{"id":4346,"date":"2015-12-09T00:28:17","date_gmt":"2015-12-09T05:28:17","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/gamestop-learning-from-blockbuster\/"},"modified":"2015-12-09T00:31:33","modified_gmt":"2015-12-09T05:31:33","slug":"gamestop-learning-from-blockbuster","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/gamestop-learning-from-blockbuster\/","title":{"rendered":"GameStop: Learning from Blockbuster"},"content":{"rendered":"

Example of effectiveness and adaptability<\/strong><\/p>\n

After the big failure of other companies that sold or rented physical copies of movies, music albums or video-games, few analysts had confidence in a business like GameStop, which appeared to be just another outdated retailer doomed to disappear. Nevertheless, GameStop\u2019s operating model based on specialization, network effects, cultivating innovation and discovering new technological improvements that drive an enhanced customer experience has aligned perfectly with its business model.<\/p>\n

 <\/p>\n

Operating and Business Models<\/strong><\/p>\n

The company\u2019s business goal is plain and simple: To sell video-games and video-game accessories. But however simple this may sound, customers are progressively willing to pay less for digital content that can be otherwise downloaded from their homes. On top of that, the video-game industry is one of the most rapidly changing businesses that exists, where products and platforms last on the market for very short periods of time, new competitors rise in a matter of weeks and distribution channels add less and less value as technology evolves.<\/p>\n

This scenario forced GameStop to adapt both its operational and business models, focusing on three business and three\u00a0operational objectives:<\/p>\n

Business Model <\/u><\/p>\n

Objective 1: Create network effects and sustained revenue streams by becoming a social destination<\/p>\n

GameStop\u2019s target customer is a young male with considerable free time. The company\u2019s stores have become a meeting point for these customers to socialize and share their views on videogames. GameStop has also become a place where even non-customers socialize. This last factor is actually welcome by the management, who sees it as a positive way to feed the network effects already in place.<\/p>\n

Objective 2: Narrow down its products to just video-games, becoming the leader in the industry<\/p>\n

Most of GameStop\u2019s traditional competitors have starved out of business. This has left big generalist retailers such as Wal-Mart, Amazon, Best Buy and Target as its main competitors. No other major retailer focuses solely on selling video-games. This landscape helps GameStop immensely when attracting and retaining customers and allows them to introduce and maintain unique customer loyalty programs, rewards and engaged members within the community.<\/p>\n

Objective 3: Company culture: Stay Customer Centered<\/p>\n

Their business model, which is heavily focused on intense interaction with the customer, has to be in line with a very open and dynamic corporate culture, one that promotes enthusiasm and a deep video-game knowledge. Most GameStop employees claim to personally know the great majority of their customers.<\/p>\n

\"Employees\"<\/p>\n

Figure 1: Employees develop a close relationship with their customers<\/p>\n

 <\/p>\n

Operational Model<\/u><\/p>\n

Objective 1: Selling downloadable content in store<\/p>\n

Most video-games are nowadays purchased online. Once purchased, consumers download the content directly to their computers or game consoles. However, GameStop has achieved to get consumers to buy digital content in their stores. The chain is managing to sell downloads in physical stores partially because several of its newer and younger clients do not have credit or debit cards, making it very hard to pay online. In addition, people still look forward to using the trade-in worth of games they have finished playing.<\/p>\n

Objective 2: Innovating: R&D to monetize each customer\u2019s visit<\/p>\n

At the beginning of 2014, the GameStop Technology Institute (GTI) was launched. The aim of this innovative business unit was to create affiliations and associations with the most important technology firms and academic institutions to discover and offer business innovation and technology solutions, to better address the needs of today\u2019s target consumer. GTI\u2019s main mission is to explore and shape best-in-class R&D processes to implement within GameStop\u2019s worldwide physical and digital selling locations the next generation of new, innovative business applications.<\/p>\n

\"Signal\"<\/p>\n

Figure 2: Installed in many sectors of each participating\u00a0store are signs encouraging customers to download the \u201cGTI app\u201d and place their mobile devices near a beacon to obtain promotional discounts<\/p>\n

 <\/p>\n

Objective 3: Train employees to take personal responsibility and embrace change<\/p>\n

A strict training program has been set up to ensure that the company\u2019s culture is being followed by its more than 45,000 employees.<\/p>\n

 <\/p>\n

Implications of the Operating Model for performance and adherence to Business Model <\/strong><\/p>\n

The main alignment of operating and business models occurs around two main areas, digital sales and becoming a social destination.<\/p>\n

Digital sales<\/u><\/p>\n

The only way to compete with online product distribution is to offer a better or equal customer experience. By investing in R&D and selling digital content in store, GameStop has managed to capture some market share from customers that would have otherwise purchased online.<\/p>\n

Social destination<\/u><\/p>\n

The severe alignment of culture, operations and business model has allowed GameStop to secure a leading position in an industry that has gone through very turbulent times. It is very difficult to explain GameStop\u2019s success without taking this alignment into account.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

Sources Used:<\/p>\n

http:\/\/www.wsj.com\/articles\/SB10001424052702303779504579465113377527996<\/p>\n

http:\/\/news.gamestop.com\/fact-sheet\/corporate-fact-sheet<\/p>\n

http:\/\/news.gamestop.com\/about_us\/company_culture<\/p>\n

http:\/\/news.gamestop.com\/about_us\/gamestop_digital_ventures<\/p>\n

http:\/\/www.businessinsider.com\/gamestops-strategy-is-working-2015-1<\/p>\n

http:\/\/www.rfidjournal.com\/articles\/view?12792\/3<\/p>\n

http:\/\/www.bloomberg.com\/bw\/articles\/2015-01-08\/how-gamestop-eludes-blockbusters-fate-in-the-digital-age<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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