GameStop — End of an Era
It’s no secret that GameStop has had it’s run of problems recently, with their stocks dropping from $15.50 to $11.28 last January, and it has struggled to recover ever since. As of today they stand at $10.97, and the current gaming environment isn’t likely to help projections in the future.
A recent article in Yahoo Finance seems to cover a positive outlook, saying this company can “survive the streaming revolution.” The writer mentions several aspects in which they believe that the company is in no immediate danger, however many of these aspects are just a positive spin on the negatives which are signaling their downfall.
One such example is this statement, which any person who has ever been to a GameStop and compared it to, for example, the Playstation or Xbox digital store makes absolutely no sense.
“And because no one is replacing consoles, I can’t jump on the “sell GameStop stock” bandwagon. However, bears might contend that game developers could sell their games directly to the consumer via downloads. But GME can counter with its low-cost, used-games business model.”
“Low-cost, used-games business model”
How many times have you been to a GameStop and looked at the used prices and compared them to the cost of the game new? For AAA games, you’re generally looking at a rather insignificant difference.
Older games additionally, though cheaper can often be purchased for the same price during one of the regular promotions through Steam, Playstation Store, or Xbox Stores.
“No one is replacing consoles”
Unfortunately you’re right and wrong here. No consoles are likely here to stay, however as we all know, with every passing year they change.
If you’re following the information regarding the Xbox One S All-Digital Edition you will certainly not be surprised to find out that it is a completely DISKLESS system. Meaning no matter what you might think of GameStop, you’re not going to be buying a used physical game and using it with this system.
If this system passes with consumers, it won’t be long before companies such as Sony and Nintendo start jumping on board. The games as a service model and digital distribution is becoming more commonplace every year.
Digital Distribution vs. Physical Sales
Probably the most telling of all statistics which indicates the direction consumers are moving are the actual sales of digital vs. physical game sales.
Physical game sales dropped from 81% in 2009 to just 21% in 2017. The trending shows without a doubt that physical sales are likely to decline up through now, and into the future.
With less physical sales being made, this leaves less physical copies of games to be purchased on the used market, which is a huge part of GameStop revenue. Simple math can prove this, the availability of stock is going to diminish significantly as developers move towards a digital edition distribution model.
Final Thoughts
When Netflix started streaming directly to the consumer, many people stood up in defense of stores such as Blockbuster, thinking that no one would subscribe to such a service when your local video rental store was just a few minutes away. We stand now at the edge of the same descent, this time GameStop is the Blockbuster and Digital Distribution is Netflix.
You had an amazing run, however unless the business model changes drastically to account for new technologies and consumer practices, it truly is the end of an era for one of the most iconic gaming stores in history.
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