GameStop, since being founded almost 36 years ago has been facing lots of financial problems for the past five years which look to be getting even worse during the upcoming holiday season. In the past five years, the stock price has fallen almost 80% with the last peak being $48 in 2015 and currently being $9 with a strong downward trend since.
After being announced last September, the digital Playstation 5 which has the same performance as the normal one, however, lacks a disk player to play physical games has the potential to hurt GameStop. The introduction of the digital PlayStation 5 is just one reason why GameStop which relies on physical games is losing lots of income.
Even GameStop has recognized their faults with their CEO George Sherman saying, “Gaming as an industry could not be stronger … it’s us that needs to pivot. It’s GameStop that needs to make some changes.” If consumers are compelled to purchase the digital PlayStation, GameStop would suffer from a lack of physical game sales. After reporting losses of almost $110 million in the last quarter and the closing of 400-450 stores, it is very clear that GameStop needs to rethink its approach to the upcoming digital consoles. It is projected that GameStop will be fine for the next three to four years before 5G and cloud gaming become more popular and until that point, GameStop will need to “reinvent itself in terms of its positions around physical software.”
The next few years will send GameStop into the ‘Blockbuster era’. Blockbuster LLC closed in 2010 and between 2013-2014, thousands of Blockbuster stores were closed. The primary reason Blockbuster suffered was because of the introduction of Netflix’s online streaming service. In addition to Netflix, Blockbuster failed to adapt to a changing retail environment where streaming media made renting irrelevant.
As the holiday season approaches, do you think GameStop will stay afloat?
Source: https://www.cnn.com/2020/10/03/tech/ps5-gamestop-digital-cloud/index.html
I remember going into GameStop with my parents when I was a kid. Today, I have notices how more GameStop stores are closing, even the one in my hometown. Especially with COVID, it’s hard to keep retail stores open. I can definitely see it becoming the new Blockbuster. In this CNN article I found, it claims that GameStop closed more than 320 more stores than originally planned. This on top of the new Playstation, it seems like a dying business. People won’t want to waste their money buying something that they can just download online.
source: https://www.cnn.com/2020/09/10/investing/gamestop-store-closures/index.html
It is always a topic for physical stores, especially in this pandemic. Many of stores has declare the state of bankruptcy. However, game stop is not one of them. Although the stock price has down to a 52- week low this year, it has been climbed back these weeks.
The reason is that the Game Stop has announced a new partnership with Microsoft. Since there is no further for partnership details, some people think the stock price climbed too high. ( Levine- Weinberg, 2020)
However, Levine – Weinberg (2020) has some different opinions about new playstation 5( PS5). He thinks that the delay of new PS5 and Xbox is one reason for the low sales revenue for Game Stop. And now, these new-released consoles help Game Stop in a short-term. Game Stop needs to do some other changes for their future.
How physical stores be successful in current digital time is always valued to think and discuss. Lots of companies have to end their business, nut some companies still open and be better and better. For example, Best Buy still owns thousands of physical stores. And there are in a healthy finance state.
In there future, more thins will be in digital, How to face this change and how to fit this change will be more important to everyone.
Link: https://www.fool.com/investing/2020/10/14/gamestop-stock-has-climbed-too-high/
I am in shock that GameStops are still open, I do not see them lasting very long though unless they can successfully make a switch digitally. Your example of Block Buster is such a good comparison and I think we can all agree GameStop will be following in its place within the next couple of years. I strongly believe that there is nothing these type of companies can do to stay in business as society changes from physical copies to digital. The only reason I feel GameStop is still in business is not only because there are still many devices that take physical discs, but because they continue selling devices such as Playstation’s, Nintendo switches, Xbox’s, and more. GameStop does extra well during holiday seasons selling these consoles and giving good deals that usually result is these things selling out. The only chance Gamestop has is to try advancing with these new devices. Something that might work is creating limited edition consoles that can only be sold at or online GameStop. If GameStop wants to have a chance it has to find a way to compete with not only Amazon, but Target, Walmart, Best Buy and more. All of these competitors sell the same products so why should consumers go to GameStop and not them? We see a lot of limited edition devices like the Halo 5 Xbox One, the Animal Crossing Nintendo Switch, and the Spider Man PS4 Pro Bundle. If GameStop can find a way to offer the same products but with different features they would have a better chance then joining in a market with places that do not just rely on gaming devices and products to survive. I took notice that GameStop already plans to go remote and become and Amazon rival, where I do not see this working there is always a chance and I am definitely interested to see if we will be saying goodbye to GameStop or not within the near future
source: https://www.playstationlifestyle.net/2020/09/25/gamestop-amazon-rival-plans/
I think that nearing this holiday season GameStop will definitely stay afloat because, as of now, no matter how many things convert to a digital presentation there will still be people who would rather have the tangeable item. GameStop will have to make some changes to their stores in order to keep it relevent and popular. One way Game Stop could do this would be by selling different devices (TV, Computer, etc.) that could allow you to play these said “digital” video games, such as the new PayStation.
