Seller’s Remorse
GameStop is most infamous for their trade-in prices. Their scheme to turn their supposedly upscale gaming boutiques into creepy pawn shops was so unpopular that it’s now the first thing everyone thinks about when they hear the name.
Back in 2007, my kids wanted a Wii. We were short on cash at the time and our GameCube had been gathering dust for months, so I thought it would be a good idea to trade it in to take the edge off the Wii sticker price. The purchase wound up costing more than I expected. When I checked the receipt later, I discovered this was because GameStop had offered me basically nothing for our GameCube, the pile of controllers, and our stack of games, all of which were in excellent condition. The price they gave us was insultingly low. Even in an exchange between good friends, I’d be embarassed to offer such a small amount. This wouldn’t be so bad if the used goods at GameStop were irresistibly cheap, but they were also appalling. It wasn’t uncommon to see a used copy of a game sitting on the shelf for $55, right next to the new copy priced at $60.
I realize that GameStop is running a business and I’m not arguing against the company making money on the second-hand market. My problem is that GameStop’s prices were so bad that it just wasn’t worth doing business there. The trade-in prices were next to nothing and the used prices were next to new. It was a bad place to go, regardless of whether you were buying or selling.
The day I sold my GameCube was the last time I spent money at GameStop. They got a really good price on my hardware, but they lost my business forever.
I didn’t stop shopping at GameStop because I wanted to go digital. I stopped going there because it was a ripoff and a bad experience.
GameStop PC Downloads
One of the famous blunders of the internet age is when
Blockbuster Video passed up the chance to buy the nascent Netflix service for just $50 million. This happened in the year 2000, when Blockbuster was in decline and Netflix had just begun to rise. Netflix is worth over $32 billion today. Buying it in 2000 for $50 million would have resulted in a 64,000% return on investment. That could have saved Blockbuster by allowing it to transition to streaming as the physical media market dried up. Blockbuster could still be around today, although I admit “Blockbuster & Chill” doesn’t have quite the same ring to it.
The only thing worse than passing up a shot at financial salvation is paying money for that salvation and then sabotaging it. Imagine if Blockbuster had paid for Netflix, and then quietly shut it down three years later, thus flushing that $50 million down the drain for nothing. In that scenario, one of the
other home streaming serviceswould have risen to fill the void, and Blockbuster would have met the exact same fate. This is exactly what GameStop did.
Back in 2011, GameStop purchased
Impulse, which was one of the very few competitors to Steam at the time. It was rebranded as GameStop PC Downloads, which is probably the least interesting name GameStop could have given it. Three years later they shut it down. Even while it was running, they seemed to have no idea what to do with it. The company never made any visible effort to promote or improve the platform.
Why did GameStop buy an entire platform if it didn’t have a plan for it? Once committed, why didn’t GameStop come up with a plan? By 2014 it was clear that digital downloads were large and growing. Why shut down an established storefront in a growing area of the market?
GameStopped
It’s reasonable to say that GameStop’s original business model was doomed by the rise of digital sales, but I don’t like to reduce this story to that one issue. The end of GameStop was hastened by its own foolishness, lack of foresight, and grasping economic model built on bilking customers when it came to selling and buying used products. The company was reviled by both customers and suppliers, didn’t offer anything its competition couldn’t, and spurned the one thing that might have saved it.
I’m not shocked to see the company in this death spiral, but I am surprised it took GameStop this long to get here. While I miss having a shelf full of attractive game boxes to represent my collection, I’m not sad to see the end of this clumsy behemoth. Our hobby deserved better.
