GameStop Remains Confident Rolling into the Next Generation of Consoles
GameStop has been in the news recently as there were reports of layoffs across North American and Canadian stores a few weeks ago, and now in a recent report, GameStop will be closing 200 stores following another quarter of dismal sales. But with the next generation of consoles not far away and the slight shift to digital sales becoming imminent, GameStop CEO George Sherman is confident that the retailer will still take a “very, very significant share” of boxed sales during next generation.
James Bell, GameStop’s Chief Financial Officer, told investors that the closures will affect between 180 and 200 “underperforming” stores between now and the end of 2019. The company’s most recent annual report listed 5,830 locations worldwide, with more than 4,000 of them in the United States and Canada. In the recent earnings call, Bell said that 95% of stores were profitable. But more closures, in larger numbers than in recent news, are expected over the next one to two years, he added.
While there was no exact percentage, CEO George Sherman did say he expected a “mix between physical and digital games,” according to Seeking Alpha’s transcript.
“Our assumption is that [games will] launch in both formats with the new cycle just as they do now,” he said. “And our assumption is that we’ll have a piece of both businesses. Obviously we have a very, very significant share when it comes to physical games. Physical games are still a significant portion of the overall gaming industry today.”
He continued, “I think it’s fair to say that, historically, we probably had a preference for physical games versus digital games and we’ve been clear to say both internally and externally that we’re going to be agnostic and it has to be the customer’s choice, as to which we may sell.”
Sherman added that GameStop is currently working to make the sales process for its own digital products “easier, more streamlined, more embedded.” James Bell also clearly defined that both Sony and Microsoft have confirmed that their next consoles will have a physical disc drive and also offer backwards compatibility, which will simply mean that current generation (PlayStation 4 and Xbox One) titles can still generate sales.
We certainly understand the physical and digital split, as more consumers buy from the consoles dedicated store, it ruins the buyers need to use and travel to a traditional store. Like us here at Playgroundz, video game players are very outspoken regarding digital sales and an “all digital future”, saying digital games should be noticeably cheaper compared to physical games since costs to produce digital content is far cheaper.
