Gamestop Buying Impulse & Spawn Labs

[CeeKay]

figured this would receive more traffic here since Impulse is a PC platform after all.  Thoughts?  Rants?  Hallucinations?

[TiLT]

I guess this will scare away a lot of Impulse's customers and further cement Steam's position as market leader.

[Huw the Poo]

Wow, I didn't see this coming.  My question is why?  Are Stardock short of cash or something?

I wonder if this will mean things will improve for European customers.  Half the games available on Impulse aren't available to us, which is especially irritating during weekend sales.

[CeeKay]

btw, thanks to Moose for pointing this out 

I agree with Huw, this is definitely one of those OMGWTFBBQ moments.

[Bullwinkle]

I think it has more to do with Gamestop seeing the digital writing on the wall than with Impulse's financial woes (though they do seem to have some, IIRC).

[baelthazar]

btw, thanks to Moose for pointing this out 

I agree with Huw, this is definitely one of those OMGWTFBBQ moments.

+1

Impulse is currently my favorite of the three (although they have had problems getting their distributing rights at the same time as Gamersgate and Steam, and don't offer as many deals). I won't say I'll stop using Impulse after this (I mean I still shop at B&M Gamestop) but I'll think twice about it. I will admit, despite my feelings, I do use Gamersgate the most and Steam second most, due to sales.

[Huw the Poo]

They (Stardock) say in the FAQ that nothing will change for customers, but how can they guarantee that?  What possible influence can they have once the acquisition is complete?  At the moment I love that I can download my games as often as I like; who's to say that Gamestop won't impose some kind of limit in the future?

[Jumangi]

Looks Like Wardell/Stardock have thrown in the towel against STEAM and are selling while they can get something for it.

[Purge]

I wonder if that means Impulse is going to offer to sell warranty on their own file servers in case they get scratched?

[Caine]

not happy that gamestop is buying them.  i would prefer steam do it so i can group my dl services together.  got accounts with all of them and keeping track of the games is tricky at times.

[CeeKay]

I wonder how long before Amazon comes out with their own client beyond that mini downloader app they have now.

[Sarkus]

Brad claims they are getting out of the digital retail business not because it wasn't profitable (they claim to have made more money on that then any other part of their business last year), but because to grow it would have required it to become their primary business and that is not what Brad wanted to do.  So from that standpoint I can see his point.  He also claims to have done his work to make sure GameStop was a great fit, but I suspect the amount they are paying made other issues secondary.

It doesn't really matter to me personally, though, as Impulse has always been a minor player from my perspective. 

[Razgon]

Its standard business practice to sell off the parts of your business that isn't your core business, but may still be profitable. Unless of course, you want to expand the area.

It does make you wonder what the idea was in the beginning with Impulse.

Either way, it's interesting that Gamestop has recoqnized the writing on the wall regarding brick'n mortar shops.

[Blackjack]

Blue's pointed out a FAQ at Stardock:
http://www.impulsedriven.com/news/2558/Stardock_Community_FAQ_about_Impulse_Acquisition_by_GameStop

Who will handle customer support during the acquisition phase?
    For the foreseeable future, nothing will change for customers. Impulse, Inc. will continue to handle customer support.

    What happens to the staff?
    The staff will be staying with Impulse, Inc.

   Will there be layoffs?
    We do not anticipate any. All key employees that worked for Impulse, Inc. are continuing with Impulse. Shared resources will be reabsorbed into one of Stardock's other business units.

   Is Stardock hiring?
    Yes!

   What kinds of positions are you hiring for?
    Stardock is actively hiring software engineers of all types, project managers, senior developers and artists.

I've never bought anything on Impulse. Though I buy many things "on impulse." Ba dump bump!  

I would be worried if Gamestop was merely buying Impulse's "customer list" and then pushing them out of the way to replace their employees with Gamestop drones (Based on my experiences with various bonehead "don't know nuthin' about no PC gaming" employees at various Gamestops). I don't sense that's the case.

I suspect this won't be the last consolidation we see amongst game retailers (digital, storefront and otherwise... is there an otherwise?).

[Bob]

Looks Like Wardell/Stardock have thrown in the towel against STEAM and are selling while they can get something for it.

Exactly. It was pretty clear they were never going to beat Steam. You can only justify being an also-ran for so long. Investment from Gamestop might make a difference, I don't know.

Seems to me though, that the PC market has moved away from Gamestop. What PC gamers don't use Steam at this point?  I wish them the best though.  Competition is good.  Would we have have weekend-deals and Xmas sales if Steam was the only game in town?

