Wednesday, April 3rd 2019

GameStop Records Worst Losses in Its History, Hinting at a Digital Future

or maybe that headline should read "Digital Present", because in many ways, it certainly seems we are already living in a heavily digital present. GameStop, one of the leading physical retailers for both new and used games, that usually has trade-in programs for games consoles as well, has reported a staggering $673 million loss in its 2018 performance.

All facets of GameStops' business have worsened: new hardware sales, new software sales, and pre-owned (which declined some 13.2% YoY) all lost money for the company, with no bright spot to be seen anywhere in the previously bright sheen of this particular part of the retail games and entertainment market. GameStop spoke of a "new cost savings and profit improvement initiative in place, we will focus our efforts on driving profitability", which justifies the company's positive outlook for 2019. How GameStop is optimistic about its future with these losses and a projected 5-10% lowered sales for the games market throughout 2019 is somewhat of a strange marriage of concepts, but if it works for the company, it works. Especially with the increased effort from a number of companies in bringing cloud gaming to fruition, with Google's Stadia and Microsoft's own expected push, it seems that a hugely important part of the market for the likes of GameStop (and let's mention other, digital storefronts as well) is going to be left dry without any sort of cut in game sales.
Source: GameStop
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47 Comments on GameStop Records Worst Losses in Its History, Hinting at a Digital Future

#26
altcapwn
It's kind of sad for the physical market. I miss the good old days when you were going to the store to rent a game, to buy a game and you were super excited and couldn't wait to get home in the car while watching at the box and reading the manual.

Haaa well, things change.
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#27
newtekie1
Semi-Retired Folder
64K
Nothing pushes me out of a store faster than pushy salespeople. I think the employees only make slightly above minimum wage, get no commissions and get pressured to meet sales quotas anyway. Doesn't sound like recipe for a pleasant work environment to me.
IDK, maybe it is just the one by me, but they aren't like that to me. In fact I rarely see them out from behind the counter. I mean, when I go up to pay, they'll offer a few other things relevant to what I'm buying. Like the last time I went in there to buy a PS4 controller(which I was actually using for PC, but they didn't know that) they asked if I was interested in any charging cables or a charging rack and asked if I had looked at their pre-owned PS4 games. But nothing pushy.

Ironically, I had looked at their pre-owned PS4 games, and all their pre-owned games and systems. The problem was they had several pre-owned games priced higher than the new games. Their used PS4 price was even still higher than the price of a new one. They don't seem to have their crap together. They used to thrive on pre-owned, and made a good profit at it too, but once they price something pre-owned, that's the price it says at it seems, and they aren't moving any product that way. Plus, places like Disc Replay(which has its own struggles) are really eating into their pre-owned profits.
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#28
Easy Rhino
Linux Advocate
lexluthermiester
I still shop there. PS4, 3DS and Nintendo Switch games. Granted, there are other places to shop for physical games. It just not fun to shop there because the staff is require to be so damn pushy. Other places you don't have to deal with that.
That's true. The last time I was there, circa 2015, I bought a single PS4 game and they kept up-selling me on all this crap.
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#29
rtwjunkie
PC Gaming Enthusiast
Deathy
And in doing so prices for games have decreased, ease of use has increased and everyone is happy.
Mostly. However, at the 6 month to a year point, check prices for physical copies of games on Amazon. I find it’s a cheap way to pick up a game that will install on Steam or Uplay or Origin. 80% of the time you can get the physical at that point for $29.99 to 39.99 instead of the $59.99 still being charged on one of the digital sites like Steam.

The best deal I got was picking up Quantum Break Collector’s Edition Box (with goodies) for $29.99 while it still sold full price on Steam
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#30
R-T-B
Vya Domus
You never get the full picture until you are in that position, who knows.
Fair point.
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#31
moproblems99
Deathy
And in doing so prices for games have decreased, ease of use has increased and everyone is happy.
I really hope my sarcasm detector just missed on this one.
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#32
R-T-B
moproblems99
I really hope my sarcasm detector just missed on this one.
Yep. Tally up the dlc to complete a game and you'll pay more than you ever did for an old launch game + expansions.
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#33
moproblems99
R-T-B
Yep. Tally up the dlc to complete a game and you'll pay more than you ever did for an old launch game + expansions.
Even beyond that, there are no packaging costs or media creation costs. Although, I would surmise that process has a very low PPU (peanuts per unit) ratio at the scale they were doing it.

