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The Writing On the Wall: GameStop Starts Slow Pivot

on Friday, Apr. 25th

If you want to know what the future of the video game market looks like go no further than your local GameStop. No, really.

The game retailer, which makes a tidy profit on the buying and selling of used games and game consoles, is looking to expand its footprint into other aspects of the electronics industry. Namely the Apple and mobile markets, as Ars Technica breaks down:

[In] fiscal 2014 GameStop plans to roughly double the size of its Simply Mac retail brand, which sells and repairs Apple products, from the 23 stores it currently operates. GameStop will also open 200 to 250 new locations for its AT&T exclusive Spring Mobile subsidiary (up from 164 currently) and open 100 to 150 new Cricket Wireless storefronts on top of the 31 that it franchises currently. By 2016, the company hopes to have 1,000 such “technology brand” stores in operation, making up 10 percent of the company’s total earnings.

GameStop and game makers have long had a complicated relationship. For years the console makers and publishers needed the brick and mortar stores in order to push their wares to the gaming public. Yet they long regretted being cut out of the profits in the used game market. Microsoft attempted to build a system that would have cut them in by shifting the digital rights management on game software away from the discs–which can easily be sold and traded–and into the cloud. Sony nixed that plan just by holding on to their old model, and very likely has the lead in current hardware sales because of that refusal to change.

That move, seen as consumer-friendly by a vocal portion of gamers, was also a big boon for GameStop. Yet the future of games distribution as a cloud-first and then cloud-only system is all but inevitable. (I mean, things can happen.) That’s a future that would turn the modern GameStop into the equivalent of a Tower Records. If you are under the age of 30 you probably don’t know what a Tower Records is. Exactly.

GameStop still has a few years of robust game trading ahead of it, but by 2016 they’re going to need to have their exit strategy from the used games market running smooth if they want investors to stay on board.

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