GameStop is Nearly Dead

Jordan

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Photo: Shannon Grixti via Press-Start

One of the standout memories I have of my time living in the United States is of the time I went to Gamestop looking for a new game for my brand new PSVita console from Sony.

I remember it so vividly because I had to walk down a Florida highway to access its insane location. I remember thinking “what moron ignores Florida’s billion strip-malls and builds a GameStop by itself next to a highway.”
Good times.

The store wasn’t carrying any good Vita games, so I left disappointed. Looking back, that should have been the sign I needed that Vita was dying.

I didn’t leave empty-handed though, because I did take a copy of Game Informer, the magazine published by GameStop to keep all their customers informed of upcoming products, and signed up to their loyalty program.

After moving back to my native Australia, I subscribed to the local edition of the magazine until in April of 2019, when the magazine was discontinued.
At the time, I figured that the Australian version was just way worse than the US one, so it deserved to die. But looking back, it may have also been a sign of bigger things yet to come.

After the discontinuing of the Australian version of Game Informer, my second big clue to GameStop’s future demise was the financial reporting that came out of the 2019 holiday season.
GameStop saw a decrease of nearly 30% in sales compared to the year before. For a physical retailer, a hit like that during the holidays is not one they can afford. Things were looking bad, and as the months roll by, they’re only getting worse.

The Slow Slide

Physical stores continue to become more obsolete every year as more and more consumer purchasing moves online.
For some brands such as luxury goods, they’re far more concerned with staying upmarket despite catastrophe’s such as their high-end handbags being listed alongside discounted rugs on online marketplaces.

But for GameStop, the online marketplace is a competitive nightmare that will see them bankrupt.

Online is Already Dominated

The online options for a gamer are endless, and GameStop could never dream of investing the money it would take to build the infrastructure necessary to compete.

I play games through two avenues, on my Nintendo Switch and on my PC. Games on my PC can be bought through Steam, an entirely online and independent marketplace that sells almost every game I could ever want.

They host regular sales, the service works fast, and the process of buying a game and downloading it couldn’t be more straightforward.
They also have a system with which I can connect and play with friends, loan out my games, and return the game if I have any problems.

If I want to buy a game for my Nintendo Switch, I just open the Nintendo Store which exists as an app that’s conveniently located on the Switch itself. I load up the store, buy the game I want, and wait while it downloads.

For some gamers, downloading a game isn’t enough to be satisfied, and that’s why retailers still have a business.
But gamers who want physical copies also want a pleasant shopping experience. Increasingly, that’s not an experience that GameStop is able to give.

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GameStop is in Trouble

GameStop employees have reported to multiple news outlets that they’re being forced to use aggressive and even “immoral” sales tactics to keep their stores afloat.

Employees said that they were forced to avoid reminding customers of their pre-ordered games in an effort to minimise the risk of customers cancelling.

I can see how that tactic would work, because I easily forget maybe 80% of the pre-orders I make. A lot of those I would have definitely cancelled if I remembered I’d made them.

Employees say that they have to recite “excessively long phone greetings” so that they can ensure potential customers know all the benefits that GameStop can offer over the online competition.
One strange sales tactic GameStop have adopted is selling download-codes for games, currency for games, and downloadable content for games.

They stock cards on shelves in the store that contain the codes inside.
Some games still have regular game cases, but inside is a cardboard disc with the code printed on it that then needs to be activated online.

GameStop likes that these cards take up very little floor space and drive revenue, but they also serve as a constant reminder to the gamer that they could have just stayed at home and downloaded all of these purchases from the couch.
There’s literally no advantage to buying the physical card unless you’re going to give it to a friend as a gift… which is also something you could have just done online.

Selling these as a store item feels to me like McDonald’s putting a Whopper on the menu.
Sure; a sale is a sale, but next time the customer is just going to go to Burger King and buy it from the source.

GameStop employees have gone on to say that selling used hardware has become the new focus and that it’s making them crazy. They feel that they’re being pushed to their limits by managers who’re feeling the pinch even more.

Managers say that except for holiday periods, they’re finding it impossible to meet their daily targets. Without meeting their targets, they’re at risk of “termination of their district”.

In interviews with Polygon, managers have been quoted saying:

“I’ve seen a change in the sheer desperation the company has towards its profit margins.”
“The company is frantic and distrustful. You can feel it in every message they send. The structure is falling apart, and they’re scrambling.”
“They have to cut costs. The games retail market is dying.”
“My store is well known for solid sales performance. But customer traffic has dipped significantly in the past two years. Aside from some expected high-traffic days like Thanksgiving, Black Friday, and major game release days, we’re missing our daily sales plans almost every single day.”

GameStop didn’t rely to Polygon’s request for statement.

The End is Nigh

The writing is clearly on the wall for all retailers who can’t offer more than the internet can give.

For the future of gaming, it seems that physical locations no longer have much utility. There will always be gamers that want physical games for collections and for safety from online service volatility, but those gamers aren’t enough to carry the entire industry.
To satisfy those customers, I predict game developers finding a way to get physical games to the customer directly.

Perhaps Nintendo could add a physical copy option next to the downloadable purchase button on their online store. The physical copy could then be fulfilled by another retailer who’s also servicing other industries.

Giants such as Amazon could be warehousing and distributing physical copies of games without the need for a dedicated games-only retailer.

In my opinion, the day GameStop starting displaying codes for downloadable games on their shelves was the beginning of the end.
I predict that our kids won’t know the feeling of going into a game retailer to ask a confused 17-year old for the newest edition of Battletoads. But they will be a part of a thriving future game industry that’s growing and improving every year.
An industry that has decidedly left GameStop behind.

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I’m a well travelled writer who loves nothing more than a well polished video game, an expertly crafted sandwich, and a hot mug of Milo.

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