Is Gamestop Out of Business? (10 Reasons You Should Know)

gamestop

Gamestop shares have been in free fall since the company reported its Q3 2017 financial results last December. At that point, the stock changed hands at $19. The share price has fallen to $7 and is likely to continue falling.

Gamestop is one of the largest video game retailers in the United States. However, the bad news comes from the latest BI Intelligence data, which suggests that they may be out of business soon.

This isn’t just a rumour. Gamestop is currently struggling to stay afloat in today’s gaming industry. Gamestop is struggling with the online and digital competition that continues to excel. They must maintain a leading position in changing consumer behavior in order to remain relevant.

In addition, GameStop has announced that they will be closing 321 stores in 2019, and they are planning to close even more by the end of 2020. The company’s sales have shown that they are not nearly as profitable as they once were, and this is the culmination of GameStop’s decline in market share.

Gamestop is Struggling to Adapt

In recent years, online gaming has experienced great and rapid growth, especially on mobile devices like tablets and smartphones. While some people still want to go to a local physical store for their shopping experience, some are more than happy to just find online games on their mobile devices without visiting the store at all.

The news feels bad not only for Gamestop employees but also for game publishers and retailers. Currently, they are scrambling to find a new place. They want to sell their product which will make more money than what Gamestop is currently making from sales tax revenue.

Gamestop’s struggles have been in sight for some time recently. But a big change came last year with the release of the online digital distribution platform Steam. Some consumers view the impending demise of retailers as a sign of the end of retail in general.

Meanwhile, others are still more optimistic about the company’s ability to adapt and change. Gamestop retailer has been struggling for years but is showing no signs of stopping. Established in 1976 and has been around for 38 years.

10 Reasons Why Gamestop Failed In 2021

Gamestop is a retail game store with operations in the US, Australia, Canada, and Mexico. The company started operations in 1984 with its first two stores. Due to changing preferences, Gamestop has experienced a decline in sales and profits over time. The climax was in 2021. This is when Gamestop is not doing well due to changing consumer trends and stiff competition from other retailers like Walmart, Amazon, and Best Buy.

Gamestop’s business model is evolving as the game industry develops. Likewise, the company’s revenue shrank, and it lost many customers due to a lack of new releases, online gaming services, and digital expansion.

In consonance with a study by International Data Corporation (IDC), Gamestop will be replaced by digital retailers in 2021. This was due to its slow growth rate, thus narrowing the player base.

The reason for the current decline in Gamestop is the emergence of new trends such as the Steam streaming service, consoles without disk drives, and mobile phones that now have VR capabilities.

Here are some of the main reasons why Gamestop is not running well:

  • The emergence of digital distribution. Digital distribution has led many customers to prefer to look for games that can be purchased and downloaded digitally. Which has slashed Gamestop’s revenue.
  • Increased competition from e-commerce stores. More and more online retailers have taken a large share of Gamestop’s retail game store market share. And their stores are unable to develop new strategies to compete in the ever-changing market.
  • Increased piracy: Piracy rates have increased significantly due to the popularity of digital distribution. This, of course, leads to more digital sales for developers and publishers who don’t want their games to be pirated.
  • Advertising campaigns. The reduced budget for advertising campaigns has reduced the company’s efforts to move forward.
  • The company has not taken advantage of the latest technological advances, such as card payments and mobile shopping apps.
  • Gamestop is not ready for the change in the way people buy games.
  • Gamestop does not have the capacity to change like its competitors.
  • Gamers are switching from buying physical games to digital. To which they can get unlimited access with a single purchase.
  • Familiarity with mobile games has made it difficult for Gamestop’s physical stores to compete with online retailers.
  • Game developers are starting to move from retail stores to digital distribution platforms like Steam, Switch, etc.
  • To survive, more than one game stopper is required as there is a high demand for customers in different regions of the country.
  • The company has experienced declining revenues over the years mainly due to competition from digital distribution platforms and other forms of entertainment. Another reason for this decline is the lack of utilization of social media which they can use to create a positive brand perception among their potential customers.

Conclusion

The most obvious reason behind Gamestop’s downfall is the growing popularity of digital games. Digital users can buy their favorite games without leaving home. At the same time, Gamestop’s main target audience is Generation X and Millennials. Who is more likely to buy physical copies of their favorite games.

One of the best ways to make up for this loss is to sell more mobile games. But, if we look at the recent release schedules of new mobile titles by Nintendo and Sony, it’s hard not to suspect that they are preparing themselves for a future where physical copies will be considered less important than digital ones.

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