Monday, September 12, 2011
GameStop: Trying to Counter a Disruptive Threat
GameStop made news this week by announcing that it will accept trade-ins of Apple iPods and iPhones at its stores throughout the country, after testing the concept in Texas for several months. This article quotes CEO Paul Raines as saying, ""We're selling refurbished iPod Touches like crazy." I find the news interesting for reasons beyond the fact that all things Apple tend to attract attention these days. GameStop clearly faces a serious threat of disruption for two fundamental reasons. First, many people see the future of console-based video games shifting to downloads as opposed to buying CDs at retail stores. Second, console-based games themselves are under attack from the shift toward mobile and social gaming. GameStop clearly will have to evolve its strategy, or face a future that looks more like Blockbuster and Borders than they would like. I'm intrigued by how Raines, who I interviewed years ago when he was at a different firm, has continued to experiment with the business model and evolved the strategy in the face of these threats. They seem much more agile than other brick-and-mortar retailers who have been disrupted, but it remains to be seen whether they can thrive amidst these challenges.