Gamestop announced a few days ago that it would be closing down somewhere between 2 percent to 3 percent of its stores globally. Since the company operates over 6,600 stores worldwide this means that up to 190 of its stores could be shutdown. This news comes on the heels of GameStop being on shaky ground in terms of its stock and overall sales of Video Games and video game accessories.
GameStop's Issues
GameStop has struggled mightily, as the company has seen its stock drop over 31 percent in the last year. To make matters worse, almost a week ago news hit that the company announced a profit decline for the fiscal fourth quarter of 2016, which took place during the key holiday shopping season.
Sales for this year's fourth quarter were 13.6 percent worse than 2015's fourth quarter. GameStop's management also issued a more conservative profit projection for 2017 following the announcement of this news. All of this bad news combined to cause the company's stock to take a 16 percent hit. The center of the company's issues was that they are not selling enough games, with CEO Paul Raines citing that the 2016's video game category was weak, especially in the second half of the year. The company did cite the successful growth and sales of their non-gaming brands and pop culture collectibles as a positive.
The future is digital
GameStop has been the latest in the long line of old guard brick-and-mortar retailers who have been struggling in recent years to compete with the massive rise and growth of e-commerce giants, with the most notable being Amazon.
Other companies besides GameStop, like JCPenney, Macy's and Staples have all announced they will be closing stores. HHGregg and Radioshack have filed for bankruptcy recently, while Circuit City got liquidated and Sears says it is unsure if it can survive. GameStop's problem is not just people ordering video games from Amazon instead of going to a store.
Video games are becoming more Digital with the rise of Steam on the PC and being able to buy games digitally right from the Xbox or PlayStation. This trend is only continuing with digital subscription services like EA Access or Microsoft's new Xbox Game Pass.
