GameStop doesn't think gamers are ready to adopt cloud-gaming in a meaningful way

Retailer shutters its R&D team Spawn Labs, and will instead focus on supporting Sony's PlayStation Now.

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GameStop announced today that it has shuttered Spawn Labs, the R&D team it acquired in 2011 that was working on a cloud-based streaming service. GameStop vice president of investor relations Matt Hodges told GameSpot today that while cloud-gaming could be "revolutionary" some day, it's not something gamers are ready to get behind right 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," Hodges said.

Instead of creating its own cloud-based gaming platform, GameStop will focus on supporting other services like PlayStation Now by selling subscription cards in its stores.

"Also, we recognize that our strength is in helping our vendor partners connect with gamers, so we will focus our energy on selling existing services, such as PlayStation Now, through our retail channels," he said.

PlayStation Now will allow gamers to stream back-catalog games to systems like the PlayStation 4, PlayStation 3, and PlayStation Vita. The service is currently in beta and is expected to launch publicly this summer.

GameStop CEO Paul Raines said in 2012 that it had Spawn Labs' streaming service up and running and that the company even established six data centers around the United States to support the service. Several hundred GameStop managers got to try it and it reportedly worked very well. For some context, here's what Raines told us about Spawn Labs' cloud-based service in 2012 and his general feeling about cloud-gaming overall.

"It's a console. It's a GameStop PowerUp Rewards library. And you pull it up and click on the game you want to play, and you can play the game. We sell you a controller for your Internet-enabled device--tablet, laptop, etc.--and the technology works very well. Where we're at now is developing commercial agreements; who we're going to launch with, et cetera," he said at the time. "And then we’ll disclose more of that as it gets closer."

"Certainly streaming gaming has not…if you go back to E3 four years ago, cloud gaming was going to take over the world. It's an interesting business. It's an early, early business. We don't see a ton of consumer demand yet there. But we're trying to position ourselves for it. I think you get into console streaming, PC streaming, PC downloads and tablets, and all of these have different consumer adoption curves, but I can't say that console streaming has seen a huge adoption yet. As far as the Sony deal, Sony has said the Gaikai technology will be used primarily as part of an online gaming service. So that will be interesting."

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