GameStop was once a haven for gamers everywhere. Its bold red and white sign would spark that game craving that so many of us have felt. We’re sure most people remember their first steps inside, the walls of game cases, stacks of gaming collectibles, the fun employees that didn’t know the bumpy ride they were about to endure. It had a little bit of something for everyone whether you liked card games, consoles, or action figures. It’s hard to believe such a beloved store from many gamers’ childhoods would disappear, but things aren’t looking like GameStop will survive to see the PlayStation 6 or Xbox Two.
Stuck In An Old Market
GameStop isn’t the trendy place it once was, with stores closing down and people opting for digital gaming for convenience, the company has found itself a home in the game trading market of yesteryear. Sony and Microsoft have taken notice of their releases of the PS5 and Xbox Series S later this year, each featuring a digital-focused variant. Reports from Statista show that physical games made up only 17% of total sales in 2018. Keep in mind, that isn’t only GameStop we are talking about here. In the same year, digital game sales were responsible for 83% of video game purchases. Statista also stated that “The number of gamers playing downloaded games in the United States is expected to grow from 170 million in 2017 to 174.4 million in 2023.”
Statista estimates that 17% of the market in 2018 was physical games.
The rise of the DLC marketplace brings forth another challenge for GameStop. With a click of a button, players can download new skins, digital currency, and add-ons to their favorite games, eliminating the necessity of traveling to the store. In 2011, the DLC marketplace was valued at 5.3 billion dollars. Statista has stated that it will be valued at 19.5 billion dollars by the end of this year. Luckily, the company still has a marketplace for digital currency as players travel to the store to purchase items like Fortnite’s V-Bucks. On the lighter side, a current employee believes that “there will always be a market for physical media, as not every consumer feels comfortable converting to solely digital.” They went on to say that “Physical purchasing options provide greater value by allowing the consumer access to a greater range of sale opportunities.”
There is more on the horizon. Microsoft is committed to its new streaming platform Project xCloud. Now in beta, it looks like this improvement to the industry could further increase the digital gaming marketplace. Reports show that Project xCloud can stream an astounding 3,500 games from the cloud. All it takes is an Xbox Game Pass Ultimate subscription to enjoy the fun. This type of enjoyment just isn’t possible with standard discs.
A Failing Business Model
GameStop has plans to close more stores next year.
To understand GameStop’s potential future, we must take a look into the past, back to when physical copies of games, movies, and CDs plagued the world. Blockbuster was huge during this time and their CEO John Antioco was at the helm. It wasn’t until 2010 that Blockbuster shut its doors to the public. GameStop is currently in a similar situation. The reason for Blockbuster’s failure can be boiled down to its slow implementation of change. Because of this, streaming platforms like Netflix and Hulu took control. Now it is hard to imagine a time without streaming platforms to satisfy your media cravings.
GameStop’s business model still heavily relies on trade-ins. It makes about 46% profit on each pre-owned game they sell. At the same time, they only make about 24% profit on new game sales. With digital games on the rise, the company may need to consider a new business plan. Antioco tried to save Blockbuster by doing away with rental fees and reaching out to the online market. GameStop could attempt the same business model before it’s too late. Though one previous employee states that they don’t “have a good solution” that could help the company.
If the rise of the digital age continues, the video game retailer could disappear. In an article from CNN, they stated that Gamestop was planning to close 320 stores, but that has risen to between 400 and 450. During the pandemic closures, they switched to online-only sales which ultimately failed as consumers switched to other platforms. A Business Insider article quoted Michael Pachter saying that the company is “a melting ice cube.”
Can GameStop Save Themselves?
GameStop’s Stock price as of Sept 23, 2020 according to FXStreet.
There is no question that GameStop’s business has been on the decline. Their stock price has fallen over the years to around $5 at the lowest. Despite the current downfall, CEO George Sherman has laid out a plan to help the company make a comeback. A key point in the plan is to “develop new revenue streams.” Gaming Street has noted that “GameStop is testing new store concepts that focus on elements such as gaming, new and pre-owned games, interactive experiences, pop culture, and collectibles.”
IGN has reported that the retailer plans to implement experiences in its stores. They want to create a place that gamers want to hang out. They plan on doing this through events. IGN states that these “types of events offered in stores vary by size and location, they involve concepts like Esports, in-store game rentals, or even tabletop RPG sessions.” It sounds interesting, but will it help them? The answer is yes. The company’s experiments have shown that gamers are positive about the changes. IGN has also reported that some stores are hiring freelance Dungeon Masters for their tabletop game sessions.
A previous employee stated that she was a part of Super Smash Bros. tournaments that had a positive result, but they “didn’t really make money during them.” A current SGA at a remodeled store says “profits I believe have gone up.” Her store is one that has been transitioned into what is called a GameStop Social. These types of stores have gaming bays that allow gamers to try a game before purchasing. These types of changes appear to have been having a positive impact on the company’s sales.
Employee Testimony
There have been many horror stories about GameStop. Camelot331 is a YouTuber whose fanbase grew from his stories about the company’s poor business. As a previous employee, he has mentioned multiple horror stories about shady practices that employees used. He has also received messages from current employees that he regularly reveals in his videos.
We have reached out to a few employees to gather their thoughts on the future of GameStop. While some have refused to comment, some feel positive about the company’s future. One SGA (Senior Game Advisor) said “I think as a company moving to the remolded type store will help relevancy immensely, as a business I think they’ll do fine.” They also mentioned that there needs to be a change in the higher levels of the company. “having a regional manager and corporate constantly screwing us over on product, hours, IT work for the new gaming bays, COVID responsibilities and overall not caring about us if it makes them a dollar is heartbreaking and ultimately the reason most of us leave.” Previous employees share a similar grudge about the management of the company.
After reaching out to a previous employee, she said “I called and said I didn’t feel comfortable working during COVID, they said my DM (district manager) already told them I put my 2 weeks in, I didn’t I had just been talking about maybe doing that, so they pretty much said, “ok we’ll pay for your next 2 weeks, don’t show up for work anymore bye.” Another previous employee had the opportunity to become an assistant manager, but their DM lied about his process in searching for a candidate. It has become apparent that GameStop may need to work on their higher tier of management going forward if they hope to last another ten years.
Moving Forward
A look inside one of GameStop’s experimental stores, GameStop Social.
GameStop has an opportunity to learn from the mistakes of past businesses. It appears as though they have already laid the groundwork. With stores changing to fit the needs of gamers, they may just survive the digital age. It won’t be easy and they will make mistakes, but they just might endure. One thing is certain after talking with new and old employees alike, management needs a makeover to really help them get into line. Stores like the new GameStop Social have proven to be successful. They have brought gamers closer together and allowed them to interact with each other.
Other plans for the company are stores like GameStop Retro that have a focus on retro games and consoles. With other designs like these, the video game retailer will stand out more than they did in the past. Gamers who still rely on physical games may have something more to look forward to, but we won’t know until the future comes.
