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Is 20 million PowerUp members enough to keep GameStop in business?

When Valve unleashed Steam around a decade ago, who would’ve thought that digital distribution was going to make it hard on well-established brick and mortar retails like GameStop.  If you didn’t catch the sarcasm in all that, then yes, I was being sarcastic.

If you’ve ever traded in a game at GameStop and felt ripped off, then here’s your chance to mock the folks that gave you pennies for your Final Fantasy collection.  In fact, GameStop relies heavily on your used physical goods, with almost 50% of the company’s gross profits coming from reselling used goods. 

(GameStop used to take these)

It doesn’t take a genius, however, to see that GameStop’s buying then flipping of goods won’t be as profitable as it was before.  GameStop has tweaked this business strategy in recent years by including more than just consoles and video games.  Even with the additions of trade-able items such as iPods and iPads, it’s still likely that GameStop will head the ways of Blockbuster and Borders if it doesn’t transition quickly and efficiently towards the cloud. 

Recent interviews with console makers such as Sony and Microsoft from various news publications reveal that even they are considering transitioning completely to the clouds for distribution of games in the future.  Not only is GameStop behind in the digital race, but its partners in crime are also trying to bail on the once profitable segment of the video game market. 

That’s not to say that GameStop is going to be met with a fatal dagger in the unforeseen future.  The Texas-based retailer has been pushing hard for its customer base to adopt the “PowerUp” program.  PowerUp adds benefits to purchasing goods from GameStop; for instance, buying a game will reward you with points which can then be applied toward contests, gears and the likes.  The PowerUp Pro is a paid membership program that extends the benefits of being a loyal GameStop customer (i.e. 10% off pre-owned games if you’re a PowerUp Pro member).  This incentive based program is purported to have 20 million members as of this summer.

So where is GameStop really heading?  Most are pretty sure that it’s heading in the same direction as Steam, with the exception that GameStop will continue to have brick and mortar outlets that will serve as show floors for customers who are interested in trying something out before buying. 

There is a pile ‘membership’ cards that’s sitting in my ‘bankrupt’ box, and my PowerUp card might join Borders and Blockbuster soon unless it hurries up and drink some Red Bull to grow wings and join the rest in the clouds.

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