New Game Plus (September 16 - 22)
GameStop Redesign
Part of GameStop restructuring plan is to evolve stores into what they think todays gamer wants. I think the key in business is to try avoid trends as much as possible because when that trend goes away you still want to have a solid business plan. The past two earnings reports for Q1 and Q2 for GameStop have been quite rough and even underperforming their down expectations. They attribute this to being the end of a console life cycle but they aren’t just putting the blame there. GameStop understands that it has core issues, but does it understand how to fix them and stay relevant. Problems ranging from outdated online presence, abundance of brick and mortar, and ideas that didn’t bear fruit such as the spring mobile.
Over the past 6 months Gamestop has been closing down a lot of stores in hopes to shore up expenses. As for the existing stores and business plan, GameStop has been trying to figure out what gamers want and through studies plan to put some of these ideas into practice in test markets. Some ideas that have been bounced around include Esports, tabletop games and retro gaming. I spotted a story this week on IGN by Matt Kim, about how some of these pilot stores are already being put into action. A facebook video showed a store in Oklahoma, with a fresh coat of paint or walls. Inside the newly test store featured very minimalist grey walls with faux wood trim. Gone are all the clutter of current Gamestop with less noise including cardboard hanging from the walls, standees, bins full of games no one is probably going to buy. In terms of what this store is trying out as opposed to what its removing from existing stores, its testing out a self serve kiosk similar to how you can order fast food at some restaurants, a table in the back for what looks to be for tabletop games, a gaming area featuring a couch as well as CRT tv’s in the back of the store.
The good news here is that Gamestop is not wasting too much time putting their reboot plan into action. There is the curious question of why was this store in Oklahoma chosen to be a test market. My thought is that Gamestop has to survive on physical game sales when the industry is changing to digital. I assume that people in higher population areas with less square footage of living space and access to much higher internet speeds are the segment of the gaming market that has embraced the digital revolution. Which would leave middle America as the best places to test out how the physical media buying population embraces the changes. That is a strong possibility with the other option being that this store is a massive under performer and rather than close it, give it a second life with a new look.
I don’t know what the answer is for Gamestop, but from the outside looking in, these changes dont seem like they are the answer that this company needs to turn things around. I am just an observer and this company has access to all the data and clearly they are implementing changes based on what they think will give this company the best chance. Gamestop needs to figure out a way to embrace digital and evolve with the gaming industry instead of trying to chase trends that are in right now. I think GameStop needs to figure out how to succeed better in Ecommerce. I would much rather buy physical games online If they could get to me the day of release or day after. Yes, it would cost a lot to set up this infrastructure, but it will also cost a lot to renovate a lot of stores to test out new ideas.
E3
Speaking of other things that need to evolve, big questions arise as to what will happen to existing gaming touchstones that are having a hard time staying relevant. The other entity trying to stay relevant and profit off gaming is ESA and what has been a gaming institution since mid 90’s and that is E3.
Over the recent years, E3 has seen it popularity waning with big companies having more success doing their own thing. Microsoft still have an event around the same time but at their own venue as well as they have introduced their own pre scripted show called inside Xbox. Although inside Xbox is more about deeper dives on things we already know about. As of last year Sony completely pulled out of the show and didn’t bother hosting any event around the same time. Sony have also introduced their own produced segment called State of Play. Sony only has had a couple of these events as of now but it seems like they are somewhere in between big conference announcements and smaller press releases. Although they haven’t announced if they would be back for 2020 or not it would seem like the only reason they would take part again would be to talk about the Ps5 which at this point seems likely to be released with the next Xbox which is due out holiday 2020. Nintendo still participates at E3 but I don’t really see any difference between their directs which are a huge success and garner enough attention on their own to require E3 to make them any more pertinent.
This brings us back to E3 and over the last couple of years with companies pulling out they have tried to make the event something bigger by adding more gamer passes every year. There was an article on gamedaily.biz this week that leaked out what the ESA is planning to try to keep E3 relevant.
Some of the main changes they want to implement include adding more gamer passes. The plan would be to bump the current number by 10000 which would bring total to 25000. At the average cost of the event pass that would mean a lot more revenue for the ESA.
They also want to add in something along the lines of what Disney has at their theme parks with a fast pass system. If you haven’t been or don’t know what that is you just go to a certain ride, grab a ticket without getting in line and then the ticket will tell you what time you are able to use your fast pass. When you come back during you allocated timeslot, you essentially skip about 90 percent of the line and this allows you to enjoy more of the theme park. The same functionality would apply for E3, allowing you to see more game demos rather than waiting in line all day to see one game.
The addition of a media only day is also something that was put on the table at the presentation. This would make it easy as most members of the media say that it is quite hard to make it from meeting to meeting when it’s quite busy and hard to get through the crowds.
They also want to target people in the lines with what they are calling quetainment. Which is entertainment for people waiting in the queue. The plan is to offer companies the ability to market to a
Captive audience using data capturing. They also mentioned exploiting millennials tendencies and habits and using it to their advantage as well as using influencers and celebrities for many events during the conference to generate hype and FOMO (ESA’s wording)
All of these changes seem like they are getting away from the core ideals that made E3 what it was but maybe this is the direction it needs to stay relevant. One thing that came across to me was that the ESA still thinks it’s doing people favors by letting them be at E3 when I think it is the other way around and that the show needs help. Rather than look at the root of the problems the ESA is trying to capitalize on practices that are less than wholesome.
State of Play
Speaking of Sony doing their own press conferences, this week on the Playstation blog it was announced that we are getting a state of play next week. This has lead to confusion and speculation for a few reasons. The first reason of confusion is that it is the same day as Last of Us 2 hosting their own media event. Although, from what it sounds like, the last of us event with be more of a media only event with behind closed doors access. The speculation comes from what we can expect to see in the show. We only have two examples of State of Play to try to assume what this one will look like. According to Sid Shuman from the PlayStation Blog “ We’re preparing a pretty hefty show, weighing in at around 20 minutes and sporting a fresh new look. And we’ll have some great news to share with you, including new game reveals, new content from PlayStation’s Worldwide Studios, and a host of other updates”
They also went on to say not to expect anything about the PS5 although in their promotional material it showed hordes of people lining up for the event and then arranging in the date with 5 stragglers behind. I don’t think this was an accident so it’s either a big mislead or they do actually plan to surprise us with PS5 information. I personally don’t think they will announced anything PS5 system related as its currently a busy time in gaming and the best time to get the most attention is during slow times. I would expect some big event from Sony in early 2020. I also don’t expect them to surprise announce it at a state of play as viewership is not quite where they want it just yet for their Direct style series.
It’s hard to predict what we will see because we don’t have a lot of examples to look at. There have only been two State of Play events so far with the first one being in March. The March event was quite basic and focused more on VR titles. This is great to see Sony not abandon the platform as they have done in the last but also based on public numbers of VR sales, those announcements are only for about 3 percent of the PlayStation audience. They didn’t manage expectations well for their first event. The took the constructive criticism and used it towards their next event which happened in May. This state of play was only around 10 minutes but managed expectations much better as it gave hints as to what would be featured before hand and during the presentation we got to see slides of what would still be to come. This event also featured much more fan facing announcements including Monster Hunter and FF7 reveals.
What we know is that this will be twice as long as the last state of play and it will include great news and new game information. We also know that it most likely will feature something related to last of us 2 as there is the naughty dog event happening the same day, which will most likely give media hands on and the ability to write up and produce features. Considering the positive changes from the first to the second state of play, it’s not absurd to think this one will be a much better overall package in terms of arrangement and announcements.