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March 26 (Reuters) - Videogame retailer GameStop (GME.N), opens new tab said on Tuesday it had cut an unspecified number of jobs to reduce costs and reported lower fourth-quarter revenue amid rising competition from e-commerce firms and weak consumer spending in an uncertain economy.

Shares of the Grapevine, Texas-based company tumbled 16% in extended trade.
"An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately," Wedbush Securities analyst Michael Pachter said.

"Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic."

U.S. videogame publishers Take-Two Interactive Software (TTWO.O), opens new tab and Electronic Arts (EA.O), opens new tab also delivered lackluster earnings last month as the gaming industry faces pressure from high borrowing costs, sticky inflation and a slowdown in demand from pandemic peaks.

GameStop's recent cost-reduction measures also included an exit from its operations in Ireland, Switzerland and Austria.

As of Feb. 3, the company had about 8,000 full-time salaried and hourly associates and between 13,000 and 18,000 part-time, hourly associates worldwide. That compares to 11,000 full-time salaried and hourly employees and between 14,000 and 27,000 part-time hourly employees in 2023.

Its expenses fell 21.2% to $357.1 million, primarily due to lower costs of labor, consulting services and marketing.

"I suspect that they will keep trimming costs to generate breakeven or better, but it is inevitable that their sales will decline to an unsustainable level," Pachter said.

GameStop's fourth-quarter revenue of $1.79 billion was lower than last year's $2.23 billion, as it also grappled with stiff competition from Amazon.com (AMZN.O), opens new tab and Ebay (EBAY.O), opens new tab.

It reported adjusted earnings per share of 22 cents, compared with 16 cents a year earlier.

Separately, the company promoted Daniel Moore to principal financial officer. Moore had taken over the role on an interim basis in August.

https://www.reuters.com/technology/gamestop-q4-revenue-falls-2024-03-26/

 

[Cyberpunkd]

"Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic."

Needs more Funko Pops,easy.

 

[phant0m]

Makes sense if you’ve been in a GS recently. They have almost no stock for video games and have just become a retailer for “geek” merch.

I live in a pretty sizable metro in the northeast and the average store in my area (4 in a 15 mi radius) has a whopping 6 used games for XSX. Roughly twice that for PS5.

The new selection isnt much better either, seems like stores are getting their preorder allocations and maybe a few extra copies but that’s it. They do have plenty of stock online though, and seems like they just prefer being an online retailer.

Not entirely unique to them either. I was in Target last week and their game shelves were 80% empty for both Xbox and PS. Switch was best stocked but even that was mediocre.

 

[Beechos]

The funkos and geek stuff is really the only thing keeping them afloat. They should just rebrand themselves into thinkgeek and sell games on the side.

There's razor thin profit margin on games and consoles. With the age of digital no one is trading and buying "used" games anymore. All the gamestops I've been to here in nyc have nothing gaming it stock.

 

[Majukun]

I would be sad for them if i didn't remember how they used to screw customers over in the past

that's why i stopped going to gamestop way before I became mainly a pc player and thus go digital

 

[Lucifers Beard]

I imagine it will be a similar story for GAME in the UK. They've even stopped their trade in program, which for me was the only thing that made them viable for me purchasing from them, as rare as that was.

 

[TheDreadLord]

Just close the underperforming stores. There are plenty of healthy game retailers that sell mostly online and ship worldwide.

 

[Go_Ly_Dow]

I imagine it will be a similar story for GAME in the UK. They've even stopped their trade in program, which for me was the only thing that made them viable for me purchasing from them, as rare as that was.

I give it 12 months until they move to online only.

 

[Gaiff]

 

[RavageX]

Makes sense if you’ve been in a GS recently. They have almost no stock for video games and have just become a retailer for “geek” merch.

I live in a pretty sizable metro in the northeast and the average store in my area (4 in a 15 mi radius) has a whopping 6 used games for XSX. Roughly twice that for PS5.

The new selection isnt much better either, seems like stores are getting their preorder allocations and maybe a few extra copies but that’s it. They do have plenty of stock online though, and seems like they just prefer being an online retailer.

Not entirely unique to them either. I was in Target last week and their game shelves were 80% empty for both Xbox and PS. Switch was best stocked but even that was mediocre.

