Is Gamestop the next Blockcuster?

Last week I went to Gamestop, the world's largest video game store chain, to observe how the consumers behave in the store and what they buy.

After five minutes in there, I felt that I was in the Blockbuster of video games, I saw 7 different customers and all of them went directly to the pre-owned games, they looked around for about five to ten minutes and then either buy one game ($20) or left the store. Most of them don’t even looked at the new games or accessories, I interviewed 3 of the consumers and asked why they go to Gamestop and the three of them told me that they usually get good deals specially in the pre-owned section and they like to trade their video games.

I also talked with the two employees, and both of them were hard core gamers, one had a Playstation 3 and the other a XBOX 360, you can tell how passionate were about the video games, new releases and new accessories, they were almost “fighting” each other when I asked which console should I buy, but at the same time they didn’t put to much attention to consumer service, they talked with me because I asked no because they wanted to.

Then I started thinking on the shift in our culture towards game downloads directly to the console or PC, especially since Playstation and Xbox have a huge hard disk. Why not just follow Netflix’s business model?

Gamestop stores are small, so the experience using and trying videogames is not the optimal. At the same time there are a lot of end users that are casual gamers, they owned a console before but now they are playing anger birds in their iPhones or FarmVillage at Facebook, so there might be a decrease in the total available market in the video game consoles industry and this also affects Gamestop’s sales.

After my visit to Gamestop, I decided to go and see Best Buy, and the experience was totally different they have 3 huge plasmas TV connected to each console (Playstation, Xbox and Wii) and you can try several games with the new Xbox Kinect and Playstation Move, the people spend more time in the game section comparing with the amount of time they spend in Gamestop, probably some of them just go there to play, but still they have fun inside the store.

Best Buy also sells pre-owned games, but they have better boundless and sales for the new products comparing with Gamestop, or at least is what I saw in my visit, the game zone had huge displays with the new video game Killzone 3, and there were about 6 more stations to play different video games.

Most of the consumers buy new video games at Best Buy. I saw one consumer buying a Wii with 3 new accessories, he told me he didn’t know if it was cheaper to buy it here but he likes to go and buy in Best Buy because the store look much more attractive to him, and here is when I remembered Marc Gobe advice “Think retail as Advertising,” and “Think Advertising as Experience.”

I’m not sure how fast will be the switch from packaged goods game sales to downloading, but I’m sure that Gamestop needs to do something to don’t get behind, the advise from a marketing perspective will be build a strong data base of your end users to create some loyalty with consumers, and when the downloading era come Gamestop will have a huge data base to exploit. In parallel Gamestop should invest in new ways of game delivering together with the big consoles companies, probably instead of a thread is a good opportunity to expand their business, at the end Gmestop once went to bankruptcy and they managed to move up to S&P 500, why not doing it again.