September 2, 2012

Gamestop, Monopolies, and the Future of Video Games Through Digital Distribution: Why Gamestop is in Trouble

Transcript for video:
This video is in response to other videos out there concerning the nature of Gamestop, the future of video games, and ultimately why I believe Gamestop is bad for the consumer.

Gamestop is a retail video game conglomerate which sells new and used of games of the current, and sometimes previous, generation of video games. There are many subjects I want to discuss in this video; namely a perceived corporate attitude at Gamestop, their monopoly of the market, stickers, inserts, trade in policies, misleading advertising practices, obscene prices, and their plans for the future.

Monopolies are generally “not good” for the consumer, as they have been historically known to abuse their market shares by limiting customer freedom [which is also known as “grabbing them by the balls”], eliminating competition, and forcing unfair policies on shoppers.

These are the key criteria for a Monopoly. Does Gamestop…

Eat all of their competition? For brick and mortar stores, yes. Are they the only supplier of goods in the entire market? Not necessarily. Do they have obscene prices on their goods? Yes. Is there an attitude of market dominance and price “setting”? yes. Have they engaged in anticonsumer practices? Yes. Have they bullied other entities out of the market? Yes. Because Best Buy is another major competitor, and they also have piss poor policies, their cut-throat tactics aimed at the consumer can be seen as a pseudo-cartel.

They fit the multitude of criteria for a monopoly, and certainly there are more details to discuss with regards to monopolies, but for all intents and purposes I will stop here.

The main question people ask, if they aren’t already phased out by now thinking “I don’t give a *&§, I just want to buy my game somewhere and not think anymore”, is why should they care?

By becoming a monopoly, Gamestop is free to set market prices on games, and people are stupid and complacent enough to accept it [these people are also known as sheeple]. When a corporation is not kept in check by competition, it leads to obscene prices, bad return policies, cutting corners to make greater profits, low wages, piss poor trade in policies, and sometimes exclusive dealing.

The too long, didn’t hear what you were saying version of what I just said is this: it allows Gamestop to tell you to “bend over and take it”.

I am going to assume that people watching this video are true video game players, and to meet that criteria, it means that you don’t have your head up your *&§ing §$, and it also means that you are a smart shopper, and are open to other means of purchase.

The only check on Gamestop right now, which has been killing its business, is the almighty internet. Valve has a fan*&§ingtastic distribution model which I have participated in with no strings and fair prices. If shoppers are savvy, they can find copies of games on the internet on sites such as Ebay, Craigslist or Amazon for significantly less than what they would pay at Gamestop. There are downsides to using the internet in regards to “collectors prices”, but for the sake of the current generation, we can postulate that it is typically cheaper to find a game somewhere else than buy it at gamestop.

However, if you were to find that purchasing it at gamestop is cheaper, with the inclusion of gas money, I and my conscience are not here to stop you, and I wouldn’t think any less of you as a gamer or a person, because you made an informed purchasing decision. I have rarely found that going to gamestop is the solution.

Eating the competition means Gamestop is allowed to make its own rules. Since they are the ONLY KIDS on the block, the consumer will have to bend backwards for brick and mortar convenience.

I do have an example to illustrate my point. Right now, there is a game I want to purchase. It is called Armored Core 5. To buy it NEW at gamestop, it will cost me $39.99 plus fuel to get to the store, plus applicable taxes. The “pre-owned” price is $34.99. There are a couple of problems already with this situation, and I haven’t even gotten to the punch line.

For this game, the price is obscene. There is no reason, other than being a *&§ing pincher for cash, to separate the pre-owned and NEW prices by five or ten dollars. Second, I am not paying “premium prices” for a used game. I will not pay $50 *&§ing dollars for a used video game that came out around 4 or 5 months ago. I don’t care “what” Gamestop says the market price “is”. assuming my local gamestop is 10 miles away, it will take me 20 miles in total to get there and back. With a price of $34.99 plus tax, that brings us to $38.45.

We have to include gas prices, too. Don’t worry; I’m going to do the math. It takes me 10 miles to get to Gamestop. Both ways, that’s 20 miles. If my car gets 28mpg city (where I am at, there are very few highways or interstates), gasoline is $4.17 a gallon for unleaded, 28mpg/20mi = 1.4 gallons to get to Gamestop. Multiplying 1.4 by 4.17 gives us a total of $5.84 in gasoline just to go pick up a game. The total now, for the game, used, arrives at $44.29.

Here is the even worse part. You are not buying a mint or near mint copy of the game. Gamestop, as a corporate policy, has the need to plaster stickers all over the disc, game case and manuals. These stickers are annoying, they piss me the *&§ off, and the consumer hates them. But remember- since they are the only kid on the block- people can call them on it, but they do not need to change because there are no competitors advertising “hey look! We don’t use stickers!”

Let’s be smart and consider purchasing the game elsewhere. When I mean “elsewhere”, you will not find it in a brick and mortar store, unless you shop somewhere like Best Buy, which has obscene prices and inept sales associates. For this purchase, let us consider the mighty internet.

