The Next Generation Of Video Game Consoles Could Be The Beginning Of GameStop's Death

from the stop-discing-around dept

Predictions about the death of video game retailer GameStop have been with us for at least a decade. There have been many reasons for such predictions, ranging from the emergence of digital downloaded games gobbling up market share to declines in retail stores generally. But there are two recent new headwinds that might frankly be the end of this once ubiquitous franchise as we know it.

The first headwind is one common to all kinds of retailers currently: the COVID-19 pandemic. The pandemic is actually almost certainly worse for GameStop compared with retailers for other industries. As noted above, sales for the industry have long been trending towards digital downloads. Yes, there are still those out there who insist on buying physical media games, and in many cases there are good reasons for doing so, but the truth is that market was shrinking steadily for a long, long time. With the pandemic both shuttering many retail stores and keeping scared consumers out of those that remain open, the digital market share in the gaming industry has grown quickly. Whether anyone will want to go back to buying physical copies of games, new or used, is an open question.

All of which might not ultimately matter, as the other headwind is the next generation of consoles being released with options for no built in disc drive at all.

The latest quarterly earnings report from GameStop doesn't show much sign of a turnaround for the long-troubled game retailer. Sales were down 26.7 percent year over year for the April through June quarter. Even accounting for permanent store closures and COVID-related reduced operating hours, so-called comparable "same-store" sales were still down 12.7 percent year over year. GameStop's already depressed stock is down nearly 8 percent on the news, as of this writing.

GameStop still publicly sees an "opportunity to capitalize" on the upcoming release of new Sony and Microsoft consoles, which could help turn its business around in the short term. But there's some reason to believe the coming generation of consoles could actually make GameStop's long-term prospects worse, thanks to console options that get rid of disc drives entirely.

During a recent earnings call, CEO George Sherman tried to spin this in the opposite direction, pointing out that the new consoles include an option for a disc drive as a reason for optimism. A huge chunk of GameStop's money is made reselling used games that are marked up considerably. If the best a cheerleader for the company can muster is pointing out that, at least for this generation, some of the consoles will still have drives... well, that isn't great.

Especially when you put this all in context. Both Microsoft's Xbox and Sony's PlayStation forthcoming consoles have options for discless devices that are priced significantly less than the alternative. That represents yet another reason why some gamers, who might not have gone all digital otherwise, will be jumping ship. Between the virus pushing more gamers to download games digitally, lower priced consoles in the middle of an economic downturn, and the general trends that pre-date the pandemic, the analogies some are drawing to GameStop's future aren't pretty.

Sherman confirmed in the earnings call that GameStop will sell these disc-drive-free consoles in its stores, a move akin to a world where Tower Records decided to sell iPods as its physical album sales cratered.

Yikes.

Now, none of this suggests that every gamer everywhere is ready to give up discs. Nor should this be taken to indicate that retail game stores are going to become fully extinct. In fact, I don't think the Tower Records analogy is the best that can be drawn, even if we stay in the music space. Instead, it is beginning to feel inevitable that GameStop, or other companies, will be become like modern day record stores: there to cater to the niche market of those that want CDs and vinyl, with all of the nostalgia that's as important for buyers as the product itself.

But it sure as hell won't be the GameStop of the last two decades.

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Filed Under: consoles, digital delivery, retail, video games
Companies: gamestop


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  • identicon
    harrysan, 11 Sep 2020 @ 7:51pm

    I've been buying used games a year later for $20 for years. That's why I like discs.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2020 @ 7:52pm

    beginning?

    reply to this | link to this | view in chronology ]

  • icon
    Thad (profile), 11 Sep 2020 @ 8:17pm

    I think we're a little late for this to be the beginning of GameStop's death.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Sep 2020 @ 8:59pm

    The last time i walked into a Gamestop, they still sold games and consoles, but also had a bunch of random "game-related" toys, shirts, coffee mugs, and other items. At the time I thought they were just trying to offload the items they had from their Thinkgeek acquisition, but this might be the direction they end up going in the future.

    reply to this | link to this | view in chronology ]

    • identicon
      teka, 14 Sep 2020 @ 5:12am

      Re:

      They murdered ThinkGeek's wonderful website and creative products just to have a brand to hide behind for the Tshirt and Funko market. I assume they think they can leverage this but I think it has been a bust so far.

      reply to this | link to this | view in chronology ]

  • icon
    urza9814 (profile), 12 Sep 2020 @ 5:06am

    They sure aren't going retro..

