GameStop financial reports suggest that the company's stock has dropped a stunning 26 percent due in part to slumping console sales.
While many know the company as GameStop today, it started out as a software retailer known as Babbage's in 1984. It changed its name a couple of times until it was purchased by Barnes & Noble. From there, the company saw tremendous success, and by the end of 2004, shareholders were able to successfully buy out the remaining Barnes & Noble shares to become a stand-alone franchise. After acquiring EB Games shortly after, GameStop saw a period of unparalleled success that lasted over twelve years. With the release of the PS4 and Xbox One, the company saw a steep decline in its sales thanks in large part to consumers preferring digital copies of games over physical ones, leading to this recent news.
Given that GameStop has continued to expand its online catalog and offer games at a discount, it appears that the company was aware of this eventuality. It's a signal to other game suppliers that the digital age is upon us, and that they must work with their consumers to figure out what physical items are desired within their stores before they receive the same fate.
According to Reuters, GameStop Corp shares fell by a staggering 26%. The company cited a lack of console and video games sales as the cause. If the stock continues to fall at the same rate, it could reach a price that hasn't been held by the company for over sixteen years. With both Xbox One and PS4 giving consumers easy access to on-demand downloadable content, there has been a major lack of demand for physical copies of the latest titles, causing GameStop the lose a large amount of money as a result.
While downloadable content is certainly becoming more prominent, the issue for GameStop is much deeper than that. Consumers the world over still want to have something tangible when they spend their money, and this shows that perhaps GameStop has an issue with how its store markets available items. The fact that it's losing money at such a fast rate seems to suggest that perhaps consumers aren't pleased with the pricing of its used games on modern consoles.
Though GameStop's reasoning for their decline is certainly plausible, there is also the possibility that their trade credit issues and their extreme pricing on certain used titles has finally caught up with them. If they want to survive in the current market, they will need to begin pricing used games on modern consoles at reasonable rates and work with consumers to create a trade-in system that is fair.