GameStop Gets Impulsive… but what Does it Mean?

Aieee.

American game retailer GameStop has acquired Impulse, StarDock Systems’ digital distribution service. This means Stardock is getting out of the digital-distro game, essentially succumbing to Steam, and handing their infrastructure off to a brick and mortar retailer.

Why is this happening?

Okay, logically, if I were Stardock and I looked at our investment in Impulse versus the return on investment we were getting, I think I’d shed it. At this time nothing compares with Steam and even trying to compete seems wasteful. Handing digibution to an established retailer with name cachet – something Stardock does not have, despite its successes in both games and office software – seems like a lucrative way to unload what I’d consider a toxic asset.

Let’s also not forget that Stardock suffered horribly on account of its disastrous Elemental release. That game, which should have been a crowning achievement, was instead a catastrophic albatross that did – and still does – slurp cash numbered with lots of zeroes at the end from Stardock, as the pro-consumer company struggles to make Elemental into a game people want to play. That takes money. Selling a huge asset gets you money.

So… because they recognized they couldn’t compete with Steam? Because there was big money in it to fund further developments? Probably both, to be honest.

GameStop, meanwhile, has to master the art of digital distribution – which is nothing like the analog counterpart. Concepts like Steam Sales and even friend tracking will be lost on a brick and mortar retailer. Moreover, one that initially made its fortune in selling used games has now acquired a service that has no logical way to provide exactly that. There will be a huge amount of getting up to speed, despite Impulse’s robust existing infrastructure.

In my analyst’s mind it comes down to this:

• Stardock wins: they unloaded a well-meaning but toxic asset, infusing cash into a generally stable developer, but one for whom a single failure had caused a lot of headaches. Minus? If Impulse becomes THE channel, Stardock won’t see a dime.
• GameStop took a risk: GameStop’s objective is to combat OnLive  and other services that stream games to your system, rather than you buying and downloading them. Thus did it also buy, at the same time, Spawn Labs,a great big streamer. Why is it a risk? Two things…
  • First, streaming services are unproven and many, self included, have serious doubts about their abilities in this neonatal period
  • Second… well fuck all, you’re still competing with Steam, baby.

GameStop has demonstrated a chameleonlike  ability to weather changes in the structure of this market. But the fact remains the same: GameStop depends on used game sales and trade ins to make its ducats. Frankly I get the sense that, professionally, they haven’t thought this through: some exec said “we need digi-distribution!”

Rather than researching what it would mean for the organization, they just bought the capabilities they felt they required. Time will tell.

Email the author of this post at steerpike@tap-repeatedly.com.