    No way is Gamestop going to go retro and focus on older consoles. As far as I can tell they seem to deliberately try to stay out of that market. Sure, they'll sell whatever they get in trade-ins, but have you ever tried to buy any specific older hardware from them? Every time I've looked, even for stuff just one generation old, even for stuff that's still being manufactured, whether it's controllers or games or consoles, you've gotta search every Gamestop in the city and hope you get lucky. You might end up driving two hours just to find a single controller...or you could just buy it on Newegg. I bet they're already trying to get all the PS4 inventory out of their stores....

    reply to this | link to this | view in chronology ]

  • icon
    Grey (profile), 12 Sep 2020 @ 8:34am

    I haven't patronized a Gamestop or Thinkgeek since the day they forcibly bundled their stash of NES classic consoles with a bunch of other junk to clear their warehouses. Until that point, I'd purchased every console since the PS1 from my local store.

    I get that they're desperate to survive as physical media fades, it was why I still enjoyed going into a store and getting a copy that couldn't be revoked by a license after the fact.

    Never again, not one red cent.

    As we saw with these bundles, there are plenty of other folks out there willing to throw their money at them. (just not enough to save the company). I get the same product, for the basic retail price at my local Grocery/Etc store without the feeling of being disrespected by Corporate (I truly feel bad for Employees stuck between the customer and Corporate).

    "Long story short, ThinkGeek told us they've managed to stockpile "thousands" of the popular discontinued console (thanks to corporate overlords at GameStop) and will be selling them today at 12 p.m. PT sharp, limit 1 per person, and only in the United States.

    And -- yes -- ThinkGeek too is scalping them to some degree. They'll only be available in bundles with a bunch of other Nintendo merchandise, with prices ranging from $140 to $220. (The going price on eBay is around $200, for your reference.)"

    https://www.cnet.com/news/nes-classic-thinkgeek-nintendo/

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Sep 2020 @ 9:16am

    They could survive by becoming download centers

    Many people are stuck on internet with caps. Those caps make downloading a few TBs of data per month to update all of your games, unrealistic. Future updates for consoles will allow you to pause updates or downloads until a future date. Either the beginning of your next allotment of data, or when you transport your console or possibly just a plug in drive for it, to a local data center like GameStop could be, to download and update everything on their local network.

    If they have localally hosted copies of the games for the consoles, they can sell other things while the people have their machine at the download bar, updating to the latest and greatest.

    The key is not trying to hold on to how the gaming world used to work. To survive is to adapt and change with the market. If not, they will be another Blockbuster Video in a Netflix era.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Sep 2020 @ 11:54am

    I can buy a game sell it or swap it or trade it in .
    Once you buy a digital game theres no value to it.
    i would go to a game store and buy old games for 20 dollars .
    the nex xbox 299 console has no disc drive.
    it only has 500gig drive space.
    Games are getting larger in size.
    not everyone has fast broadband to download a 300gig game.
    the main way gamestop makes money is by buying old games and selling them
    for a 10-20 dollar markup.
    People that want retro games or consoles will buy em from an online store.
    if every xbox ,ps5 game is gonna be 4k and hdr the game files will be very large.
    Just provide a good service and have new games in stock is the only way game stores will survive,
    like music shops are switching over to selling special editions and vinyl to
    survive

    reply to this | link to this | view in chronology ]

    • icon
      Eldakka (profile), 13 Sep 2020 @ 5:10pm

      Re:

      it only has 500gig drive space.

      storage is expandable through standard USB external HDDs or by proprietary SSD plugin modules.

      if every xbox ,ps5 game is gonna be 4k and hdr the game files will be very large.

      The cut-down xbox is way cut down from the X version, 20 1.5GHz CUs vs 52 1.7GHZ CUs, not only is there no way in hell it'll be able to do 4k, MS has said it is intended for 1440p play. Therefore while the games are still going to be large, I would imagine the 'S' games will be smaller than the X version of the games. Even if they aren't significantly smaller, I wouldn't expect many games in the early release year or two to be over 100GB, still that's only 5 games without storage expansion or deleting completed games until one can purchase additional storage. Also, both the new Xbox and the PS5 are designed from the ground up for games to be delivered and stored compressed, with embedded hardware uncompression engines. Therefore newer games should all come in at far less than 100GB in their now native compressed storage format.

      But the S console is aimed at those on a budget anyway, therefore purchasers will have to make some sacrifices if they want the budget $299 console vs the full-fat $499 one. As is always the case with people wanting the budget version of something.

      But the thing I expect is that most of the people who want and can afford the X will most liklely not be people on a budget, who would either have decentish broadband (enough at least to download overnight) anyway and/or be the type of people (like me) who don't bother with 2nd-hand games (Gamestop's bread-and-butter) and just buy new games at full price or when on special. And are just as likely if they do buy physical discs to do that online as well anyway direct from a Steam or GOG (or Kickstarter) that offer physical purchase options.

      reply to this | link to this | view in chronology ]

  • icon
    Ehud Gavron (profile), 12 Sep 2020 @ 12:04pm

    Gamestop is done.

