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GameStop gives up on building game-streaming tech to focus on retail

The retail chain is shutting down Spawn Labs, the internal R&D division working on a digital game streaming service, in favor of selling physical goods for existing digital distribution services.

Alex Wawro

March 27, 2014

1 Min Read

GameStop announced today that it is shutting down Spawn Labs -- the internal R&D division that has been working on building hardware and software to support a digital game streaming service -- in favor of selling physical goods for existing digital distribution services like PlayStation Now. "While cloud-based delivery of video games is innovative and potentially revolutionary, the gaming consumer has not yet demonstrated that it is ready to adopt this type of service to the level that a sustainable business can be created around it," GameStop VP John Hodges reportedly told Gamespot today. "We will focus our energy on selling existing services, such as PlayStation Now, through our retail channels." Gamestop acquired Spawn Labs in 2011 alongside Stardock Entertainment's Impulse digital distribution service as part of a digital market land grab. Though the company has reported significant digital sales growth in the intervening years, it doesn't seem to have done much to change the company's core focus on physical retail -- GameStop reported a 15 percent year-over-year increase in digital sales during its most recent quarterly financial report, but that growth was dwarfed by the nearly 30 percent year-over-year increase in sales of new hardware. During a conference call following the Spawn Labs acquisition, GameStop president Tony Bartel claimed the company was looking to implement a "try before you buy model," for such a service, using Spawn Labs' tech to promote both digital downloads and retail sales of full games.

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