GameStop closing locations, losing stock value

For years, GameStop stores seemed almost as common as Starbucks. Is there a mall or outdoor shopping center nearby? GameStop is most likely inside. Through the rise of the digital age, it has survived … until now?

The current headlines for GameStop paint a bleak picture.

The first three articles indicate GameStop is closing a notable number of locations and losing stock value. According to Simon Diamond Cramer from Gamespot, “up to 225 of the company’s 7,500 stores worldwide could be facing closure.”

“The retailer’s fourth-quarter profits in 2016 had dipped by 13.6% since those from the prior year, prompting its stock to plunge by 31%. These losses were made in sales of both new games and new consoles, which GameStop attributed to ‘aggressive console promotions by other retailers on Thanksgiving Day and Black Friday,’ as well as ‘weak sales of certain AAA titles.'”

The downfall hints that perhaps not even new hardware can reinvirgorate the old business model of selling physical video games at stores. More people are downloading games and buying consoles and other accessories through online means.

GameStop’s reported struggles come after the company boasted about how well the Switch from Nintendo initially sold.

“Just a note on the Switch launch: We have had a very successful launch so far, with high attach rates of software, particularly Zelda and related addons,” said GameStop CEO Paul Raines (via Gamasutra). “The Switch has provided a dramatic lift in traffic in-store, and has real potential to be Wii-like in its potential to expand the gaming category from core to broad audiences.”

The Switch gives GameStop a glimmer of hope. Because the Switch is not equipped with a lot of storage, many gamers will choose to buy physical Switch cartridges in order to save space. A large portion of GameStop’s profits come from selling used video games, so the chain depends on the buying and selling of physical media. Nintendo is slowly embracing the digital age though and could add storage later.

But, the store is expanding beyond games too and most GameStops now sell used smartphones and other nerd-related items.

Is GameStop set for a rebound, or will the slow slide continue?

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