They might want to focus more on the retro aspect, however their quality control/inspection practices need improving.

 

[Coloress_Kafka]

They are really lacking in Anime and more Asian stuff for the weebs like figures and quick snacks like Pocky. They should really pick up the phone and try to work out a deal to get a Crunchyroll branded section that just focuses on weeb stuff.

 

[Needlecrash]

They might want to focus more on the retro aspect, however their quality control/inspection practices need improving.

If they focused on their "Funcoland" aspect, I can assure you they would be doing better.

 

[bitbydeath]

There’s a market for cards (especially the trading scene) and comics which would work with their current image.

 

[LordCBH]

When they shifted to giving most of their space to garbage collectibles I can get cheaper anywhere else, I stopped shopping there.

 

[Spyxos]

I walked past a Gamestop today. I only saw anime figures. Somewhere at the very back there were also a few games.

 

[West Texas CEO]

I walked past a Gamestop today. I only saw anime figures. Somewhere at the very back there were also a few games.

Same here.

And the sales reps are shadier than ever, lol

 

[Unknown?]

I would be sad for them if i didn't remember how they used to screw customers over in the past

that's why i stopped going to gamestop way before I became mainly a pc player and thus go digital

They should stock big box PC games! It'll make a return just like vinyl.

Man how I miss FunCoLand!

 

[MagnesD3]

But the inverse is true too, Ive bought so many used games there for cheap.

 

[Mibu no ookami]

In their zeal to destroy the used game market, maybe Sony and Microsoft didn't consider the impacts this would have on hardware sales and therefore software sales. It goes without saying but A LOT of people get into gaming via used product. That lack of growth could very well be a result of a lack of a strong used market.

You're basically trading short term software sales and margins for medium to long term decline in growth.

 

[saintjules]

They seem to keep on trucking regardless.

 

[wipeout364]

There is no scenario where they come out of this intact. Physical game retail is going to be the province of mom and pop stores with little to no overhead. It’s way too expensive with margins too low for them to continue. Their side ventures they dabble in may buy them time but board games, funky pops, and the other fan junk they sell is not going to save them.

 

[SmokedMeat]

Not letting you use Reward money towards digital games/gift cards killed them for me.

I have no use for GameStop anymore.

 

[Mibu no ookami]

There is no scenario where they come out of this intact. Physical game retail is going to be the province of mom and pop stores with little to no overhead. It’s way too expensive with margins too low for them to continue. Their side ventures they dabble in may buy them time but board games, funky pops, and the other fan junk they sell is not going to save them.

I would say it'll go more to warehouse retail like Amazon than anything else, primarily because mom and pop stores barely exist in the first place and they certainly won't be able to hold up physical gaming.

Gamestop should pivot significantly to more of a warehouse model. They have entirely too many locations to support.

Targets and Walmarts will largely survive because they sell other things. Gaming on its own isn't big enough.

 

[ByWatterson]

It's pretty obvious they should turn into a LAN party business.

Not kidding.

 

[Krappadizzle]

 

[TerribleAtThisGame]

Last couple times I went in my local GameStop it looked like dudes were robbing the place. Turns out those were their employees. A straight-up methhead with pick-marks on his face and another guy on his phone using the word fuck more frequently than a Tarantino flick.

 

[Kacho]

That’s a shame. My kids love going there to get random stuff.

 

[Evil Calvin]

Well...considering you cannot even buy a game on their website and actually SEE what you are buying (like Ebay)....it's not surprising they are failing.

You can buy a used game from their site and not even know if you are getting the real case for the game or manual. Heck they even ship opened games as 'new'....just like they sell in the stores when it's a last copy (they grab the opened case off the shelf and pull the disc from a drawer....and sell as new). GAMESTOP!!! THAT IS NOT 'NEW'!!

These basic rules of reselling of used and new games has been the norm on all online sites for YEARS but yet Gamestop gives you whatever they have laying around and you won't know what you are getting. It's amazing that they even carry games without boxes or cases. I have read multiple times that the stores toss the cases and manuals out (for some reason...I don't know why). That is why almost all GBA, and DS games have no cases.

Gamestop just sucks. Good riddance!!