With this digital world we are now living in, companies and businesses must adapt i order to stay afloat. I am definitely intrigued to see what GameStop will do in order to solve their problem, but they ufortunatly must come up with a solution quickly before it is too late; it is only a matter of time before all video games/devices become digital, and with the world we are living in you never know when the next technologically advanced device is going to come out.
The example of Blockbuster is the perfect scenario to look at in reference to digital advancement becaues Blockbuster shut down in a matter of a few short years. Since Blockbuster is not at all needed anymore (thanks to Netflix), does that mean that GameStop technically isn’t needed anymore with all the new technology that could replace it?
GameStop will be bankrupt within the next few years. Gaming is switching to completely digital, and even though there will still be a demand for physical games, big retailers and online retailers like Walmart, Target, and Amazon will supply the need for physical games. I’ve been in GameStop many times, and in my opinion, its not a good business. Their main goal is to get as many customers subscribed to their PowerUp Rewards member, as that is probably their main source of revenue. I like your comparison of how GameStop will become very similar to Blockbuster in the reasons behind their bankruptcy. Both companies will go bankrupt due to the switch to digital downloads and the easy accessibility and convenience of online movies/gaming.
Source: https://gamerant.com/is-gamestop-going-out-of-business-dying/
This is a very interesting topic because of how similar it is with Blockbuster. The reason people turned to Netflix instead of Blockbuster is because how much more convenient it is for the consumer. Instead of having to go to a store, you can just get the same product from the comfort of your own home. This is the exact model that PS5 and Xbox Series S, where you can have the game downloaded at midnight the game comes out, instead of buying a disc and installing the disc which takes hours.
I have been a GameStop membership for several years and the only benefit from it is a bonus when you can return games. This is the only way that GameStop has been able to stay alive and that is because they allow you to return used games for some money back (however, the return on games has been decreasing over the past few years).
COVID has destroyed businesses that weren’t able to shift to a digital environment. For example, movie theaters have been decimated because streaming services are so much more convenient for the consumer. As 5G becomes more available to gaming consoles, it will just make downloading digital games much faster and more convenient .
https://www.businessinsider.com/gamestop-video-games-gaming-survive-digital-future-2019-5
This is a very interesting topic because of how similar it is with Blockbuster. The reason people turned to Netflix instead of Blockbuster is because how much more convenient it is for the consumer. Instead of having to go to a store, you can just get the same product from the comfort of your own home. This is the exact model that PS5 and Xbox Series S, where you can have the game downloaded at midnight the game comes out, instead of buying a disc and installing the disc which takes hours.
I have been a GameStop membership for several years and the only benefit from it is a bonus when you can return games. This is the only way that GameStop has been able to stay alive and that is because they allow you to return used games for some money back (however, the return on games has been decreasing over the past few years).
COVID has destroyed businesses that weren’t able to shift to a digital environment. For example, movie theaters have been decimated because streaming services are so much more convenient for the consumer. As 5G becomes more available to gaming consoles, it will just make downloading digital games much faster and more convenient .
https://www.businessinsider.com/gamestop-video-games-gaming-survive-digital-future-2019-5
This is a very interesting topic because of how similar it is with Blockbuster. The reason people turned to Netflix instead of Blockbuster is because how much more convenient it is for the consumer. Instead of having to go to a store, you can just get the same product from the comfort of your own home. This is the exact model that PS5 and Xbox Series S, where you can have the game downloaded at midnight the game comes out, instead of buying a disc and installing the disc which takes hours.
I have been a GameStop membership for several years and the only benefit from it is a bonus when you can return games. This is the only way that GameStop has been able to stay alive and that is because they allow you to return used games for some money back (however, the return on games has been decreasing over the past few years).
COVID has destroyed businesses that weren’t able to shift to a digital environment. For example, movie theaters have been decimated because streaming services are so much more convenient for the consumer. As 5G becomes more available to gaming consoles, it will just make downloading digital games much faster and more convenient .
Gamestop is definitely declining as both Xbox and Playstation are turning to digital. Xbox also has a digital only version of their new console and have already released cloud gaming, along with their GamePass subscription for digital games. I think Gamestop could pivot to being a rental service, especially for single player intensive games. A lot of people dont want to pay $60 for a game where they play through the story once or twice and then never play again when there are games they can get that have multiplayer that they can play for years for the same price.
