Competing against a dominant market player?
I'm an avid video gamer and as a consumer I feel like there is a big void in the online purchasing/streaming/rental category that is not being filled. I have been thinking about how I could successfully bring the product to market profitably and the issue I keep landing on is that I find that my product idea would be very difficult as value proposition to both sellers (game developers) and consumers (gamers) without already having a large base of the other. E.g. without a large consumer base there is no incentive for developers to publish on my platform, but without a significant enough number of titles there is no incentive to consumers to subscribe.
As an alternative I have been very seriously considering bootstrapping my company as a game rental by mail subscription service and then building out my longer term product goals of global domination after I have an established customer base.
Getting to my point; Gamefly (www.gamefly.com) is already clearly established as the dominant player in the game rental by mail category (they may actually be the only one even left in business?). I'm curious if anyone has advice on how you would approach such a problem? I don't see a clear way I can add more value than Gamefly initially so I have considered trying to compete on price. I'm not sure if this would be feasible or if they would have an advantage there due to economies of scale?
Competing on price is usually a bad idea, especially when trying to compete with the big boys. Since they have the advantage of economies of scale.
I'd focus on adding more value with your rentals.
I stopped playing games a long time ago, but remember having to look for walk throughs or easter eggs, as something that you could bundle with your rentals as a value add, just an idea.
NEVER compete solely on price unless you want to be commoditized. Find some other way to differentiate, ask your market directly and or do competitor research to find out what they are not providing for your customers. Maybe you could niche down to certain genres of games like imported games only e.g Neo-Geo games.
The only other competition to GameFly I immediately thought of is redbox.com, which has a slight edge over GameFly cause you don't have to wait for the game to be delivered via mail. Granted, it's not the same but pretty close to it.
Point being is there is competition, but just not pure mail-order competition. Granted, redbox was basically started by some people who already worked at some large companies; if I recall correctly the CEO of redbox is a former marketing executive at McDonalds, which is probably why redbox is at all McDonalds locations.
Point is, you're going to have to think really outside the box (pun intended). ;)
I would like to rent a video game console system for a week (with several "must have" games as well as a "buy" option at the end of the week). I don't know if Gamefly offers that.
I can tell you that if there's already a huge market, there is definitely some segment of niche customers whose needs are being ignored, and there's probably enough of them to make a living.
My idea is that you are likely a gamer, and have a bunch of different games to rent out. I would start out with the games you have in your possession. Offer same-day fast shipping and see how that goes. I think if you can offer them an online multiplayer experience with the game (ie. temporary online accounts for games like Overwatch) then that would be a nice bonus.
I just have one big red flag about this which I think you should be aware of (if you aren't already): "[Gamefly] may actually be the only one even left in business". That's a really big thing to consider. Why is this the case? Is this them taking the direction of Blockbuster? Is it just difficult to enter the market? I don't have the answer, but it definitely seems important to consider :)
From the gamer perspective, Gamefly is the equivalent of Netflix. The average consumer when thinking of game rentals will just think of Gamefly. Their Alexa page rank for the US is 5,333.
There used to be quite a few "also runs" competitors to Gamefly, but they have all dropped off over the years while Gamefly continues to grow. The last one standing that I knew of was Gamerang which still has a site up, but no longer accepts new memberships (so not sure what the status is there).
There is also a very small mom & pop game delivery rental service, GameGrizzly that only maintains a very small selection of the latest titles available.
One thing I have considered is trying to reach out to some of the previous owners/management of shutdown services such as Gamerang to see what factors came in to play during their demise.