Earlier this week GameDaily BIZ published an exclusive interview with GameStop's newly promoted CEO, Dan DeMatteo. The GameStop boss had a lot to say about his company's views on used game sales and digital distribution. DeMatteo's comments, however, did not go over very well with industry veteran David Perry, Shiny Entertainment founder and current CCO at Acclaim Games.
Perry sent us a lengthy e-mail, which examines several of DeMatteo's viewpoints. Ultimately, Perry believes that DeMatteo is misleading investors and that GameStop's policies are ironically accelerating digital distribution. The entire letter from Perry is below for your perusal, but we highly encourage you to read the GameStop interview first if you have not already done so.
Perry's letter:
Whoa,
I'd love to publicly respond to the Dan DeMatteo article. (GameStop CEO)
Firstly, I'm a major fan of GameStop; I've spent thousands of dollars there, so there's no weird grudge. They have made us many millions in previous years.
That said, I hate to think someone this powerful can put out this kind of nonsense in an interview, and confuse professional investors, that might have been interested in the digitally distributed future of the games business. Some developer (or publisher) pitching a digitally distributed strategy might have just been 'thrown under the bus' today by Mr. DeMatteo.
Where to start? Sheesh...
He says we are 12-17 years away from downloading games digitally? I know he's got to pretend that digital distribution isn't relevant (or any kind of threat) to protect his stock price, but I guess Steve Jobs is miles off course then (100,000,000 digital downloads in the first 60 days of opening Apple's 'Digitally Distributed' App Store.) Or that iTunes is now the biggest music retailer in the world. There's tons of games I can download today, digitally, on console and PC. 12-17 years? Try right now.
What is the Amazon strategy? What is the Netflix strategy? To distribute entertainment digitally.
This wave will be just like the disruption the camera industry experienced – you can hope "digital" won't show up and keep selling film cameras, or you can embrace the future. Every major camera company alive today embraced the digital future. It's not like he or GameStop has any part in deciding where or when; the consumers will decide. Let's face it, he's running the shop that sells the film.
The big BOLD part of the article: "I think the argument that [used game sales] competes with the new games is false. Imagine what new car sales would be like if you couldn't trade in your old car." Well that's interesting, as the vast majority of our industry has no issue with people selling their games on as many times as they like (eBay thrives on it.) What we object to is that our key retail PARTNER decides to pitch our consumers with rhetoric like, "You'd be crazy to buy the new copy, when you can buy the used one for less, and we guarantee it will work." Back to your car analogy, try partnering with Ford, doing co-op advertising TOGETHER, have Ford spend even more money dressing up your stores etc., then when a consumer finally walks in to buy a new Ford and says, "I'd like to buy a new Ford please," then your salesman (who is SUPPOSED to be Ford's promotional partner) says, "You'd be crazy to buy a new one, here buy this old Toyota instead, it's great, it's cheaper and we guarantee it will work." You'd be Ford's partner for about 5 seconds. Oh, and yes, if you stopped selling used games, I'd bet NEW game sales would go up. Let's try it!
In reality, every game that goes "digital" will drop in price for the consumer (when compared to today's system). "Price" will always be a key part of the "buy" decision for consumers, and removing fees for GameStop, Packaging Design, Packaging Materials, Manuals, Shipping, Insurance, Manufacturing, Distribution, In-Store Promotions, Co-Op Advertising, RETURNS etc. will help consumers see attractive price drops. For publishers, removing 1st party fees to make custom expensive Blu-ray discs will be a nice price reduction also. And yes, as an industry we have no problem paying a distribution fee (as we are very used to that due to our relationship with GameStop).
Mr. DeMatteo talks about downloading 30GB games taking too long? Again, does he really (honestly) think we will force users to download 30GB before they can even start to play a game? Obviously, large data will get streamed as required, as that's how things work in a digital world. How can Apple get an HD movie to play in seconds? No 72 hour download required as he quotes. Also the vast majority of games are nowhere near 30GB anyway, and what about data compression? (Sigh.)
Reader Comments (2)
Mr. Wells- Your point is well taken about GameStop, and indeed, the industry at large shares some of the credit (blame?) for GameStop's success. However, Mr. Perry does not personally deserve your criticism as Acclaim does not do retail distribution, only digital distribution.
Dear Mr. Perry Before I begin let me tell you that I am the owner – operator of 2 independent game stores. I have been I the game business since the early 90’s and have operated 2 stores for the last 10 years. You can attribute any bias you wish to this fact. Your response to Mr. Dematteo’s interview really intrigued me. You complain that GameStop is your partner, but they undermine your interests by selling YOUR consumers used games. If you and other game companies feel that GameStop is not giving you the proper respect, why do you continue to give them such huge competitive advantages? Are there “special arrangements” going back to the publishers from GameStop? If Acclaim and the other publishers want to sell more new games they should stop giving their “partner” the huge competitive advantage of getting games 1 to 3 days before anyone else (including big box retailers like Wal-Mart) and follow the business model of books, music, and video and establish firm enforced street dates on ALL releases. Many years ago, the movie studios agreed to make one day of the week (I believe it is Tuesday) “New Release” Day. Product was shipped to distributors and direct accounts so it could be in stores for the Street Date. It created excitement for consumers, leveled the playing field for all retailers and video stores, and they spanked those who violated the street date whether they were big or small. The only reason your “partner” Gamestop sells the high percentage of a new release that they do is because Acclaim and the other publishers give them the huge competitive advantage of having the ability to prebook new releases by promising consumers they will have them before anyone else. If you really care about YOUR consumers give them the choice of where to get games on day one. If you really feel that your “partner” is biting the hand that feeds it, take away the “special treatment” they receive on receiving new games. Making say, Thursday as New Release Game day would sell more new games. YOUR consumers would know that they don’t have to prebook with just one retailer to get their game first. There would be more excitement in the business; Wednesday would become mid***ht madness ***ht in many stores as customers line up to get the newest release at Walmart, GameStop, or even my little independent stores. If your dog bites you, why keep giving him treats? Steven W. Wells