Talk of OnLive Crushing GameStop Way Too Early
It’s a shame that people are so ready to call an end to GameStop because of a start-up company, OnLive, that hasn’t launched yet.
Some of the headlines were puns off of the GameStop name, but pretty much read the pretty much the same…streaming video games online to PCs and TVs would crush GameStop’s brick and mortar business model.
There are several observations/questions…
1) It’s not the idea, but the execution that counts. It won’t launch until Winter 09, and many things can change, like product delays, lack of funding (remember, the business is a start-up)
2) Will pricing and demand be enough to pay for the costs of running the business while enticing games to use the service?
3) Will latency and other major technical potential problems be worked out by the time of launch or soon enough after
Nonetheless, this COULD be another Blockbuster v Netflix (remember, people said that no one wanted to wait for DVDs in the mail).
No question that management at GameStop should watch OnLive and see how they are doing and formulate Plan B (I really do hope they don’t think they’re Superman) just in case. I mean, EA, Take-Two and other major publishers have apparently signed on, so there HAS to be something to it.
Actually, if customers want another distribution channel, GameStop should work on anyway to meet that demand, as a practical business exercise. CEO, Daniel Matteo, said on the 4th quarter earnings call that they’ve seen these types of things come and go. I have no doubt about it. Again, it’s not about the idea, but execution.
It’s just too soon to tell.
