Offline Video game retailer GameStop has repeatedly reported declines in sales of gaming consoles and pre-owned hardware and software. This is the challenge that GameStop is facing since online Sales began.
GameStop sales in the first quarter of 2018 were US$1.8 billion, and it has fallen to US$1.5 billion in 2019. This is a 13% drop in sales, and the company’s net income drops to 78% this year.
However, this problem is cyclic. Whenever Sony or Microsoft release a new console, it boosts the sales of GameStop, and once it ages out, Sales drop again. This is backed by a 35% drop in hardware purchases in GameStop, and most of them are waiting for the next-gen Xbox and PlayStation. This could see some sales in the coming month for GameStop, but the wave won’t last for long.
The gaming retailer has long term woos as players are more inclined to download games than purchasing CDs or DVDs. This has cut into GameStop pre-owned games which saw a 20% decline in this year only.
With Mobile and Online gaining even more popularity outside the traditional console, it would be hard for GameStop to compete with Smartphones and Games. With Amazon, Google, and Apple working on their own cloud-based console, it would be hard for GameStop to keep up with them.
GameStop saw this coming as they stated in their 2018 annual report. Where they stated if players prefer downloading games. Rapid advancement in technology, players will have more option to play games, and this would cut in their sales.
GameStop has hired a consulting firm to help them in the current situation and provide another option of revenue. They have also eliminated quarterly payment to investment, which will save them US$157 million a year. The Board will use this money to pay its debt and invest in initiatives.