 

[Hudo]

They could always go into the Pachinko business.

 

[SportsFan581]

It will always be a mystery to me why they didn't jump on PC gaming. Have a decent selection of components available in store and offer to build systems for $50 or $60 like Micro Center. They wouldn't have the same selection of components, but they would have a big advantage in the reach of the stores they have. At least this part of the business will still exist going forward, physical disks for console we don't know about.

Instead it seems like they only dabbled a bit here and have mostly stop offering GPUs.

Maybe there would be openings for them in the limited run space as well. With some physical games that are only available from their stores.

 

[Quasicat]

Not letting you use Reward money towards digital games/gift cards killed them for me.

I have no use for GameStop anymore.

Add to this, they raised the price of their rewards program from $15 to $25, and I’m out.

The stand alone GameStops around me never seem to have any foot traffic, but the one in the mall (about a half hour away) is constantly busy. That mall also has a bunch of boutique stuff like an anime statue store and a Pokémon shop that focuses on the original 151 characters. The GameStop there, which also has a bunch of large statues, stuffed Pokemon, and games fits in perfectly.

 

[Bond007]

They suck in alot of ways...BUT
The ability to atleast decide if you wanna trade on a good deal or just trade in general(for me as a kid, this was amazing way to get new games) I understand it's not always a great deal- but atleast a quick option,.
Additionally, keeping physical used and new games is obviously the big one.

I like we have the option basically. I really rather not see them go down.
Target/Best Buy/Walmart are hardly reliable retailers anymore and the shelves are only getting smaller.


Its a shame really that ultimately alot of the their practices alienate the people they claim to serve.

 

[sloppyjoe_gamer]

This quote from the original post pretty much sums it up, IMO...

"An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately"

If Gamestop stores were like they were around 10-15 yrs ago where associates weren't constantly trying to push shit on you, were cool to just go in talk games with, and were just fun places to go into, i think they wouldn't be in this current state of where they are.

Others have said it, and i agree.....they need to fully embrace the gamer geek culture and sell all of that stuff now and have games be a secondary.

 

[Magic Carpet]

Wish they would abandon most of the games and stock more different types of hardware. Even Bestbuy has a Tiny Hardware selection.
We dont have a micro center near here. Where are the PC parts?
It’s just a Sony Nintendo software store with a bunch of different colored series x controllers.

 

[Shake Your Rump]

They have almost no stock for video games

This is incredibly frustrating. I am very fortunate to still have an independent video game shop in my town, otherwise I would be stuck ordering everything online. The few times I have relied on GameStop for a game, they essentially have zero copies of the game outside of preorders. This is a major location at our largest shopping mall.

I decided at the last minute to get Prince of Persia on release day. Surely they have an abundance of a Ubisoft game on hand. Nope! They had received exactly one copy, and it was on display. Granblue Fantasy Relink? Again, literally one copy available out of three they had received.

I'm surprised that they sell any games.

 

[Northeastmonk]

I went to the GameStop at the Mall of America and it took me less than a couple minutes to walk out. I remember Sears selling video games back in the day (Genesis, SNES, and Virtual Boy) and they only had two glass display cases. Those two display cases probably had more games than GameStop had on display.

I don’t get how someone would go out of their way to get a game anymore. There’s so many other options available. I realize that ignores FOMO. I have zero empathy for that store and I grew up loving EB and Babbages. I feel worse about K-Mart going downhill.

Remember those employee walk outs from a while back? They claimed their district manager didn’t care and they could hire a bunch of college kids in an instant because “vidya games”. There seems to be a lack of passion in the tech industry. Everything is about money and how far they can stretch it. It sucks, but what can you do?

 

[wipeout364]

I would say it'll go more to warehouse retail like Amazon than anything else, primarily because mom and pop stores barely exist in the first place and they certainly won't be able to hold up physical gaming.

Gamestop should pivot significantly to more of a warehouse model. They have entirely too many locations to support.

Targets and Walmarts will largely survive because they sell other things. Gaming on its own isn't big enough.

I don’t think this will work. Once they go warehouse they are in a race to the bottom for markup and they essentially have to give a reason why I am buying from them and not Amazon.

