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Digital Survival

Expect top games retailers to scramble for a foothold in digital distribution in the coming months.

Even more interesting is this week's move by top US bookstore Barnes & Noble, who have joined Amazon in the e-book race with a fantastic-looking combined hardware and digital retail offering. This is what retailers should really be looking most closely at. Barnes & Noble is not a technology company, or it least it wasn't until this week. Its core competence is running a vast network of retail locations, which has pretty much zero relevance to this new business venture. Yet the move into digital distribution makes perfect sense for one simple reason - brand.

In the minds of countless Americans, Barnes & Noble's brand is deeply associated with book-selling. It's probably a slightly painful realisation for a company which operates so many stores and warehouses, employing so many retail and distribution staff in the process, but in the digital world, that's the only asset it has that's worth just about anything - and for its survival in a new world where it will compete not only with Amazon but with Sony, and quite possibly with Google, Apple and Microsoft as well, it needs to pump that brand for everything it's worth.

The same is true of top games retail brands, and some of them, at least, know it. GameStop, probably the biggest games retail brand on earth, is presently in the market for a digital distribution acquisition. Despite the powerful positioning of brands like IGN's Direct2Drive and Valve's Steam, digital distribution is still an open market - a solid service carrying the GameStop brand could take a major foothold.

The companys acquisition options, however, aren’t quite as extensive as one might expect. In fact, there aren't that many major players in the digital distribution space - not least because at present, it's limited to the PC, with other platforms catered for by first-party stores. Direct2Drive is part of IGN, and as such, belongs to media conglomerate News Corp and is not for sale. Smaller players like Stardock/s Impulse could be of interest, but would require that GameStop effectively build a large part of the content catalogue from scratch - I suspect they'd rather hit the ground running.

That effectively leaves two contenders - Valve's Steam and Metaboli, a French service which bought GameTap from TBS last year and operates a variety of branded outlets on the web.

If you wanted to place a bet, my tip would be that we’ll see an acquisition deal between GameStop and Metaboli in the coming months, which will finally give the retail chain a major footprint in the digital distribution market. It'll also serve as a boost to GameStop’s European ambitions, which have plodded along at a rather slower pace than everyone expected when they first set sights on these shores a few years ago.

However, it's also worth watching closely what happens to Steam in the coming months. Unconfirmed industry scuttlebutt suggests that Zenimax - the parent company of Bethesda, which made headlines back in June when it acquired legendary PC studio id Software - is still on the acquisition trail, and has been making eyes at Half-Life creators Valve across the bar.

Whether Bethesda, a hybrid developer/publisher itself, would want to keep Steam on board, or spin it out to a third party, is unclear - as are many other aspects of a potential deal which would once again raise the awkward question of who, exactly, owns which parts of the Half-Life and Counter-Strike IPs.

Either way, however, it suggests that both Metaboli and Steam - two of the three biggest names in digital distribution - are potentially going to change hands in the coming months. How the landscape looks after those changes could have a powerful impact on which games retail brands survive the coming changes in the industry.

For more views on the industry and to keep up to date with news relevant to the games business, read GamesIndustry.biz. You can sign up to the newsletter and receive the GamesIndustry.biz Editorial directly each Thursday afternoon.

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About the Author

Rob Fahey avatar

Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.


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