Video Games Are a Bad Play for Blockbuster

You have probably noticed that since the fall of 2008, Blockbuster has been making a major push to transform their stores to video game outlets. Shelf space for movies has decreased greatly and has been dedicated to the display of video games, consoles, controllers, and accessories.

Blockbuster has been renting out video games for years, and this always made sense, because there are not many game rental places around. Blockbuster’s move toward retail game sales, however, is puzzling. Many, many major retailers sell video games and gear, and it appears Blockbuster hopes to compete with these retailers. Some of these retailers are very big players. Why would Blockbuster want to sell products, which are readily available at stores like Walmart, Target, Best Buy, etc. for low prices? Furthermore, Blockbuster is competing with untold numbers of online retailers who can offer the very same products at lower prices, low or no shipping charges, and no sales tax. Since most gamers are very computer literate, ordering games online is second nature to a large portion of them. What makes Blockbuster think they can compete in such a competitive arena, and why would anyone buy video games and equipment from a big corporation with tiny retail stores?

There is a more complex long-term marketing problem here. If Blockbuster happens to get their movie rental customers hooked on video games, these new gamers will have less time and money to spend on movies. A movie-buying consumer will probably become bored with a $20 DVD after watching it for about four hours ($5 per hour of entertainment), but today’s video games are so advanced and complex, a person could easily spend a hundred hours playing a $50 game before getting bored with it ($0.50 per hour of entertainment). Why would Blockbuster want to convert movie customers who might spend $5 to purchase an hour of entertainment to gamers who are probably used to paying $0.50 for an hour of entertainment? The problem is even worse when looking at rentals. A movie watcher who wants to rent twenty hours of entertainment will need to rent about five DVDs. If that person becomes a gamer, one game rental will easily fill twenty hours with entertainment.

Blockbuster’s video game outlet transformation plan just does not add up. Blockbuster may be greedily going offer the booming market of video game sales, but they may be shooting themselves in the foot. Blockbuster needs to retain the movie fans who have been keeping them in business all these years, and Blockbuster certainly has no business competing in a market, in which they are way out of their league.