who has been paying attention) which evil
entity had a bigger negative impact on their pocketbooks in the last five years:
GameStop or Somali pirates. I can guarantee you the truthful answer is GameStop.
To be fair, the Somali pirates have yet to begin trading in software, but their hacker
brethren—while capable of doing serious damage—have still likely done less to
reduce the money in developers' pockets than GameStop's aggressive move into
the resold games market. (At least this was true until Sony's PlayStation Network
[PSN] was compromised in 2011.) Why? Simple: people who pirate games on con-
soles must do so on “modded” or hacked hardware. This trick is difficult enough
that it limits the number of people out there actively stealing and copying code.
Moreover, many of those who “pirate” these games would likely never have pur-
chased more than a few titles a year in any case. (The number is roughly in line
with the rest of the game-buying population.) But the customer who walks into
GameStop and picks up a used game thinks they are doing the morally and fiscally
right thing. They walk to the register, pull out and swipe a credit card, pick up
their free copy of Game Informer , and head home happy—content that they have
bought and paid for a game they are excited to play. But lo! The developer and
publisher of the product get no money from GameStop.
This type of used trade accounted for 48 percent of GameStop's total revenue
in 2010. In fact, the practice of buying and reselling used games proved so success-
ful and popular that GameStop has introduced a “PowerUp Rewards” program,
giving users points for trading in their used systems and games—points that can
then be converted into additional discounts for future purchases … at GameStop.
PC games developed subscription fees and in-game purchasing via micro-
transactions in an effort to beat piracy. They largely overcome the trading of
“used” games in the same way. (No reputable store will take a used PC prod-
uct, as they are too easily copied.)
But social games have no similar problem. Retailers are cut completely out
of the loop when your game is on Facebook, and you make all of your money
through the various advanced monetization methods we've discussed.
However, GameStop didn't get to the top of the highly competitive retail
games trade by sitting back and resting on their laurels, or by being fools.
Recognizing that social and online games were beginning to take a bite out
of their market, in 2010 they bought Kongregate, an online gaming service.
Kongregate is a fledgling social network and a portal for small Flash-based
games. Players win points for playing games on Kongregate, for rating games,
or for referring friends. These points are converted to Power Up Rewards points,
which are then redeemable at GameStop stores or online.
In May 2011, GameStop continued this move into the digital download
space by acquiring Impulse, software written by developer Stardock, that
allows users to purchase and download games directly from GameStop.
Because games purchased through Impulse are not eligible for resale (they are
all PC products), many publishers of traditional retail games have supported