Blockbuster’s New Plan Won’t Affect Gamestop
April 29th, 2008 by Will Prusik in Analyst, Business, News, Xbox360
Just today we brought you news that Blockbuster is ramping up their involvement in the video game selling business. Soon you’ll be able to buy new consoles and a wide variety of games straight from your local Blockbuster rental location. Colin Sebastian of Lazard Capital Markets has assured Gamestop investors that this move won’t hurt Gamestop’s profits at all. This is likely a move of slight desperation on Blockbuster’s part as it’s probably likely that their popularity has dropped with Netflix and the iTunes store as well as On Demand cable boxes making video rentals cheap and easy. Give most people the option of either walking/driving to their rental store or pushing a button on their remote for the same price and they’ll choose the option that keeps them in their slippers every time.
Gamestop has very little to worry about for several reasons. First of all there’s familiarity. Sure, most everyone knows about Blockbuster, but if your local deli started selling computer hardware, you’d probably stick to the sandwiches.
Secondly you’ve got a different group of people working a Gamestop than you do at a Blockbuster. Go to a Blockbuster and ask for movie recommendations. Everyone likes movies. That doesn’t mean everyone knows about movies. Ask two different people the best movie of all time and you’ll probably get contrasting answers. Some people like depressing indie flicks. Some like lighthearted romps through Gamestop is generally staffed by gamers. When I walk into my local Gamestop the workers are almost always talking about some game or other. People ask for recommendations and usually get pretty good stuff because of it.
Thirdly is just the sheer amount of space a store dedicated to a sole category of merchandise can dedicate to each of its products. Blockbuster would do well to phase out the incredible volume of terrible horror/action films that clutter their shelves. Nobody cares about Kevin Sorbo or Dolph Lundgren anymore (it’s debatable if they cared about Sorbo in the first place). Gamestop has every inch of their space stocked with gaming merchandise. Every older film that sits on the Blockbuster shelves and gets dusty is space where Gamestop is putting a PSP case or a Wii game.
Tags: Analyst, Business, News, Xbox360