Let us use, which I love. Some people have problems with it, but let us consider what they have for sale. There are over 60 listings available, and the cheapest available copy is for $26.99 and free shipping. BRAND. *&§ING. NEW. This price, after applicable taxes, will come to $29.66.

There is a convenience cost here- but look at how much money you save versus Gamestop. By waiting for the game to arrive at your doorstop, you save $14.63. In the days of splurging people would write this expense off. In today’s economy, and for those who are frugal, that is $14.63 I could spend elsewhere. I could go to the shooting range, buy groceries, or even save and invest that money.

As more consumers become less of a “sheeple” along with those tired of naturally taking it in the §$, Online purchases are becoming more viable and are beginning to put Gamestop out of business, as they have no way to compete, and no desire to use predatory pricing to “*&§ over” some retailer over the internet. The problem is, Gamestop’s perceived attitude on the problem [that is, that people won't bother with online sales] versus what the consumers are doing are two completely different things.

If the news isn’t bad enough for Gamestop, it doesn’t end there. I am only getting started. Say I want to trade in the game I wish to purchase. Back in 2004-2005, I attempted to sell a copy of Yu-Gi-Oh! Duelist of the Roses for the playstation 2. Gamestop was selling the game for $29.99. When I wanted trade in credit, they offered me a quarter. A god damn *&§ing quarter! That is the day I had it with the corporation, but they still pull this bull§$ today.

Gamestop’s corporate culture is indicative of buy low, sell high tactics. This is a fabulous marketing strategy, except when you *&§ over the consumer. If you just bought a $60 game, and you are the type of gamer who trades it back a week or two later with no interest in keeping it, sometimes the best Gamestop can give you is… nine dollars. Yep. I am not kidding. 

Their trade in credit rates are absolutely horrible, as they turn your game around for over 300% profit. In America, and around the free world, you have every right to be a pawn and to be a dumb§$ with your purchasing choices, but if you feel something is wrong with the deal you are getting, then tell them to sod off and look elsewhere.

Gamestop, for the future is looking into two ventures. One is in a pseudo steam distribution model, and the other is the sale of vintage video games. Gamestop, in its infinite glory, wants to trade-in, buy and sell “digital copies” of games. At its heart, with gamestop removed, if the price was right, I really do not see a problem with the model- pay a nominal fee to download a game for a month [Gamefly already does this, and publishers are catching on VERY quickly].

The problem here… is Gamestop itself. If corporate policy is to *&§ us over and use anticonsumer tactics, then the reality of the situation with physical games in stores should translate over to the online realm. This may be a doomed venture because Gamestop is up against the long running Steam client and Valve Corporation. Valve has never once tried to *&§ me over, has reasonable prices on most of their games, and allows customization of the client to suit my needs. Who is to say that valve does something similar in regards to rentals?

There is another core problem. Remember how I just said that game publishers are catching on? It is possible that the next generation of consoles, save the Wii U, will offer digital distribution services for significantly less. Again, who is to say that they heard gamestop and said “great idea! Let’s rent games out too”. To compete, Gamestop would have to design their own console, which is something that will take time, which it doesn’t have, an upstream of revenue, which it doesn’t have, and capital, which it has as a retailer, but not as a console manufacturer, in my opinion.

The second route Gamestop wants to take is the sale of retro video games. Again, if corporate policy dictates, the same anticonsumer practices should transfer over with the new venture. Gamestop will need to be intelligent while marketing older, vintage games, and not be complete §$holes while doing it. With their given track record, I will have more luck catching a leprechaun having his balls tickled by the tall grass.

I see two scenarios with the second venture. One is that gamestop can completely *&§ over online sales and ruin the market. The other is that gamestop may push down internet and “collector prices”. In order for online vendors to compete, they will need to drop their prices. The third option is that nothing happens because Gamestop could not compete with online mom & pop when someone in the boardroom of Gamestop knew *&^%ing better in the first place. Given Gamestop’s lack of predatory pricing, I am inclined to believe that gamestop is shooting itself in the foot, it is backed into a wall, and within five years it may be gone.

With the future moving towards digital distribution, the video game market may actually strike back and screw Gamestop out of the cut. The only reason Gamestop can rely on sales right now is because games are of a physical medium. If Sony and Microsoft, along with publishers decide to focus attention on digital distribution, within a generation or two we will see a drastic shift in where the money is flowing, assuming that those who want to “re-pioneer” the download distribution model are smart with it. With less attention on physical media, Gamestop will struggle to move along, potentially closing multiple locations worldwide.

You have more of a choice with the internet. Now that everyone realizes the power of open communication and markets through e-commerce, governments and corporations worldwide, including the United States have attempted to censor and regulate what its citizens see. Other comparable countries include China, North Korea, and Iran. I invite you to be a smart consumer, to think about where your dollars are actually going, and to spend your money wisely. Gamestop isn’t worth your time, and certainly it isn’t worth your consideration. 

[edited for grammar. Sorry, its 3:30am].



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