PS5 And Xbox Series X Reveals Have Negatively Impacted GameStop's Business, Retailer Says

The Nintendo Switch, however, is selling well and might be indicative of a future turnaround.

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The holiday season is historically the most important sales period of the year for retailers, but unfortunately for GameStop, things did not go so well. The Grapevine, Texas-based retailer announced its holiday earnings today, and they dropped significantly.

For the nine-week period ended January 4, 2020, GameStop generated revenue of $1.83 billion, which is down 27.5 percent compared to the same period last year. Store sales fell 24.7 percent, which is a dramatic result given sales increased 1.5 percent during the holiday period last year.

GameStop said the downturn in sales this holiday was due in part to the "overall trends impacting the video game industry," adding that the drop-off was also impacted by the "accelerated decline" in new console and game sales, "particularly in the month of December."

PlayStation 4 and Xbox One console sales have been dropping for months now at GameStop and other retailers, with the more recently released Nintendo Switch the only major home console experiencing growth in 2019. It's expected that PS4 and Xbox One sales have fallen recently, as the systems are at the tail end of their lifecycles, having been in the market since 2013. Additionally, people may be holding off on buying a new PlayStation or Xbox right now because next-generation consoles from each company are due out this Holiday.

"We continued to see growth in the Nintendo Switch platform, which supports our view that our sales will strengthen as new consoles and innovative technology are introduced," management said.

As for game sales declining, GameStop--which trades mainly in physical media--is likely suffering at the hands of increasing digital game sales. Multiple major publishers have announced that the percentage of new games sold digitally are increasing, at times to record highs. For example, Borderlands 3 sold 70 percent of its launch copies digitally, while Call of Duty: Modern Warfare also set digital sales records.

GameStop CEO George Sherman said the retailer anticipated a "challenging sales environment" for this holiday season. "Our customers continue to delay purchases ahead of anticipated console launches in late 2020," he said.

Due to the poor sales results, GameStop is downgrading its fiscal 2019 earnings guidance. The company believes it has the "right long-term action plans in place" to help improve profitability for the company year, though no specific strategies were announced.

One way GameStop is cutting costs is by closing stores. As part of GameStop's ambitious "GameStop Reboot" initiative, the company is closing 180-200 "underperforming" stores by February 2020, with more store closures to potentially come later.

Around 55 stores are already confirmed to be closing in the United States, while more than two-dozen EB Games locations are closing or have already shut in Australia. (GameStop owns EB Games). GameStop also cut staff from its Game Informer magazine recently.

GameStop announced its holiday sales report and confirmed the downgraded projections at the end of the day on Monday, so it will be interesting to see how anaylysts and investors respond when the stock market opens on Tuesday. GameStop is currently trading at around $5.43 per share, which is close to an all-time low for the company.

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sweet_jcs

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Digital is a concern for them, but in reality it really comes down to one thing. They don't beat competitor pricing. I am a cheapassgamer and I search for the best deal and the one time in recent memory where I wanted to buy a game (Control), I wasn't ready to buy it on Black Friday. Gamestop had the holiday sale recently, but it wasn't in stock near me. I ended up paying more on ebay for it, but it's still $20 cheaper than their used price. Their website is horrible for inventory tracking on mobile phones.

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illegal_peanut

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Maybe if they gave the consumer something the other stores don't (Besides trade-ins). Then maybe they could bring their sales up a bit.

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totallytc

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This is bullshit. Console margins are razor thin. Retailers do not make money on new consoles. You hope to sell a new console with the hope that the consumer will come back to you to buy their games for it. So no, Im not buying that consoles are causing any type of revenue issue. At this point, the only money to be made in Video Game retailing is in used games. margins are good there.

That being said, Gamestop is Blockbuster. They are living on borrowed time.

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Fursnake

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If I'm supposed to fell sorry for Gamestop well, I don't.

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SkyHighGam3r

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I used to love GameStop with a burning passion - but then digital distribution happened.
I used to love Blockbuster with a burning passion - but then digital distribution happened.

