Monday, June 11, 2012

The Future of Game Rentals

For many of us, at least within my age range, we had Blockbuster growing up. And that was it. If you wanted a movie or a video game to watch/play temporarily without paying for the full retail version, you had the blue Blockbuster store. Netflix was a twinkle in someone’s eye.

Anyone remember those crappy game tournaments Blockbuster held? Yeah. Good times.

While the internet age has matured to include Netflix and GameFly, the rental industry for games has stalled from what it once was. GameFly does decently enough, and has been more open to the public since it began running ads through gaming websites and tv spots. Netflix has stayed out of games (and I’m inclined to agree with them that they stick to what they do best and keep up the catalogue of old movies). It’s up to Red Box now. A year after adding video games to their kiosks, the numbers have been pretty decent making up 4% of their profit margin. That doesn’t sound like a lot, but it comes up to $30-40 million.

It’s also a testament to how people rent. GameFly may have a large selection, but typically they find their biggest renters are in the “causal” game and E categories. This is Madden, NCAA, Mario, Club Penguin, and family game territory. Red Box’s numbers reflect the same thing. The people that are renting are going to be the casual family. Hard core gamers are more likely to purchase a product at the store. Families will probably rent, test out a product before they are committed to buying.

I wouldn’t be surprised if GameFly over the next few years tailors their products to be more E oriented. Red Box will probably start doing this very soon. They see the value in having family content where the share of other products haven’t been pulling in cash.

Game rentals are in this weird limbo of space and time. Honestly, I can’t remember the last time I rented a game. Maybe when I was 13? As a gamer by heart, Blockbuster (still the only game back then) had a really limited selection of what was available. And always the one game I wanted, they only had that one copy that would be out for months at a time (we didn’t have certain fees back then). Their content shifted to be more family focused. When gaming took a backseat to their business, a lot of their customers left as well. In an odd way, coming to the store to pick up a game probably generated more revenue for Blockbuster. We’d stick around to look at the movies, pick up some overpriced candy and soda while we’re at it. It’s the super market syndrome. Get them in for one item, have them leave with 20.

While GameFly and Red Box are seeing their numbers reflect that people want E products, it may end up biting them back when they see the core gamers move off to another service that will cater to their needs.

I think I trailed off again. The point in all of this being that while it’s great that there is a spot for families to get games that won’t offend the senses, Red Box and GameFly shouldn’t make the shift to E only content. If they want to keep their customers, they need to stick to the variety. That’s why I’m still with Netflix, even when people tried to abandon ship (really that rate increase was nothing).


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