I don’t love Amazon but I don’t really have warm and fuzzy feelings towards GameStop. I honestly don’t see any path forward for them that makes sense.

The death of a real used game market is the the death of GameStop.

 

[Three]

Subscription models and the rise of digital effectively killed their own business model. They were too blind to preserve it though.

 

[nush]

It will always be a mystery to me why they didn't jump on PC gaming.

The business is built off console gamers, everything and all their head office employees only know that. They would have to hire a "PC guy" but not just one, one for all parts of the business. The investment is too high and they cant sell games because it's all digital storefronts now.

 

[diffusionx]

There was really no way for GameStop to continue as a game retailer when 70%+ of game sales moved to digital format. The same fate befell Tower Records and Blockbuster.

 

[StereoVsn]

They should have pivoted to smaller number of larger stores with properly curated used games sections as well as adjacent stuff like statues, books, etc…

Still have new games (pre-orders and a bit more), but focus more on retro / physicals and collectors.

Hell, have a computer part section where they could build folks system for a price ($100-300, depending on water cooling).

There could have been a lot of things to try, but it was managed by morons who didn’t understand the actually market they were in and it’s too late now of course.

 

[Mibu no ookami]

I don’t think this will work. Once they go warehouse they are in a race to the bottom for markup and they essentially have to give a reason why I am buying from them and not Amazon.

I don’t love Amazon but I don’t really have warm and fuzzy feelings towards GameStop. I honestly don’t see any path forward for them that makes sense.

The death of a real used game market is the the death of GameStop.

That's the reality of it.

 

[dragonyeuw]

With the age of digital no one is trading and buying "used" games anymore.

And in the cases where you are still buying/selling physical, there are much better options than trading your game( ebay, FB, local listings) for $2 to Gamestop for them to flip it for $40.

 

[Moriarty1889]

The last few times I went to a Gamestop they had changed dramatically. More collectible crap than actual games. Also the workers were some of the weirdest looking I had ever seen. Blue and pink colored hair and one with more facial piercings than actual games in the store. That says a lot about the company as well and how they will be perceived in the public eye by most people. They rob people on trade ins and have been for years. Their business model sucks and it’s caught up to them these last few years.

 

[Cyberpunkd]

With the age of digital no one is trading and buying "used" games anymore.

Do you hate money as well? Used games it's the best thing about Nintendo, I can have by kids play top releases for less than 15€ (difference between price paid new and when sold).

If no one is buying used they should then be perfectly fine with paying $100 for a game, after all people don't care about money. Then we don't need as many microtransactions in games to off-set high budgets.

 

[dorkimoe]

Worked at GameStop 2004-2011 or something. Saw halo 2 launch, WoW launch etc. it’ll never be like that again. Say what you will about GameStop and hate them all you want but it’s pretty shitty to see the future of gaming just be digital store fronts

 

[March Climber]

The funniest thing about this thread are the amount of people who think they should copy other business models from other dead store franchises.

DVDs? PC parts? Rentals? Anime merch?

 

[Aesius]

Worked at GameStop 2004-2011 or something. Saw halo 2 launch, WoW launch etc. it’ll never be like that again. Say what you will about GameStop and hate them all you want but it’s pretty shitty to see the future of gaming just be digital store fronts

One of my best friends worked at the local GameStop at our mall 2004-2006 or so. I remember being incredibly envious. It was nearly impossible to get a job there because every high school kid wanted to work there.

It is definitely sad to see it decline. I remember going to the mall with my mom as a kid and spending hours in Electronics Boutique while she shopped in department stores. The employees were all nice, knowledgeable, and enthusiastic. All of those EB stores around me eventually turned into GameStops, and they are now sad shells of their former selves.

 

[SmokedMeat]

It will always be a mystery to me why they didn't jump on PC gaming. Have a decent selection of components available in store and offer to build systems for $50 or $60 like Micro Center. They wouldn't have the same selection of components, but they would have a big advantage in the reach of the stores they have.

Microcenter’s employees know what they’re doing though. I wouldn’t trust a GameStop employee with building a costly PC.

 

[Orutisu Furio]

The only thing that may "save" or at least extend GameStop's lifespan is the launch of the next Nintendo console, whenever that is.