You can mouth off about me 'not owning' my games all you want - and I know you will... you know who you are - but your ridiculous boogie-man tales of MS and Sony sneaking onto my HDD to delete my games is pure bull****.

On the flip-side, I don't have to deal with fantasy rpg cosplayers in period accurate body-odor trying to talk-down to me at 11:59 at night because I won't join their stupid adventurer's guild or w/e. Hanging out with Gooftard the Wizard and his band of merry Virgins isn't how I want to spend my night - plus after visiting the shire of shame, I've got to wait for the disc to install and patch before I can play? no thanks.

I much prefer digital where I am on my couch at 9:59pm, in my pajamas, chilling with my drug of choice. Everything is pre-downloaded, pre-patched, and ready to go the second that clock rolls over, and I can actually get some solid game time in before I have to go to sleep and get up for work - because we still haven't broken free from this nonsensical 00:00 Tuesday release date quite yet.

My point is, GameStop is a relic from an age that is almost completely dead. Physical games will always live on, and I think that's a good thing. Lots of people enjoy them, and that's awesome for them - do what you love.

The only part that gets on my nerves is when anti-digital gamers wanna act like my method for storing games is unreliable and absurd, all while conveniently forgetting how the words "Disc Read Error" have been haunting gamers for the past TWENTY SIX YEARS...

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skippert

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Edited By skippert

@skyhighgam3r: I never realized that this was such a big deal. Is this even a thing people are debating these days? Cause if it is, that worries me...

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SkyHighGam3r

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@skippert: It can be. People are passionate about their physical copies, which is fine in itself; I can see why people still love physical collecting. With all passion points though, there are folks who take it too far. I guess I'm getting a little overly pre-defensive about it re-reading this post haha.

Still, seems like nearly anytime I mention I prefer digital - there's some holier than thou little **** screaming at me on social media about the "evils" of digital games, often using incredibly exaggerated or blatantly false information to try to make themselves feel better for being 'woke' enough to only buy physical lol.

Those people in particular, remind me of trying to argue with an anti-vaxxer or a flat-earther. lol

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skippert

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Edited By skippert

@skyhighgam3r: Don't awaken the beast hehe. For me personally, I wouldnt collect physical copies of modern games just to collect. I mean, my younger brother for instance: Collects olders games from the NES/SNES and N64 era and he jumped a hole in his ceiling when he found a cheap cartridge TMNT Turtles in Time for SNES and I think thats pretty cool but not really for me. The only plus I see in collecting physical copies is so I can sell the whole lot along with the old console when Im done without having to discard my account along with it. But even then the bump in price is probably minimal. Other than that, digital all the way for me.

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SkyHighGam3r

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Edited By SkyHighGam3r

@skippert: I do keep a small collection of physical retro games. Usually only my absolute favorites or things I had as a kid. It's pure nostalgia though, I almost never ever ever play those. I wouldn't sell the stuff, but I don't see getting much for a console and a handful of games anyway.

I built an emulation console out of my PC a few years back, and I honestly can't imagine going back to the way things used to be with how convenient it all is.

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dynamotnt

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Edited By dynamotnt

yeah and everyone goes to ebay or facebook to buy ps4s because gamestop is either conning or mocking their customers.

In the uk there are plenty of shops going strong, in spite of lots of people selling up thinking that the new consoles are right around the corner, when in reality we have months and months before they're out.

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BasketballFan

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This is great news!

Coming from a former manager. ROT in hell.

I was there during the Funcoland-Gamestop transition, MAN what a sh*t show.

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gamerman1065

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They need to get with the program and give people a deal on trade ins and new games. I just bought Madden 20 Superstar Edition off of Ebay, brand new, never been used, still sealed for exactly half of what Gamestop wants right now. If you wait till the holidays or keep watch over random times throughout the year, digital games can be bought for any console or PC for super cheap all year long. I realize that Gamestop has to pay employees and bills to open the doors each day. But, they rely on the warranties, Pro memberships and other non gaming related items to stay afloat. I find that over half of the store is dedicated to clothing, collectibles, toys and other mindless stuff. Of course, January has been a super slow month for new games and that does not help. But, digital downloads are so convenient and the majority of games are digital download the minute you buy them and pop the disc in. Only autistic nerds, like my brother in law, pitch a fit about the fact that they have to download so much after buying a physical copy. Even then, there are some people you will never please.

