GameStop closes its game-streaming division — will focus on PlayStation Now

Most consumers don’t really want Netflix-style game streaming, at least according to GameStop.

The retailer announced today that it closed its Spawn Labs research division, which was building a cloud-gaming service that would have enabled customers to play games instantly over the Internet. GameStop doesn’t think consumers want something like that yet. It instead plans to focus on selling cards for Sony’s upcoming PlayStation Now service, which will stream PlayStation 3 games to a variety of devices, including PS4 and Vita.

“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 vice president of investor relations Matt Hodges said.

He is potentially referring to streaming company OnLive, which attempted to start a cloud-gaming business in 2010. While the service is capable of streaming triple-A releases online just like Netflix does for film, OnLive has failed to attract a critical mass of customers despite trying a number of business models. It went bankrupt in August 2012. It announced a new strategy, which will enable gamers to access their Steam games from any device for a monthly fee of $15.

We’ve reached out to GameStop to ask if it might return to researching cloud gaming if consumer demand changes. We’ll update this story with any new information.

GameStop acquired Spawn Labs in 2011 as part of its strategy to move into more digital businesses. With that acquisition, the retailer was hoping to build up an online business that would generate $1.5 billion by this year. For its fiscal 2013, the company generated more than $1 billion in revenue from its digital services, which include its software-distribution services and online gaming portal Kongregate.

In addition to selling currency cards for PlayStation Now, GameStop is also still developing its physical-games business. The company also announced today its plans to work with publishers to reprint rare, older titles that it can’t keep in stock.