The video game market is booming, so naturally, video game retailers should be raking in the money. But it seems that isn’t the case with GameStop, the largest video game store chain in the US. GameStop has announced that they will be closing 2-3% of their stores nationwide due to massive revenue and sales drops last year. The news has already had a big impact, causing GameStops stock to plummet.
According to CNBC, GameStop saw a major decline in hardware and software sales, amounting to 29.1% and 19.3% respectively, for the fourth quarter of 2016.
“The Texas based company said fiscal fourth-quarter global sales decreased 13.6% to $3.05 billion, while consolidated comparable sales – a metric monitored closely for retail companies by Wall Street – declines 16.3%” reports CNBC
The root cause of GameStops declining sales seems to be shifting consumer interests. GameStop used to a be a major player in the gaming industry, powerful enough to force publishers to make their decisions according to their policies and needs. This was seen with efforts like EA’s $10 policy, which blocked features like multiplayer and others behind a $10 paywall that had a one-time use code for new copies of games. This policy was aimed at reducing used games sales at retailers like GameStop, which led to major losses for publishers as they did not get paid anything from those sales.
Consumers have also shifted largely from in-store shopping to online shopping. Online retailers like Amazon handle a large part of physical game sales due to their low prices and home-delivery. Players would rather order games and recieve them from the comfort of their home than go out to get them. A large number of players have also moved on to buying games digitally, thanks to high speed internet and huge sales on digital games.
GameStop still has time to change their game plan and adopt a new policy, focusing on opening technology and collectible-focused stores. We’ll find out their future plans soon.