[Purge]

Would we have have weekend-deals and Xmas sales if Steam was the only game in town?

I think so. There are many multiplatform games that threaten PC gaming.

[TiLT]

Would we have have weekend-deals and Xmas sales if Steam was the only game in town?

I think so. There are many multiplatform games that threaten PC gaming.

Not to mention that people have different price points where they are willing to fork out for a game. By providing bargain deals Steam taps into a much larger potential customer base, even if they are completely alone in the market.

[Teggy]

So they're not going to buy it and just shut it down in an attempt to kill digital distribution?

[morlac]

I would guess they are doing this in anticipation of having the infrastructure in place to deliver console games digitally in the future.  I mean they don't even sell PC games there anymore right?   

[CeeKay]

I would guess they are doing this in anticipation of having the infrastructure in place to deliver console games digitally in the future.  I mean they don't even sell PC games there anymore right?   

they have digital downloads through their website, I guess they want to get all newfangled.

[Razgon]

I would guess they are doing this in anticipation of having the infrastructure in place to deliver console games digitally in the future.  I mean they don't even sell PC games there anymore right?   

They sell tons of PC games in Denmark.

[PR_GMR]

What a dumb move. To let go of a highly-profitable game-delivery platform that will make oodles of the money to do what? Make buggy games like 'Elemental'?   

[hepcat]

To be fair, I don't think they were making tons of money as a digital distributor.

[Razgon]

To be fair, I don't think they were making tons of money as a digital distributor.

Well, they said they were, actually ,and cites this as the reason for selling it.

[morlac]

To be fair, I don't think they were making tons of money as a digital distributor.

If were being fair we should also point out that elemental was an exception and not the norm for games devolped by Stardock


And i was kidding about Gamestop selling Pc games.  Of course they do.  They are right there in the back of store encompassing 1/64th of one half of a shelf next to the PS2 peripherals and Gamecube used games.

Now I had no idea they sold digital downloads but I am sure that Impulse is a much more robust and intricate delivery system.  I think it was a good deal for both parties.

[wonderpug]

To be fair, I don't think they were making tons of money as a digital distributor.

Well, they said they were, actually ,and cites this as the reason for selling it.

Yup.  Here's a quote from Frogboy:

If Impulse was so profitable why Stardock let did this happen?

Because Impulse was so profitable.

At some point, you have to decide what type of company you want to run.  A technology company or a digital retailer? When Impulse became our #1 business unit, we knew it was time to find someone to partner with to take it to the next level. Someone who already was a retailer and understood the game industry. Someone who was interested in seeing the PC gaming market greatly expanded. Gamestop turned out to be the ideal partner.

My guess is that somehow nobody at Stardock has shopped at GameStop in the past 10 years and somehow thought we still lived in the glory days of brick & mortar PC game stores.  "We first considered partnering with Egghead Software but they were unresponsive to our calls."

[morlac]

Someone who was interested in seeing the PC gaming market greatly expanded. Gamestop turned out to be the ideal partner.

 

 

[msduncan]

I have hated digital distribution since it's inception.     One of the few ways I could afford to buy as many games as I do was to play through them and then post them on eBay.    Before digital distribution, I could resell most PC games.    Along comes this crap and I was stuck with a product I'd never use again after beating it.    I *never* replay games once I play through them.


Edit:   I also credit Gamestop for trying to destroy PC gaming altogether by reducing store shelves down to literally a tiny hidden corner for PC titles.     Of course they try to have big blowouts for WoW expansions just to get a piece of the pie.... but otherwise they are the bane of PC gaming.

So double hatred of this news for me.

[Razgon]

Gamestop follows the market, the market doesn't follow them. Its not gamestops fault that less pc games are sold in stores - its consumers faults.

[morlac]

Gamestop follows the market, the market doesn't follow them. Its not gamestops fault that less pc games are sold in stores - its consumers faults.

No it's not consumer's fault or really Gamestop's fault.  There is such a slim profit margin on games to begin with and PC games fall in price so fast that it is not surprising that their shelf space shrunk over the years to allow more room for consoles.  Plus there are a lot more accessories they can sell for consoles and they can make more $ off of those sales than their games.  However, the only thing keeping the doors open at Gamestop is the used console game market which they just can't do with PC games.  None of those can be blamed on consumers.  This all happened well before digital distribution really even got started. 

[Razgon]

I have no idea what the profit margin is, or have been on PC games, but I'm pretty sure that if there was a market for pc games bought in stores, the games would have found its way there.