    Too many people want to pretend that things aren't changing... that they'll "go back" to "the way things were."

    Gamestop is done. They're not the first. Think of Tower Records, Blockbuster, every movie theater, Dave & Busters, etc. People seem to not want to die, and if that means ditching high-density party zones, well then, that's what it means.

    So yes, you can debate whether you'd rather spend $20 at Gamestop and get a real CD or whether the new console can play it vs $5.99 on Steam, but really you're just debating which chord the band should play next as the Titanic sinks into the icy ocean.

    Don't take my word for it. Take corporate's numbers... take store numbers, and finally, look at where console mfgs are going. They're done with the CD stuff.

    Gamestop - It's dead. It just hasn't stopped thrashing yet.

    E

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2020 @ 11:27am

      Re: Gamestop is done.

      Don't take my word for it. Take corporate's numbers... take store numbers, and finally, look at where console mfgs are going. They're done with the CD stuff.

      Almost. Re-read their words to find their hidden desire:

      1. We want to ensure the only thing you get are worthless bits. (Or bits that we get a cut of the resale profit on. What? Car manufacturers and the carpenter that built your house don't have any claim to resell profits so why should we? Because it's imaginary property, you just think you own it.)

      2. If we can move everything to streaming then you won't even have the game engine or asset data to play the second you cancel your subscription. Let alone 20 years from now when we have long abandoned the servers and have the new "remaster" on the latest system you'll need to shell out for. Private servers? Open source game-engine re-implementations? Without the asset data you'll have quite a bit of a hard time recreating things. Plus, we're sure as hell not going to be releasing anything ourselves. Why would we? Creating new avenues for people to avoid paying us money in perpetuity after going to such an extent to get rid of them, absurd.

      Too many people want to pretend that things aren't changing... that they'll "go back" to "the way things were."

      Not a single person who's pro consumer rights condones what the video game industry is trying to do. The industry has been trying to do this for a decade now regardless. The whole push for this is to get in on the SaaS gravy train and force it on an entire industry. I'd say that's quite the resistance. It's also proof that the "free market" doesn't care about what consumers want. It cares about making as much money as possible, damn be everyone else.

      Don't take my word for it. Take corporate's numbers... take store numbers, and finally, look at where console mfgs are going. They're done with the CD stuff.

      All of which are easily manipulated, and shouldn't be trusted on their own. After all, they come from the very people who would benefit the most from such a change. The first rule of any capitalist transaction is information manipulation to give yourself leverage in negotiations. (Not that the current market negotiates with consumers in any sense of the word mind you.)

      Gamestop - It's dead. It just hasn't stopped thrashing yet.

      That much is true. Hell, my local one got a call from regional while I was in the store saying to cut hours for the next week from their staff of one person because the store didn't make enough money the week prior.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Sep 2020 @ 2:03pm

    Playing games on pc is completely different from sitting on a sofa playing games on a TV,
    I don't care if games on pc are free or 5 dollars,
    There, ll always be a more casual gamer who likes to play console games. Blockbuster went out of business because people can stream TV, watch Netflix, Disney TV online etc like people play music on phones rather than buy cds.
    MS and Sony make more money selling digital downloads than making a physical games disk
    There will always be people who want to buy games on disc as long as the game stores are in business
    Most retail stores are having a hard time now due to covid and the recession

    reply to this | link to this | view in chronology ]

    • icon
      Ehud Gavron (profile), 12 Sep 2020 @ 3:16pm

      Re: Most illiterate rant ever

      About the only thing you got right is you "don't care if games on pc[sic] are free". Good for you. The rest of your run on half-sentences (I didn't even think that could be done) are making your English teacher turn over in her/his grave.

      You should apply at the White House. Donald is looking for morons to write his whines for him.

      reply to this | link to this | view in chronology ]

    • icon
      crade (profile), 14 Sep 2020 @ 11:03am

      Re:

      You realize that computers work just fine with tvs and both playstation and xbox controllers?

      reply to this | link to this | view in chronology ]

  • icon
    mark (profile), 12 Sep 2020 @ 11:15pm

    what future?

