GameStop Continues Its Descent into Oblivion as Shares Fall 36%

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GameStop is struggling to survive. The video game retailer’s shares fell as much as 36% today, while first-quarter sales fell 13%. Executives seem to have no idea how to turn things around, as digital and streaming continue to overtake GameStop’s core business model of physical titles. Another conundrum is that console sales are down due to next-generation consoles being just around the corner.

GameStop has been in a multi-year slump. The company’s stock has lost two-thirds of its value over the past two years as customers switch their gaming habits. Downloads have overtaken CDs. Mobile gaming is satisfying casual gamers. And video game streaming is a fledgling business that could make serious competitors out of Google (GOOGL), Amazon (AMZN) and Apple (AAPL). GameStop is a record store in the age of iTunes and Spotify.

Despite the confidence of CEO George Sherman, who pledges to cut costs in a “multi-year transformation effort,” investors and shareholders seem convinced the chain is doomed. More and more stores are being shuttered, and there isn’t a buyer in sight.

The problem is there’s not much that’s working for GameStop. The company has already closed hundreds of stores over the past several years, and GameStop forecast sales at stores open at least a year would fall another 5% to 10% in 2019. Ironically, GameStop was once a streaming video game innovator. It bought Spawn Labs in 2011 to create a kind of Netflix for video games. But it was too early: The technology wasn’t quite ready, and GameStop shut down Spawn Labs in 2014.


Tsing Mui
News poster at The FPS Review.

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