I also think Gamestop could copy Xbox’s GamePass and be a subscription service for physical and digital games. With consoles rapidly transitioning to an all digital gaming systems Gamestop will need to figure out a way to do the same. Eventually, even Walmart, Target, and other stores that have video game sections will also disappear as physical disks are becoming extinct. Its not even fully because of the consumer, video games are taking up more and more memory and so a physical CD is becoming a bad way to store games. A lot of games now come in two discs. Digital is definitely the future unless if a company makes something better than a CD to be able to store games physically.
Link to article: https://www.thegamer.com/gamestop-decline-2020/
Many brick and mortar stores are experiencing situations similar to Gamestop. As mentioned in the initial post, Blockbuster was a video-rental service in the US that no longer exists because of Netflix and other streaming services. One of the biggest influxes of revenue for Blockbuster was late fees. According to the article, “Blockbuster said it made $800 million in late fees, or 16% of its revenue.” This clearly frustrated many of its customers, therefore switching to Netflix once it was founded in 1997. The founder of Netflix, Reed Hastings, even admitted he founded Netflix because he did not want to pay his 40 dollar fine owed to Blockbuster. In the coming years, Blockbuster even considered buying Netflix, but decided against it. This would be the start of their downfall.
As Netflix began getting more and more popular, Blockbuster knew they had to change something. They took away their late fees in hopes it would incentivize customers to continue using their service, but it didn’t and they ended up losing over 200 million dollars. In 2010 Blockbuster filed for bankruptcy and the company was bought by Dish Networks. At the height of its peak, Blockbuster had 9,000 stores globally and made $5.9 billion, but today only one store remains in a small town in Oregon which is now an Air BnB.
As sad as it, I see this coming in the near future for Gamestop. With all video games being able to be purchased online, there is no need for the brick and mortar store. Although some may fight that you can still buy the physical consoles and controllers there, they are also available at big retailers such as Walmart and Target. It is much easier to pick up what games you want at Walmart when already there, versus going to Gamestop just for the game itself.
Source:https://www.businessinsider.com/rise-and-fall-of-blockbuster#today-the-blockbuster-franchise-has-dwindled-to-just-one-store-in-bend-oregon-which-has-been-turned-into-an-airbnb-15
With the times changing and advancements in technology, GameStop does need to take a step back and think about ways that they would be able to adapt to the even-more-digital era. With Amazon and Target as competitors that tend to offer cheaper prices, there’s no way that the store will be staying afloat, and I do think that in the near future they are going to be filing for bankruptcy.
Upon reading this blog post, my first “solution” I came up with was to transition from physical stores to an online store. After doing some research on GameStop and its declining sales, I discovered that this is exactly what GameStop’s biggest investor, Ryan Cohen, plans to do as well. He actually recognized that GameStop was becoming like a Blockbuster and plans for GameStop to be remodeled into something of an Amazon competitor, where people can mail in old game discs and buy used games online. Also, he wants GameStop to offer more products for sale online, and have faster shipping for the products.
Do I think it’s a decent idea? Yes. But do I think it’s going to work? No. Amazon is an extremely successful company that combined elements of online stores, physical stores, third-party seller services, subscription services, and more. It’s going to be hard to try to outdo all of that.
https://www.playstationlifestyle.net/2020/09/25/gamestop-amazon-rival-plans/
This discussion is extremely relevant because of the recent global take over of Amazon on internet sales, but especially now so that a majority of the money that companies or stores like Gamestop make are from physical disk copies of games that are used for gaming systems like the Xbox or Ps4. To put some numbers to it, with Gamestop already struggling to compete with newer options like Amazon, they have already closed almost 400 stores in the past year (2020) and they project to close another 400 in the upcoming year. With the coming change in one of the major producers of their income, I think it is reasonable to expect that Gamestop will see significant losses without a lot of new innovation or creativity in ways they are selling games. In the above responses, I think that Blockbuster might actually be a viable comparison to what Gamestop could become if their is no change in the course to which things seem to be heading with technology.
https://www.gamesindustry.biz/articles/2020-09-09-gamestop-will-close-another-400-to-450-stores-this-fiscal-year
It’s definitely interesting to compare Gamestop’s situation to Blockbuster, the store just isn’t needed anymore. Especially with new consoles, most people will probably just want to save money and opt for the digital edition. Not having to swap out discs to play a different game just seems so old school, when you can buy the game online without leaving your home, not to mention ordering physical games on websites like Amazon. I’d much rather not leave my house. Interestingly enough, the last time I went physically to buy a game, I actually bought it from Target instead of gamestop. The only real reason I would be forced to go into game store is for a used game, or an older game that I can’t find anywhere else. I can’t think of any other good reason if I can just order a console, controller, or game on Amazon and it is at my house the next day.
They will definitely need to pivot like you mentioned, or they will be going the route of Blockbuster and out of business very soon.
https://www.cnn.com/2020/09/10/investing/gamestop-store-closures/index.html