Thursday, 29 September 2011

GameStop: We Have Advantage Over OnLive, Gaikai

It wasn’t too long ago that GameStop was blind to the potential of digitally distributed games, focusing solely on retail. But the leading specialty video game retailer has been extremely active in the cloud of late. In fact, today gamers can buy digital copies of PC games on GameStop.com. The retailer also owns social game development site Kongregate and cloud gaming company Spawn Labs and digital distribution service Impulse. This fall, the retailer will begin selling tablets that customers can stream games on. GameStop President Tony Bartel talks about the role cloud gaming will play in the future of this retailer in this IndustryGamers interview.

IndustryGamers: What are your thoughts on cloud gaming?

Tony Bartel: First, I think it’s important to define cloud gaming, which is anything that is distributed digitally and enhances the gaming experience. Whether that’s a full game download, or whether that is the sale of DLC.

IG: How do you see cloud gaming evolving as a business model?

TB: I think you’re going to see a lot of models being tested. I think you’re going to see people trying to sell full games for streaming in the cloud. I think you’re going to see people having monthly subscription models to pay for gaming in the cloud. I think you’re going to have people put together a micro-rental model where you have “X” dollars per hour to play these games. But at this point the only one of those that has truly been tested is the DLC model.

IG: What opportunities does cloud gaming open up for monetization?

TB: Based on market research that we’ve done, we believe one of the highest growth categories in all of digital is the sale of DLC. You still have a $50 billion console industry out there, and now you have this great DLC market where you have downloaded content directly to the console. And these gamers are used to paying for games. Rather than look to conjecture about the future, I would start with let’s talk about what’s working today, and that definitely is working. We see that growing from a $3 billion global category today to a $6.4 billion category by 2014. That’s a 24% per annum growth rate.

IG: How is GameStop getting involved in cloud gaming?

TB: What we find is that people who are gamers really want to have their games on display. We have our PowerUp Rewards program, which allows our 10 million customers to put their library on display digitally in one place. We see that as a huge benefit.

IG: What role will Spawn Labs play in your cloud gaming plans?

TB: The reason that we purchased Spawn Labs was to deal with latency. We believe that we’ll get latency to a point where it’s imperceptible even to a very discerning gamer. We’ll do this through our selection of where we put our data centers throughout the U.S., as well as on-going technological improvements to what they’ve already done. We believe that our technology will get to that point. It is already low latency. We’re going to continue to drive that down, as I’m sure OnLive and Gaikai are.

IG: How will you deal with demand from gamers in the cloud?

TB: Spawn Labs has allowed us to really start from the ground up and totally develop our PowerUp Rewards system. We know exactly what games people have and which games they are going to be playing. We know exactly where they live. We know what the demand is, and we know who is going to be playing those games. With our reservation system, which is also tied in to PowerUp Rewards, we will have great information in terms of who is going to be most likely to play games and where that’s going to take place. That will allow us to really invest behind demand. We will be able to see demand. We’ll be able to scale accordingly.

That’s where we have an advantage over our competition because we know who has reserved a game for the big launches. As you have these large launches come out, it will tax the system. Based on the fact that it’s extremely capital intensive, it is going to be a challenge for the industry to scale for some of these major launches, especially if people are streaming directly.

IG: What do you see in the future of cloud gaming?

TB: We think that there’s going to be an evolution of streaming from the cloud. As we look at the horizon, we see it as a very hybrid horizon. We basically see people beginning to access games from many different locations, and from many different channels. If you look at the GameStop strategy, our strategy is to basically meet them at every channel, provide them an excellent way to get to the game that they want to enjoy, in whatever way they want to enjoy it, from whatever device they want to enjoy it.

IG: What role will consoles play in this future?

TB: We continue to believe that the console is a strong platform and will continue to be the gold standard. People will begin to digitally download first a lot more downloadable content. Eventually, full games will become more relevant to some consumers who want to do that. Then we think that streaming will continue to grow. As you get additional bandwidth, we think that it’s going to become more prevalent over time, which is why we’ve invested in it.

IG: What role will tablets play in this future?

TB: We see this as an evolution where people continue to be more and more hybrid. We do believe that tablets are definitely a positive force, albeit a disruptive force, in the gaming universe. We see it as expansive. We really see that people who are using tablets generally have a high propensity for gaming. Whenever we have a high propensity for gaming, we get very excited about that, because we think that makes the whole gaming pie bigger. The question is, how do we, as a gaming community, get these immersive games -- which have always driven the gaming community -- into the hands of people who want to play them on tablets? I think that’s a question that we are answering, and a question that we’re very excited about addressing.

IG: Thanks Tony.

GameStop has a CEO they deserve to have, go see his face at the article source. That's some nice arrogant corporate money grabbing ass, this guy would feel right at home at the helm of a tobacco or oil company.

SOURCE: IndustryGamers.

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