Can Physical Products Survive?
The physical products space is being taken over. Not by a new competitor, not by some heavily branded super-retailer, and not by online delivery. Nope, digital products are taking the world by storm! Can physical delivery of data survive the oncoming onslaught?
GameStop
I was lucky enough to take a recent options position in the largest videogame retailer in the world: Gamestop. Seeing how the company has taken a nosedive, and looks prime for a takeover, I purchased several option lots near the bottom and am now solidly (170%) in the black after just three weeks. But I’m still shaking in my boots…
Earnings and Brick and Mortar
Tomorrow is earnings day, one that could be make or break for me and my recently acquired positions. Nevermind that, though, I’m beginning to wonder if physical products of any kind can even survive the next big move in technology.
Save for early game systems like the N64, Playstation 2 and other pre-internet consoles, most games can now be purchased virtually. No delivery, no fancy package, just a bunch of 0 and 1s on a computer hard-disk. (That’s really what consoles are nowadays, right? Computers?)
How about CoinStar (Redbox)?
I’m beginning to think that even Redbox, which delivers millions of DVDs daily through its DVD rental vending machines, will be able to beat out electronic delivery. Consider this, 99% of American households are just 1 piece of hardware away from being able to get all the movies, games and other intellectual (not physical) property of their choosing. TVs just need a simple computer to complete the process and many DVRs are already doing it!
Creative Destruction
I think we’re in for years, if not decades, of creative destruction that happens so quickly that once hugely successful firms fall out over night. Unless Gamestop, Redbox, and others all find a way to make their product ridiculously desirable or less expensive (impossible!) than digital delivery, you can say goodbye. There just isn’t enough draw to keep customers coming in the door!
What do you think?
I want to hear what you have to say. This is an interesting topic and one that’s sure to affect us for many, many years to come.
