Sony sent ripples through the industry in late September when it announced a digital version of the PlayStation 5 that has the same performance as the standard one, but would be $100 cheaper and do away with a disc player for playing physical games.
But if gamers were to feel compelled by a digital version of the PS5, and switch over, GameStop would face a huge challenge to its business. The company declined to comment on that risk for this story.
But in a September 2019 interview, CEO George Sherman told CNN Business: “Gaming as an industry could not be stronger … it’s us that needs to pivot. It’s GameStop that needs to make some changes.”
Analysts were split on whether the gaming retailer is in immediate trouble. But Sony’s upcoming launch is the latest signal the retailer needs to adapt.
Stephanie Wissink, managing director of consumer equity research at Jefferies believes that digital consoles won’t see mass adoption yet as most gamers across the country will need more bandwidth and external hard drives to hold all those digital games.
“But then after that, we really need to start talking about some of the threats… the digitization of software, the rise of cloud gaming,” said Wissink, “By the time we get out three or four years, GameStop is going to have to reinvent itself in terms of its positions around physical software.”
A ‘Blockbuster era’
“We’re entering a kind of Blockbuster era,” said Carolina Milanesi, a tech analyst at research firm Creative Strategies, “The same thing we’ve seen for movies and content for Netflix and the like that ended up killing Blockbuster are now starting to impact gaming.”
To survive, GameStop may have to evolve.
“You could become just a merchandise store that is linked to gaming and could be also selling accessories, as an example,” said Milanesi. “You’re changing your DNA, you keep the name and you become somebody else, that’s possible.”
Michael Pachter, an analyst at private financial services firm Wedbush, said GameStop survived the pandemic and closing stores, and it will benefit from new console launches “since there will be a reason for consumers to return to stores.”
The digital PS5 is a first for Sony but not for gaming. Xbox has done it before by launching a digital version of the Xbox One S in 2019, which Pachter said “barely made a ripple.” Xbox’s Series S will follow the same trend, but it has lower resolution graphics and less storage than the mainstay Xbox Series X.
“People who want to trade in games will buy the more expensive PS5 and will continue to buy discs,” said Michael…
Read More: PlayStation 5 Digital Edition could pose a threat to GameStop