    Sounds a lot like Blockbuster when Netflix kneecapped 'em to me.

    reply to this | link to this | view in chronology ]

  • icon
    Ben (profile), 13 Sep 2020 @ 7:38am

    Tell me again why I should care that the horse buggy manufacturers were put out of business by a change in the market?
    (Individuals' jobs aside, that is. Thankfully, individual sales people can be taught to sell other things, or do something actually productive with their time.)

    reply to this | link to this | view in chronology ]

    • icon
      Ehud Gavron (profile), 13 Sep 2020 @ 8:36am

      Improvise, Adapt, and Overcome

      They failed to do anything other than attempt to stifle the competition. Had they improvised, adapted, they would have overcame the change and embraced it. The same is true for GameStop. They have lots of physical retail space and display space for games. If the games are not physical in nature that space can be used for other things.

      Hallmark is a niche product but yet they have physical retail stores and they turn handsome profits on selling $2 cards with simplistic sayings. (With all due respect to Mr. Deeds...) GameStop needs to improvise, adapt, and overcome.

      E

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 13 Sep 2020 @ 1:27pm

    Gamestop had 2 parallel business models, neither one of which has been doing well in the last few years. On one hand they are selling game futures (reservations) by letting you pre-order upcoming games at MSRP with a small deposit. On the other hand they are operating a pawn shop specializing in video games.

    If you want to purchase a new game within a week of launch the odds that they would have it is pretty low even though the big box stores will have dozens of copies available.

    Accellerating digital sales of games with the next console generation is just another nail in their coffin.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 13 Sep 2020 @ 3:42pm

    If you have followed any of the digital download items and what their course wound up to be, you would refuse to buy a digital download only machine.

    How many of you invested in a digital music library only to find some years later the company you bought them from went under, allowing you only so many days before your on line listening pleasure was cut off completely?

    Did you buy a Nest before Google bought them out, only to find Google refused to support for previous models making them non-functional?

    Or did you buy into Phillips Hue's lighting system, only to find out later after purchase, Phillips undated the software wtih DRM that only allowed Phillips light bulbs to be used at higher costs. Then you found out some years later that Phillips dropped Hue for a newer system making the old system non-functional?

    Sorry but I've given up on digitally tied to the internet purchases. Ones that you buy but don't own.

    Xbox has one for you if you haven't. All the old games you loved at a real cheap price compared to the original game price. Only you have to be a paying member of their gaming club to access the game after purchase. Stop paying for the club membership, you can't access the game. Not much of a bargain at all in that light.

    reply to this | link to this | view in chronology ]

    • icon
      crade (profile), 14 Sep 2020 @ 8:44am

      Re:

      "Sorry but I've given up on digitally tied to the internet purchases. Ones that you buy but don't own."
      But the same thing on physical media is cool.. As long as you still own the plastic after they disable the game

      reply to this | link to this | view in chronology ]

  • identicon
    Rekrul, 14 Sep 2020 @ 9:07am

    The next generation of video game consoles will the final nail in the coffin of game preservation. When games go all digital, can't be truly backed up and are dependent on remote servers to get their patches and updates, game preservation will become a footnote in video game history.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2020 @ 11:48am

      Re:

      You underestimate human ingenuity and persistence. There's no lock that a smart man can't figure out how to pick. Game preservation isn't going anywhere.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Sep 2020 @ 12:54pm

        Re: Re:

        There's no lock that a smart man can't figure out how to pick. Game preservation isn't going anywhere.

        Given that all game streaming is just a video feed, your lock picking won't be very fruitful.

        The best you could hope for would be to use photogrammetry to reconstruct some of the visual aspects of the game. (Specifically the models and their textures.)

        Only downside is that such behavior would be easily detected by a game server. As getting the needed footage would require avoiding special effects, multiple passes through each area from different directions, avoiding interactions or scripted events that would cause the scene to change, lots of loading zone changes to reset areas, constant camera adjustment, etc. Individually, each one is innocent enough, but it would be hard to get usable footage with just one behavioral tick. Some of those behaviors are also the kind used by exploiters and speedrunners. Anti-cheat will also be on the lookout for them in addition to the anti-copying protections. Which means those violations will probably see an upgrade in severity and punishment.

        Even getting past that challenge still only gives you the models and textures. You still need the audio, and game mechanics will have to be figured out from studying the footage and interviewing reliable gamers. Only then you'll finally be able to start where your average open-source game engine project does today. Most of which never finish their work.

        In short it's not impossible, but the barrier to entry just got a lot harder. If anything it would only be attempted by severe enthusiasts for a very small handful of meaningful and beloved titles.

        reply to this | link to this | view in chronology ]

      • identicon
        Rekrul, 15 Sep 2020 @ 9:21am

        Re: Re:

        You underestimate human ingenuity and persistence. There's no lock that a smart man can't figure out how to pick. Game preservation isn't going anywhere.

        Is there a preserved copy of P.T.? Not the remakes (which can never 100% replicate all of the original's secrets and Easter eggs), but the actual short game for the PS4.

        reply to this | link to this | view in chronology ]


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