The PlayStation 5 Digital Edition could pose a threat to game stops


Sony sent a wave through the industry in late September when it announced a digital version of the PlayStation 5 that had the same performance as the standard, but would be $ 100 cheaper and away from the disc player to play physical games.

It’s a departure for the gaming industry that started with heavy reliance on hardware and hard copies, and it signals a shift to digital and the cloud. An alarm bell rang for the move Game Stop (G.M.E.)Is, which relies on physical sports for a significant portion of its income.
In 2002, her then-parent company, Barnes & Noble, launched Gamestop. Over the years, GameStop has diversified its business by opening pre-orders of the PlayStation 5 digital version, continuing to sell merchandise such as Funko Pop Pop toys, offering Fortnight in-game items as gifts with purchases.

But if gamers feel pressured by the digital version of the PS5, and switch over, Gamestop will face a major challenge for its business. The company declined to comment on the risk to the story.

But in a September 2019 interview, CEO George Sherman told CNN Business: “Gaming as an industry can’t get stronger … we need to pivot. It’s a game stop that needs some change.”

Analysts were divided over whether the gaming retailer was in immediate trouble. But Sony’s next launch is the latest signal that the retailer needs to adapt.

The company reported a loss of 11 111.3 million in the most recent quarter, compared to 5 5,415.3 million in the same period last year. It said it would close 400 to 450 stores globally this year.

Stephanie Wisink, managing director of consumer equity research at Jefferies, believes digital consoles will not be widely adopted yet because most gamers across the country will need more bandwidth and an external hard drive to capture the whole digital game.

Wisink predicts that GameStop will benefit from sales of the upcoming Xbox Series X and Standard PS5, and will do well for at least the next three to four years until 5G and cloud gaming become more popular. For now, the company will be designed by sports collectors and others interested in trading in physical sports. Body copies can be traded, but not digitally.

“But after that, we really need to talk about some of the threats … digitization of software software, the rise of cloud gaming,” Wisink said. “Gamestop continues until we get out in three or four years. We have to rediscover ourselves in terms of the situation. “

A ‘Blockbuster Era’

Subscriptions like the Xbox Game Pass, where gamers can try multiple games per month for a flat monthly fee, and cloud gaming subscriptions like 99.99 per month at Google Stadia, can all be challenges for Gamestop’s business model.

“We’re entering a kind of blockbuster era,” said Carolina Milanesi, a tech analyst at research-based Creative Strategies. For effect gaming. “

To survive, Gamestep may have to evolve.

“You can just become a merchant store that is connected to gaming and can also sell accessories, for example,” Milanese said. “You’re changing your DNA, you name it and you become someone else, it’s possible.”

Gamestop has survived the epidemic and closed stores, and will benefit from new console launches since customers will have reason to return to stores, said Michael Pachare, an analyst at private financial services company Wedbush. “

The digital PS5 is a first for Sony, but it’s not for gaming. Xbox has done so by launching a digital version of the Xbox One S in 2019, which Patcher said “barely made a ripple.” The Xbox Series S follows a similar trend, but has lower resolution graphics and less Mainstay more storage than the Xbox Series X.

“People who want to trade in games will buy more expensive PS5s and will continue to buy discs,” said Michael Patcher, an analyst at private financial services company Wedbush. “As long as there is a version of the disk drive, there will still be disks and Gamestop will continue to sell them.”

An unexpected gold mine

Gamestop doesn’t have a very valuable asset, said Jefferies analyst Wisink. “Games also sits on a database of 16 million profiles of top five core gamers with whom they have a direct relationship. And it can tell you whether those gamers play more than one game,” Wisink said. “So that’s something Micro .ft (MSFT) No. Activation (ATVI) No. EA (EA) No. All those companies know their personalized knowledge in the matrix, but they do not have the appearance of the matrix. “

It just depends on what Gamestop is able to do with that customer data. The company also owns Gaming Magazine, Game Informer, and one of its recent shareholders is co-founder of pet supply ecommerce store Chevy, Ryan Cohen. Than last year. The stock price has risen 78.30% to 4.45 dollars, reflecting optimism over the next national-console.

“We know one thing about Chevy, it’s built from customer data at the center of everything,” Wisink said. Use that data to push customer loyalty, repeat purchases and Subscription services.

.