December 18, 2019
Can GameStop Survive a Shifting Market?
Streaming media has slowly transformed multiple different industries. It began with music. As the iPod sliced away at market share, retailers and production companies tried to ignore the interloper. Apple didn’t stop, and, in the space of a decade, the entire industry was transformed.
The example was plain to see, as were the trends, but many booksellers did not pay much attention. When the Kindle came out, they scoffed. Then, stores started closing, as Amazon book sales and digital book sales exploded. People still buy and love “real” books, there are still big box booksellers and independent bookshops, but the market potential shrank considerably.
It was only a matter of time before the video game market followed suit. Like movies, video games followed a pretty basic consumer distribution model: you could buy games or rent games, buy consoles or rent them. Because of that, game resale stores became big business. Now, though, one of the biggest video game resellers, GameStop, is asking some of the same questions music stores were asking a decade ago. When not enough people are coming in, what do we do next?
GameStop is telling investors to expect the company to continue its current sales decline, and the company is projecting a loss of $83 million in the third quarter alone. CEO George Sherman is reportedly blaming weak sales on people waiting for the holiday releases of new game consoles, such as the PlayStation and Xbox. Others are saying that’s only part of the problem; that the real issue goes much deeper. They are likely correct.
The simple fact is that consumer habits are shifting. More people are playing online, more people are streaming games, and fewer people are buying games outright. With fewer people buying games, there are fewer resale games available. And, when consoles are not upgrading every year or two, there’s much less reason for even the most dedicated gamers to go shopping for something new.
This isn’t speculation. GameStop stock is down about 60 percent this year, and executives don’t expect a rebound any time soon. If they’re waiting for the release of what GameStop leadership called “new and innovative” consoles late next year, they could be playing a very dangerous waiting game. Who knows what the next year will offer in the way of streaming content.
Will GameStop even be relevant this time next year, or will the company have waited too long to reinvent the brand for the current market realities? Time will tell, but the smart money says the company can’t wait that long. They need a new, connective, and relevant message. And they need it now.