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theduckofdeath

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@gamerman1065: Go on -- kick the brother-in-law in the nuts. LOL

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nickpeck36

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@gamerman1065: It's kind of hard for stores to match ebay prices like that from people that sell gifts / stolen games at low prices to make a quick buck. But you are right, most people can't be pleased no matter how "good" something is or can be.

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Richardthe3rd

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Gamestop is reaping what they've sown for the past decade. I feel no remorse or pity for them.

They could offer unique products. Imports, retro systems, those sorts of things.

Instead, they sell the same products you can find at big box retailers, often at a worse price. Their used products are poorly priced and they don't offer you enough for your trades.

There's nothing about Gamestop that demands my dollar. It's been that way for a long time. They deserve this and worse.

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Just1MoHr

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Well, they need to stop pestering their customers about PowerUp's and warranties each time. Do you know how many times I just did not feel like going into their stores, because I did not wish to be irritated with sale pitches and they end up losing sales with their aggressive tactics.

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nickpeck36

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@just1mohr: Most stores do this lol. Best Buy, Target, Walmart.... Most places you go have a sales pitch which is nothing new. All you do is say no, pay and leave... That's not aggressive at all imo, I never buy those but I don't mind someone just doing their job.

Now if you get a crazy employee that bugs the crap out of you, that's different. I have never been hounded at GS while looking around or buying anything. Hell, I hate clothes shopping anymore though, those people love to follow you around with ideas of what you should buy, now that annoys me.

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Thanatos2k

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Edited By Thanatos2k

@nickpeck36: Best Buy used to be bad at this but they've really toned it down lately. Now the best you'll get is the employee will say "It's going to ask you some questions" and the credit card reader screen will ask if you want a credit card or whatever and you press no. No awkward interactions with employees getting increasingly aggressive with you as they desperately attempt to meet quotas, which has happened repeatedly to me at Gamestop.

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Forester057

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The number of games coming out each month has slowed to a trickle as games become more like services (like Overwatch and Fartnite with seasons and regular meaningful? updates years after release). Gamestop depended on lots of games coming out so everyone would be in a rush to sell one to buy the next in a long backlog of games. Fewer games = fewer sales. And digital deals are pretty good these days. We've all got a gaming backlog of several centuries that we need to finish first before buying more games also. Life/business/everything changes is the one of those things for sure like death and taxes.

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illegal_peanut

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@forester057: Same. That's why I have a love/hate relationship with games like fortnite, and overwatch. I like some online games like them. But at the same time, I hate them because they have really killed off singleplayer, or other fun multiplayer games.

And, it doesn't help that a lot of gamers can be painfully repetitive at times. Playing the same handful of games. For ages to eons. Making games like those able to continue for years to decades.

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JSprunk

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@forester057: That and also the fact that game prices dropped like a rock over the past 30 years. (At least the games that I play.)

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liljohnsta2

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Digital is killing them

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Thanatos2k

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Edited By Thanatos2k

@liljohnsta2: Amazon killed them. I can have the game at my door and never have to deal with obnoxious employees demanding to know why I'm not trading in games with them while simultaneously explaining how they don't have the game I'm looking for which just came out because I didn't preorder it. When they stopped being a store that sold video games and became a store that sold preorders and toys there was no reason to ever buy there again.

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Fitzy_2812

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@liljohnsta2: I wouldn't go so far as to fully blame digital, at least in Australia, their store prices generally match the digital prices of the 3 console stores. Their biggest issue here is that those prices are consistently $20-30 higher then going to a larger retailer or electronics store like Big W, Target or JB HiFi. Very few people are willing to pay $99 for a game when they can get the exact same thing for $69-79 from any other store. The best part is when they tout they are having a huge sale and you walk in and see sale prices that match the standard prices of other retailers.

