GameStop announced the purchase of Kongregate, a leading an flash game community web site.
Started by siblings Jim and Emily Greer, Kongregate attracts 10 million users per month and works with over 8000 game developers, sharing ad and virtual item revenues with them.
Honestly, I don’t get this deal. What is one of biggest retailer of video games going to do with a flash arcade community web site?
It seems not to fit in their current strategy, but maybe that’s the whole point.
GameStop is a leading bricks-and-mortar retailer of video games but their long-term prospects are dim as games increasingly are digitally distributed online.
For the first time never, NPD estimates that half of all video game sales were digitally distributed online last month, and this is before cloud gaming services like OnLive hit their stride.
Perhaps GameStop plans to use Kongregate points to redeem for games in their physical stores. Or maybe this is an attempt by GameStop (off the heals of their purchase of Jolt Online) to completely re-do their business model and shift completely online.
Last night I was watching The Tudors on Netflix when I realized how much I prefer to stream and watch movies instantly than wait for DVD’s in the mail. Netflix understood years back that DVD’s were dead and that they had to take risky bets on streaming in order to survive in the future. Fast forward today, and the streaming feature is the only reason I use Netflix now.
GameStop’s purchase of Kongregate could be part of their attempt to re-align their model from the physical channel (where they excel) to the online channel (where they need move to in order to survive).
In which case, it’s fine that I don’t get how Kongregate fit’s into GameStop’s plan yet…as long as they do have a plan.
My guess is that this will be the first of many purchases for GameStop as they endeavor on pulling off a Netflix and transition from the offline to the online world.