GameStop's third fiscal quarter ended on November 3rd, and things did not go well for the gaming giant. The most troubling number was that of the net income, which showed a net loss of $488.6 million.
It seems that declining interest in pre-owned video games is the cause, at least based on a report from IGN. GameStop experienced a 13.4% drop in pre-owned sales during the third quarter. That's quite a blow, considering that used games is sort of GameStop's thing. Meanwhile, sales went up for new items. Xbox One X and PS4 consoles saw an increase of 12.8% while new software rose by 10.9%. Accessory sales saw a huge growth of 32.6%. This was mostly from sales of headsets and controllers.
These numbers suggest a trend of gamers preferring to buy new over used. This was especially true in the third quarter, which saw the release of several high-profile games. When it comes to titles like Red Dead Redemption 2, most would rather buy on release than wait for someone to trade it in so they can buy used.
The trend towards new is also indicated in the actions GameStop has taken in response to the third-quarter losses. The company has lowered its projections for the fourth quarter, putting more expectations on new hardware sales and less on pre-owned sales. On the other hand, it could be a simple case of them knowing that the holidays bring sales of new consoles and console bundles, and that people are less willing to give pre-owned games as gifts.
Despite the loss, GameStop chief operating officer and chief financial officer Rob Lloyd spoke very positively about the company’s growth over the past few months.
“We are especially pleased with our performance in October, a month where The NPD Group disclosed that the U.S. physical video game industry grew by 46% while our U.S. physical video game revenue outpaced the industry and increased 63% resulting in market share gains.”
He noted that Red Dead Redemption 2, Spider-Man PS4, and Black Ops 4 launching earlier than last year's Call Of Duty did a lot to drive those tremendous software sales. But he did make it a point to say that sales of collectibles went up as well.
As GameStop seeks to use the upcoming holiday rush to recoup some of its third-quarter losses, collectibles will probably be what the company leans on. Digital and Black Friday sales likely hurt the pre-owned market, as will the launch of big new games like Super Smash Bros. Ultimate that no one will buy used. If that pillar of GameStop starts to crumble, expect the company to go hard on collectible sales. Hope you like POP! figures.