GameStop acquires Kongregate

[jay]

GameStop has acquired browser gaming hub Kongregate, the retailer confirmed this afternoon.

While terms of the deal – or its ultimate intentions – have not been disclosed, it has been announced that the 10 million user-strong portal will act as a wholly-owned subsidiary of the retail and online chain.

Said GameStop CEO J. Paul Raines, "Kongregate advances GameStop's digital strategy by providing a gaming platform for casual, mobile and browser games that can be promoted and played by our existing gamers. We welcome the Kongregate team to the GameStop family."

Added Kongregate co-founder Jim Greer, "our company's unique DNA has given more than 8500 game developers the tools to make their games social, reach a huge audience and make money from over 30,000 innovative games.

"This includes access to virtual currency and robust community features such as leaderboards, player achievements, profiles, multiplayer, dedicated game forums, and a site-wide leveling system."

The outcome of the partnership is mysterious for now, but GameStop's broader intentions are summarised in an official statement as "Kongregate's unique digital platform allows consumers to discover great free-to-play games that can be enjoyed via internet-connected devices.

"Acquiring Kongregate strengthens GameStop's digital platform and its commitment to become the gaming aggregator of choice."

This follows comments by Raines last week in which he stated the company's intent to move beyond shop-floor retail – a sector that is currently struggling.

"We want to be the destination for gamers, whether they are getting content via online, mobile, console or any other platform," Raines told the Street.

"We are also migrating our website from a purely e-commerce site to a gaming platform that users can visit to play, learn and purchase games."

Kongregate was launched in 2007, funded by Greylock Partners, Bezos Expeditions and several angel investors including Reid Hoffman.

The deal is expected to complete on August 1, with Kongregate founders Jim and Emily Greer staying on, as well as maintaining the site's headquarters in San Francisco.

[jay]

I don't think this is a surprise to anyone who has watched GameStop's annual reports.  Plus, the evolving changes in the industry and downloadable content signals the eventual end to second hand game sales. (and this is the GS bread and butter!)

I'll be curious to see how they integrate an online model into the physical stores.  Will you go into a GameStop and be able to wirelessly download items you can't just get at home? (impulse buyers beware!)