Back in the 90s, it use to be that EB stores were lively hubs full of people playing tabletop games and with knowledgeable staff that actually knew what they were selling and weren't throwing the sales pitch at you every chance they get. It wasn't unusual to see people spend hours in the stores and willing to pay that little extra for the experience.

But now they are empty and the staff often have little idea what the product is they are selling you while trying to up-sell you that $5 scratch protection warranty and they offer nothing to justify the extra cost your paying.

Combine that with their greedy practices of trying to skirt their own price matching policies by selling games with an extra download code or something insignificant in order to claim it as a different product and thus not able to price match or that you can buy a $99 game, trade it straight back to them for measly $10 store credit and then watch them shove a $95 pre-owned sticker on it and its not surprising no one wants to shop there anymore.

They can't even get their own prices right, a quick browse of their website and you can see multiple versions of the same game for different prices or pre-owned games priced higher then brand new copies.

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CraigTL

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@liljohnsta2: I know it did for me.... when I started buying digital I stopped going to gamestop.

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Thanatos2k

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Edited By Thanatos2k

I'm trying to care, I really am.

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DonHolio1toe

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Not suprised a bit. They lost my business when their website got hacked and my bank account drained and they offered me nothing in return for their mess up. Along with a million people or more affected, I will never buy anything from them again. I wouldnt be suprised if its the main reason they lost business and are covering it up with this BS story

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tingtong

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I’m sure approximately 0 people care.

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SystemOverload

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GameStop negatively impacts itself and the company is not going to do well basically selling what Best Buy, Target and Walmart sells.

GameStop should focus on foreign video games electronics and goods.

GameStop doesn’t offer enough to do well unless you like junk and pay a lot for it.

What is GameStop’s next step? Turn into a dollar store?

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JSprunk

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@systemoverload: That and they treat PC gamers like we don't even exist anymore. I started using Steam back in 2007 when Gamestop reduced their PC game section to a tiny shelf in the back corner of the store with ripped and ragged looking PC games that weren't even current. Instead of embracing the digital world like Valve did, Gamestop laughed and told everyone that digital PC games were going to kill PC gaming.

Well, here we are in 2020....

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jubejubekitty

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This isn't surprising as the new systems are only about 10 months away. It's that and wanting a machine that can do and play everything. I personally prefer owning a physical copy of a game if I like it. But I guess with digital copies you don't have to wait in line at the midnight launch and have the exact same experience with a digital copy. That and you don't have to switch the media out and just use the optical drive as a DVD/Blu ray Player.

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RestatBonfire

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@jubejubekitty: only downside to digital is if you lose your account you lose all your content. Or no wifi lol

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jubejubekitty

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@restatbonfire: True. But I guess that's why I always buy physical. I'll only buy digital if there's a massive sale, it's free, or that's the only format it exists in.

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RaveNRolla

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@restatbonfire: but how do you lose your account? internet is not required to play digital games once you downloaded them (at least on the ps4), rather you have to set your ps4 as your so-called "primary" ps4 and then you can play offline as much as you want. i don't know about xbox.

i pretty certain that is how it works (feel free to correct me), even though i'm barely ever offline. your ps+ games do not work offline i think, because the system needs to check wether you are a legit ps+ member. but other dlc should work fine.

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RestatBonfire

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@RaveNRolla: hacks, bans.. I lost my xbox account of like 9 years, bought hundreds of dollars worth of digital content and was permanently banned because my roommates would send out hate messages when they got mad. So I lost everything. Had a gamerscore of over 100k too. I still buy digital , I just dont live with the same douches

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RaveNRolla

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@restatbonfire: shit. sounds like a good plan to not live with them anymore. on the other hand you cannot blame xbox for banning your account on these grounds.

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Boom4Real

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The day Gamestop shuts down completely is a win for gamers. 90's chains were so much better and obnoxious people weren't pestering you with aggressive sales everytime you walked In.

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Matricks_

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What, the 3,000 new PopFunko dolls per month filling your store shelves instead of games aren't offsetting the lackluster gaming sales? And I thought it was fool-proof plan.

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