GameStop, Tomb Raider, and how retail and online competition remains unfair

GameStop employees opened their respective stores in August of 2011 to find an interesting directive from their bosses.

They were to open sealed PC copies of Deus Ex: Human Revolution, remove the coupon that offered a free digital version of the game, throw it away, and then sell those copies as new after resealing the boxes. Later that day GameStop removed the game from store shelves entirely.

The result was Square Enix releasing a statement that supported GameStop’s ability to sell, or not sell, anything it wanted. The stores were given copies of the game without the coupon, and life went on. The message was clear and unmistakable however: If you mess with GameStop’s ability to sell a game, or if you think you can use their stores to even indirectly promote a digital service, the retailer has no problems with punching you in the virtual throat.

It will be awhile before the digital stores are competitive

The tension between digital game sales and retail is only going to get worse, and it’s likely to blame for some of the odd behavior you can see in the market. GameStop released Tomb Raider: Definitive Edition days before the announced street date, and many eager gamers rushed to their PlayStation 4s or Xbox Ones to try to buy the game online, only to find that the original street date of January 28th was being honored online.

So why wasn’t the game made available online in order to compete with retail? It’s hard to know for sure, but the answer is likely deep within the dance that takes place between the platform holders who control the digital storefronts, the publishers who control where and when the game is sold, and the retailers who control what boxes are put on what shelves.

To put it bluntly, Sony and Microsoft need to keep stores like GameStop and Walmart happy, or they lose the primary method for selling their hardware to customers. Publishers need to keep the retailers happy because they know stores like GameStop don’t give two wet sneezes about yanking a game from the shelves if they think digital is being given an "unfair" advantage.

In other words, publishers and platform holders are going to bend over backwards in most cases to keep retail happy. Don’t be confused if you see PlayStation Network or Xbox Live behavior that suggests they're not fighting as hard as they could against places like Walmart; the last thing anyone involved wants to do is piss off retail. This isn’t competition in the real sense, it’s more of a slow erosion, with retail gaining many of the concessions they need to maintain at least a slim advantage.

This is only going to get worse, as you attack every aspect of GameStop’s model when you purchase a game like Tomb Raider directly through your console.

They can’t talk you into selling back your games to pay for your purchase. Not only that, but you don’t have a physical copy of the game to sell back to GameStop. Selling new games is a low-margin business, but it’s necessary to keep customers coming into the door so they can take part in the buying and selling cycle that feeds the high margin used-game market.

There is nothing the industry would like more than to strangle that secondary market to death, but pissing off GameStop has all sorts of nasty side effects, including the possibility that a game or system could be removed from the shelves. Any decision that’s made about games being sold digitally through the hardware is likely done after, or during, long conversations with retail partners about how it will impact their business.

It’s important to avoid the trap of thinking that the online stores are competing against brick and mortar on merit, as the invisible dance that happens behind the scenes to keep retailers happy impacts more than you think when it comes to how and when you buy games online.

GameStop is feeling the pinch from selling low-margin consoles in high numbers only to have customers buy their games online. They have reason to be afraid, and to act accordingly, and that includes "asking" that online sales of a game take place after the retail version is available.

So don't think you're being paranoid if it sometimes feels like retail has been given an advantage, as it’s always possible someone from a major retailer called the publisher and explained what needs to happen if the game wants to stay on the shelf.

The Deus Ex incident ended with customers being offered a $50 gift card and a "buy two get one free" offer on used games. The company needs to keep you in the cycle of buying and selling used games, even when it's saying it's sorry for flexing its own power to keep the publishers in check.

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