Nov. 9, 2012 • Eleven months after the open beta inauguration of its PC digital content client, game rental retailer GameFly officially launched the service with a free download of 2K Games’ Bioshock. The company entered the digital distribution business in August of 2011 with the acquisition of the Direct2Drive service from IGN. Using the Direct2Drive platform as a foundation, GameFly was intent on creating an online portal where its subscribers can manage their rentals, as well as purchase and download games digitally. At the moment, GameFly is fielding 1,500 PC titles for purchase, and is making more than a hundred available free to its members to play free.
Impact: To its credit, GameFly had a concrete strategy on how to integrate the second most popular digital distribution service to both augment the retailer’s existing rental business, as well as grow into digital sales. The downside came at the expense of Direct2Drive users who discovered that many of the titles they had previously paid for took months to show up as playable after the GameFly integration began last January. Surprisingly, the situation did not create a public uproar. Perhaps many of these consumers already had accounts with Steam and they simply shifted their business there, or their expectations of digital downloading services were so low to begin with that it wasn’t worth making a huge fuss. The take-away for consumers is that regardless of the service, they are potentially one acquisition or several bad revenue quarters away from losing access to the titles they paid for. On the plus side for GameFly, any lost legacy D2D users give the retailer a relatively fresh start to attract consumers to its hybrid rental/digital business model. The competitive target here is much more GameStop/Impulse than Steam or Origin. Steam and Origin are too entrenched with their consumer base for a GameFly to be much of a threat. We’ll be watching carefully to see how GameFly’s play pans out over time.
