GameStop has been a staple of the lives of many gamers. The bright red and white sign a symbol that fed their gaming needs. But GameStop has been on the rise with controversy of different ex-employees coming forward to talk about their experiences.
The company has also felt the sting of the digital age slowly creeping up on it. For years, people have been switching to downloads and buying their games directly from the distributor. Why feel the need to go to a store when you can just sit on your couch and download a game.
Updated March 10, 2021 by Aden Carter: GameStop has been receiving more media awareness lately due to the fluctuating stock prices. Daytraders have taken it upon themselves to increase GameStop’s stock in an effort to save the company. With the hashtag #SaveGameStop, some daytraders believe that GameStop will see a rise in sales as well as a rise in their bank accounts.
8 Lacking Content
GameStop has always lacked some form of content in their stores and the years have only been worse for that. In 2019, Sony decided to pull all digital content from GameStop’s stores. That was a massive blow that helped people switch over to digital. Many customers were going into the stores for downloads because of promotional offerings or PowerUp Rewards points. Without those bonuses, it was better to stay at home and not waste the gas. Before then, other digital items like PC games were hard to come by and some games had bonuses like discounts if you pre-ordered them through a digital store.
7 Digital Gaming Is More Popular
It is no surprise that digital gaming has been on the rise, but do customers realize how much of a rise it has had? Going back to 2009, when GameStop was for profitable and digital gaming didn’t have the same market it does now, physical games made up 80% of the gaming market.
Fast forward to 2018 and the market has changed dramatically. Only two years ago, physical games made up 17% of the market. Meanwhile, digital games made up 83%. That change is only going to increase as time goes by and internet speeds go up.
6 Gamestop’s Market Is Shrinking
GameStop closed 321 stores in 2019 alone and plans on closing even more stores by the end of 2020. The company’s sales have shown that they aren’t nearly as profitable as they once were and it is starting to show. With less people having access to a store close to them, it has become easier to switch to an online platform. GameStop is attempting to rebrand some stores as well with some being focused on collectibles rather than games. This has the potential to hurt them if some gamers can’t find a store that sells games near them.
5 A Growing Digital Marketplace
Digital gaming is becoming easier and cheaper than it has previously. Part of that is thanks to Microsoft’s Game Pass. This system allows gamers to pay a monthly fee to play any game that has been put into the Game Pass and it is expanding to new games. Upcoming titles like Halo Infinite are coming to Game Pass on day one.
With a monthly fee of $15 USD, it has become the cheaper option for gamers if they want the new titles. Other memberships, like Playstation Pro and Xbox Live Gold, allow players to get free downloads each month. This helps to boost the sales of games from the respective console stores. These services are also expected to change in the future for the PS5 and Xbox Series X.
4 Streaming Services
Just like movies, games are available for streaming. Services like Playstation Now allow gamers to access some of their favorite titles to stream or download. This type of market is something that GameStop doesn’t have access to yet. Playstation Now is $60 USD per year which equates to $5 a month to be able to play older and newer games alike. Coming later this year, Microsoft has announced Project Xcloud which will be free for anyone with a Game Pass Ultimate subscription. This is another service that will allow players to stream their games instead of waiting on pesky downloads.
3 World Events
The current situation of the world has not been too kind to GameStop. COVID-19 has forced many businesses to shut their doors and lay off employees. Reports show that GameStop’s e-commerce sales have increased over the years. This would be great, except reports also show that they had a net loss of over $160 million. Due to lockdowns, the company did need to shut down almost all of its stores for a limited time. During this time, they only offered curbside pickup. This brought a drop to in-store sales for GameStop of around 17%. If they were to need to shut down again, they may not end up recovering as well as they did the first time.
2 A New Business Model
GameStop needs a new business model that revolves more around digital gaming. There has been a switch in some instances with test stores that focus on being more of a gaming cafe style of store. The business model is flawed though. GameStop relies heavily on trade-ins. About 46% profit on each preowned game they sell. With less physical games being bought, there are less trades being made. This method of business seems doomed to fail in the rising digital age.
1 GameStop’s Crazy Stock Prices
Recently, a group of daytraders has banded together to raise GameStop’s stock price to levels it hasn’t seen for a long time. Overnight, the stock price soared to over four hundred dollars. This increase brought the attention of many media outlets, but just because the stock is up doesn’t mean the company will survive. The stock price fluctuation could actually hurt the store if the brick and mortar portion of it doesn’t change to reflect the higher stock value. Increasing the stock price is also not a substitute for monetary gains for the store. In the end, GameStop could see its stock price plummet again.
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