The on-going Gamestop debate: They're still dead


#1

So we’ve had a few discussions about the Gamestop business model. Here’s their latest investor report:

http://investor.gamestop.com/phoenix.zhtml?c=130125&p=irol-newsArticle&ID=2007374

They had about a $3B holiday quarter. That’s -6.5% from last year with November down -12%. The worst part for them is that new console sales were down -32% in a year where PlayStation was hitting record breaking sales numbers. Translation: people are buying a shit load of gaming stuff, just not from Gamestop.


#2

I wonder who’s head will roll for this… probably nobody’s…

They can’t get their mobile hardware sales like they wanted to help overlap their game losses, even though mobile sales is up like 28%. I just hope I can still get my Game Informer! (heh)


#3

Does anyone expect them to try their hand a digital client (similar to steam)?


#4

I think that would have been a great play 5 years ago. Now, I fear it may be too late to migrate their retail customers. Their bread and butter are console games and both Sony and Microsoft have robust digital stores integrated right into the console now. When grabbing a new game is as simple as hitting the PS button, it’s hard to get that user to move to a web site to make a purchase.

They needed a GameStop app for both Xbox and PlayStation, in my opinion. Now that they’re behind the curve, Sony and Microsoft, as well as publishers, are no longer giving the huge bonuses to GameStop to drive sales because they’re declining in being critical to a successful launch.


#5

I think GameStop had a hold on the market in the past because they had something special to offer. It was a place that was gareenteed to be open for you to pick up a copy of a game you preordered on the time of launch. Now you just preorder via your console and you get the same benefit without leaving your home and standing in line. They were one of the only places to trade in your old games and equipment and get anything for them. Now this is a more common practice and I understand that Amazon does it better.

I’m afraid the writing is on the wall. They cannot offer any real savings because they are no longer pushing the inventory in bulk. The exclusivity of offering a game at launch or the ability to compensate you for an older title is lost. Unless they can come up with a game changing strategy they will fall.


#6

Personally, the only game I’ve gotten from Gamestop in the last three years was GTA V for the PS3. They were the only retailer selling the Collector’s Edition of the game, so it’s not like I had a choice in the matter. One of the other reasons they lost my business was their employees. Most of them weren’t helpful and were only interested in pushing presales. This is also the first year in quite a while I didn’t renew my subscription; I just felt there was no need.

That said, the move to digital has likely hurt all retailers, but Gamestop especially as they have no alternative inventory. Hardware is available everywhere. They’ll occasionally have exclusive pre-order bonuses, but those are almost never worth going out of your way to get. Plus with all the disappointment in AAA titles this past year, I think a lot of people are moving away from pre-ordering games. It’s a move I absolutely agree with.

What they likely need to do now is downsize considerably. Close a few hundred of their retail locations. Extend their digital presence as much as they can. I’m not sure how second-hand game sales are doing lately, but even that isn’t exclusive to Gamestop anymore. Amazon, Best Buy, and just about everyone else now offers game trade-ins, and their deals are usually equal to or better than Gamestops.

Maybe they should consider going to gaming-media only, focusing on their publications, or see if the market would bear a competitor to Gamefly, a service that isn’t very competitively priced. That said, I don’t really think physical distribution will wane to all-digital any time soon. I personally still prefer to have physical copies of all my games. I don’t fully trust internet networks yet in terms of reliability, and obviously broadband speeds are still limiting especially when servers are crowded.

As you’ve already mentioned, Gamestop needs to re-find their niche now or they’ll be going the way of Blockbuster.


#7

They have no choice but to consolidate their operations. Close a bunch of retail locations and beef up their digital presence as others have said. There is still no “one stop shop” for buying games/hardware online, so maybe they should really aim for that. I find myself buying either from Amazon, Best Buy or PSN these days.

Is it too late? Probably. Hard to beat Amazon in the online space and they just keep growing. Does Gamestop have a digital distribution platform? I don’t even know.

I think the realty is that they just don’t belong anymore. With mobile gaming and digital distribution rising, they can’t even catch up even if they wanted to.


#8

The trouble is, this was an option for them until they shutdown the Impulse online marketplace last year; they just sell Steam/Origin/PSN/etc keys now.


#9

well,their other option would be to take the large presence they already have in the retail world and transition into selling retro games and consoles, along with hard to find games and accessories. Currently you can only get that stuff at small local places.

If Gamestop were to throw their weight around in that market they might be able to take it over and still have a place for at least some of their stores.


#10

I think you’re overestimating the market for retro games.


#11

I’m not saying they won’t have to close several locations but as it stands now, they have no niche market to cling to as the years pass by.

At least with retro games they can hold on to life in some form.


#12

GameStop shares soar after holiday sales:


#13

I’m not sure I trust my portfolio to Gamespot’s financial reporting… That is a very short sited prospective given.


#14

Yea, but somebody is taking the bait! Obviously if a company is reporting their big revenue stream, the market will increase their values. It’s not like we couldn’t predict that would happen, I just thought it was funny.


#15

It was kinda like saying “Hey, we did not suck as bad as we thought we would. Forget about our past proformance.”

There stock is a relatively cheap date and in the technology field. It has the potential for larger shifts. My advise is to set a stopwatch if you buy. The time to sell will be close at hand.


#16

That’s like a FOX News chart—go back far enough or compress it short enough to where it fits your narrative. Holiday retail trading starts in October/November. GameStop stock is DOWN more than -25% since then.


#17

They already sell steam codes. I have bought a few steam games from them.


#18

The retro game market will probably be on the downswing as well if it isn’t already. Sony is pushing their PS now with old games, and I’d guess this trend will only expand. I still like to buy discs just because I feel like there’s some product there I can resell but will likely give that up soon as it seems the digital product also has better load times, etc. than playing off disc.