Of course, the industry plays into this as well - higher cost for producing a game means a lot in this respect, thats for sure.

There's a lot of factors in this, but I'm pretty sure Gamestop isnt the fountain of evil that some seems to think it is, regarding PC games.

[CeeKay]

Star Ruler is no longer available on Impulse because of the takeover.  I wonder if this is will be the only company fleeing or if other will follow.

[Shkspr]

It's worth noting that the decline in shelf space for PC software over the years has almost certainly occurred for different reasons for different retailers.  In some big box stores (Target/Walmart) you can often still see floorplans that devote a nice chunk of space to PC software - 24 linear feet in my local Walmart, opposed to 20 feet for PS3 and XB360 combined.  Much of that space, however, is dedicated to casual gaming, both of the HdO/TMg variety and Sims/tycoon style.  Obviously, big box stores like Walmart aren't going to be put off by a paltry 10-15% average industry margin on games since that still puts gaming among the higher per category returns they get.

Specialty electronics retailers like Best Buy generally still carry a decent mix of PC software and likely will to the bitter end.  Until the day it went under, the local Circuit City still had over 70 feet of PC games (though all faced out) and the big problem with the local Best Buy is more that PC software is in the corner, not merched next to the huge 45" screens playing Kinectimals or Madden.

You used to see Toys R Us and other toy retailers carry more PC software, but the edutainment market seems to be pretty dry, and 16+ year old PC gamers are not generally Toys R Us's target market.

Which brings us to Gamestop, and Gamestop's big difference from any of the aforementioned retailers is its absolute reliance on revenue from used product.

Gamestop makes a gross margin of about 27%. (I've got no reason to think they've budged appreciably from the last time I went googling for investor materials, but the numbers involved are from 2008, not last year.)   In other words, for every $100 spent in their store, $73 or so goes to pay for the cost of the items they bring in.  The other $27 pays for salaries, rent, advertising, Casual Friday at the corporate office, and trips to PaxWest, among other things.  Gamestop makes about half of its gross margin from used sales, which traditionally have a sales margin of about 60%.  Streamlining the math, when Gamestop sells three copies of CoD:BlOps, it does so in the fervent hope/expectation that one of those three buyers will sell back their copy and allow GameStop to sell that copy to a fourth person.  In fact, if it CAN'T get one of those three copies back used and resell it, it's more or less screwed.

So their major problem with PC really boils down to the fact that they still only get 10-15% margin on those items, but with all the serial codes and online authentication, the market for used PC games sales is incredibly volatile.  An independent store owner might be able to keep everything on the same page as far as which games have codes and which ones are MMOs and what materials absolutely have to be in the box, but the returns percentages alone on used PC games sales have got to kill any hope of a national retailer pinning their buyback decisions on the shoulders of a 19 year old kid with more enthusiam for the product than business acumen.

I also think that recent changes to the way game sales are tabulated has opened some eyes to the fiscal reality behind the health of the PC industry.  We as gamers have known all along that PC gaming wasn't dying, but changing - I suspect that it is only in the last year or so that the financials to back that assertion up have been readily available to the industry as a whole.

[Bullwinkle]

A very articulate post.  Nicely said.

PC has been shifting to mostly digital, too.  I don't have the statistic in front of me, but the number of digital versus boxed sales is staggering.  However, that may be a chicken/egg thing, as PC games had been pushed out by GS long before digital sales took off.

[Blackadar]

As soon as Wardell doesn't own it anymore, I can start using Impulse again.  Sweet!

[lokiju]

It's been my experience that Brad's a very nice guy who's done a lot for PC gaming. Why the hate?

Edit - Or is my sarcasmeter low on power?

[Razgon]

No, Blackadar has a personal grudge against him for ruining his life over at another forum

[Blackadar]

No, Blackadar has a personal grudge against him for ruining his life over at another forum

I don't like his politics, his personality, nor some of his two-faced business policies.  I simply choose not to do business with people like that.  I don't want to turn this thread into an anti-Wardell one, so let's just leave it at that. 

[Razgon]

Sure - you didn't have to post it like that, then.

 Anyways - Seems like they have invested heavily into getting a digital department over the last year or so - I'll see if I can dig up the articles about it, but they hired some heavyhanders apparently.

[Huw the Poo]

No, Blackadar has a personal grudge against him for ruining his life over at another forum

Oh, is that what it was?  I wondered why he claimed that I want to have Brad Wardell's baby in the Elemental thread despite my previous few posts being highly critical of Stardock and merely voicing some cautious optimism.  Seemed a bit uncalled-for...