GameStop, the OG of the gaming industry, has shut down thousands of its stores in the past few years. Does that mean- Is GameStop going out of business?
Even for the oldest and most beloved business, surviving in this era of digitization and e-commerce is becoming extremely challenging.
So, what happened to GameStop exactly? Does it have a future? Let us dig deep and find answers to all these questions in this guide!
GameStop is a popular video game retailer that has been around since 1984, and ever since, it has survived many pitfalls, the most recent one being the most brutal.
Ever since its inception, GameStop has been captivating game fanatics and casual players with its wide array of consoles, games, and other accessories.
GameStop has seen customers coming to its stores not only to purchase the latest edition of video games but also to seek guidance, connect with other gamers, and engage in gaming discussions like no other.
Additionally, the company has persevered in the changing e-commerce landscape and has taken plenty of steps to stay relevant.
However, the rise in e-commerce and other factors have affected the company deeply in the last few years especially.
Keep on reading to find out why GameStop has been struggling and if it is going out of business.
Why Is GameStop Struggling?
The most iconic video game retailer, GameStop, has battled its fair share of financial struggles over the years, even battling a series of bankruptcies that shook people.
Here are reasons why GameStop is struggling financially:
Rise in Digital Gaming
The biggest reason why GameStop is in a financial crisis is because of the rise in digital gaming and online distribution platforms.
Gamers, these days, prefer to download video games directly on their consoles instead of visiting a brick-and-mortar and making a purchase.
The availability of speedy internet and access to high-speed broadband has pronounced the shift even more.
Even publishers and game distributors are shifting towards online distribution models. The ease of purchase with the rise of e-commerce platforms such as Amazon has reduced the need for offline stores considerably.
All these reasons are making it hard for brick-and-mortar GameStop locations to stay afloat.
Adding more to the misery, the COVID-19 pandemic also impacted the sales of GameStop greatly.
In 2020, in fact, 83% of the total game sales accounted for digital games, and GameStop had to close down a few of its stores temporarily, which reduced the company’s revenue even further.
Declining Stock Prices
The constant decline in GameStop’s revenue because of the aforementioned reasons led to a decrease in its stock price.
Over the last few years, the stock price of GameStop has declined by 41%. And because of this, the investors are losing faith in the company.
GameStop’s struggle with declining sales and increasing debt has led to the company’s culmination in multiple bankruptcies.
However, in spite of numerous challenges, Gamestop is trying to transform and adapt to the changing trends.
The Rise & Fall of GameStop:
The Recent Turnaround of GameStop
In spite of grappling with continuous losses, bankruptcies, and other challenges, GameStop has been able to turn the tables around.
In a surprising twist of events, In 2021, GameStop announced making a profit of a stunning $48.2 million as compared to the net loss of $147.5 million in the prior year, surging its stock prices and gaining the confidence of investors.
The improvement in GameStop performance can be attributed to the company’s persistent efforts in adapting to change.
Efforts GameStop Has Taken:
To keep up, GameStop has started expanding its business by offering goods beyond physical games. GameStop has started selling merchandise, gaming accessories, pop-culture collectibles, etc.
They are also working on their online presence, and for this, they have launched a new e-commerce gaming platform.
Additionally, they are working towards improving customer experience, and for this, they have started same-day delivery and curbside pickup.
All these changes and efforts have rendered fruits for GameStop.
Is GameStop Closing Stores?
Yes, because of declining sales and as an effort to reduce expenditure, GameStop has been adapting a de-densification strategy. This strategy involves shutting down GameStop stores that are not performing up to the mark.
As a result, GameStop closed down plenty of stores in the last few years.
- According to CNBC, GameStop closed down 195 stores in 2018.
- PCMag reported that it closed down 321 stores in 2019 as well.
- Then, in 2020, GameStop shut down 400-450 stores globally.
- In 2022, it closed down 120 stores.
- And in 2023, it is set to shut down 13 stores.
Is GameStop Going Out of Business?
GameStop still has a solid fleet of loyal customers who are concerned about the company and want to find out if- Is GameStop going out of business?
Well, GameStop has closed down thousands of its stores in the last few years and has faced multiple financial setbacks. The company is still reducing the number of underperforming stores to increase its revenue.
So GameStop is not going out of business as of now, but if it fails to improve its performance, it might not last long in the evolving gaming industry.
Is GameStop on the Verge of Bankruptcy?
At the end of October 2021, GameStop had cash and cash equivalents of $1.4 billion, so GameStop is a debt-free company right now.
And GameStop used this money to spike its stock price, which has strengthened its balance sheet. So, GameStop is not on the verge of Bankruptcy as of now.
Does GameStop Have a Future?
It seems like GameStop has been trying everything in its power to meet up with the changing trends to stay relevant and successful.
GameStop has been exploring opportunities in the blockchain, NFT, and Web 3.0 gaming. It has also been hiring tech talent. If everything goes right, GameStop will be a completely new company in the near future.
GameStop has been a pioneer in the gaming industry, but in the last few years, it has struggled a lot financially because of its outdated business model.
The company is finally taking positive steps towards adapting changes to improve its revenue and overall performance; better late than never!
Will the efforts fruit results? Only time will tell!
We hope in this article you found a satisfactory answer to -Is GameStop going out of business?
How many stores does GameStop has?
As of January 2023, GameStop is operating 4,413 stores worldwide, including 2,949 in the United States, 419 in Australia, 216 in Canda, and 829 in Europe.
Who is the owner of GameStop?
GameStop is a publicly traded company and is owned by 52.47% retail investors, 20.13% Gamestop insiders, and 27.40% institutional shareholders.
However, Ryan Cohen is the largest individual shareholder of GameStop, and he owns 36.85M shares, representing 12.07% of the company.
How is GameStop going to survive in the future?
GameStop is all set to expand its e-commerce capabilities and adapt to digital technologies and is even exploring cryptocurrencies and NFTs to stay relevant in the future.