Edit: Ease of use is the same, and happiness is debatable. Although, what we have now sure is entertaining (Looking at you Epic).
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#34
rwc123
The main reason i still go to gamestop is their 7 day return policy for used games. Despite how easy it would be for game developers to produce demos for all their games, most developers dont. so i buy any game i am unsure about (which is almost all games these days) and return them when i dont like them. Incidentally i return about 3/4 of games mostly because they are usually terrible but also because amazon.com sometimes sells them cheaper new. This is probably why they are doing so poorly financially. But if you think about it, that is really the fault of game developers who spend more effort on flashy graphics story lines that only middle-schoolers think are interesting than actually fun game play.
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#35
moproblems99
rwc123
But if you think about it, that is really the fault of game developers who spend more effort on flashy graphics story lines that only middle-schoolers think are interesting than actually fun game play.
Mostly agree except for that. Good gameplay can overcome poor graphics and story or a good story can overcome poor graphics and gameplay. You have to have either a good story or game play though.
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#36
rwc123
moproblems99
Mostly agree except for that. Good gameplay can overcome poor graphics and story or a good story can overcome poor graphics and gameplay. You have to have either a good story or game play though.
A good story can sometimes overcome poor game play, but i find if i only play a game for the story, then i end up finishing it in a few days and thus return it for full refund at gamestop. And if i suspect the gameplay is poor for a new game i just go to youtube and watch someone else play through for the story.
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#37
lexluthermiester
As an aside, I worked for Software Etc in the mid late 90's. Back then we were paid a fair wage, got bonuses for reaching goals(goals that were actually reachable) and we were encouraged to "up-sell" but not be pushy. Better times!
Posted on Reply
#38
Darmok N Jalad
newtekie1
If they are looking to sell the business, I'll give them $3.50 for it, $4.50 if they want store credit, but that's the best I can do.
Easy there, big spender! This isn’t a new release.
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#39
neko77025
This is so funny to me ...

Back in 2004 I worked @ Electronics Boutique as A Assistant manager, had been their since 2000 or so. One day we had the DM, RM and A few other higher ups coming by our store. ( Our store was A big deal , always in the top 4 ). Anyhow, they were talking to us and ask what we thought the future was for EB / games ect ect. I said something along the line of ... I think it will be all online. ( was really the only PC guy in the store, everyone else were console peasants ). The DM kind of got mad and the RM ask me why ... I was telling him about steam ect ect. They all started taking about how people like to shop and hold stuff in their hands. And people loved boxes and owning A real item. And that they would always have the consols ... I said well the xbox is more like A PC ... anyhow .. they all thought I was A fool.. And I am sure my DM diskliked me after that .. she was very rude from then on.

But to this day ... I wonder if they remember me telling them this was going to happen ... I know the RM was demoted to DM and then fired when Gamestop took over ... but man I really want to know if they are thinking .. man that dumb kid was right ...

edit
Well the were all 40 - 50 .. so they might be dead by now ... ugh I am 39 .. where the hell did time go !
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#40
Vayra86
Vya Domus
Was it though ? Maybe they just mitigated their loses knowing it will go nowhere with Steam around.
Epic Games Store says hello... Of course its possible to dethrone Steam, but its not easy and will require sacrifices Gamestop never wanted to make. This happened to many other on-demand services too. You either go all out or you fail.

What happens to Gamestop is like a complete deja-vu of many retailers over here lately. They try, keep trying, revamp their store concept and try once more, when in fact everybody knows what time it is. Its a misguided holding on to the old and unable to jump onto the new. Because new is risky and unknown.

A much better path for these retailers is to reboot to 100% online and rebuild a store concept from there. This is how many other brands get their way back into the physical store while being profitable. It doesn't provide them sales, but serves mostly for visibility and to showcase and try out products, provide face-to-face customer service for those who need it, be approachable. And I think that is fine, and it is the new normal. There is still a demand for physical stores, but only because we like to go there not because we're forced to because its not available online.
Posted on Reply
#41
Vya Domus
Vayra86
Epic Games Store says hello...
They are certainly saying hello the question is for how long will they be able to wave their hand until their wrist starts to hurt. No one knows exactly what's going on with all these publishers suddenly jumping ship giving them exclusivity but you can take a guess as to whats happening. It's likely they are simply offering them much better deals and there's nothing more to it, I mean their store isn't exactly revolutionary from any point of view is it ? So what else could there be ? If that's the case then all this is a rather weak attempt and more importantly it's also probably unsustainable.

There are industries out there where there is simply an unimaginable small chance that anyone would be able to compete, take IC manufacturing, how likely it is for anyone to start competing effectively with someone like TSMC at this point ? Same thing with the current situation of digital distribution of games.
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#42
Vayra86
Vya Domus
They are certainly saying hello the question is for how long will they be able to wave their hand until their wrist starts to hurt. No one knows exactly what's going on with all these publishers suddenly jumping ship giving them exclusivity but you can take a guess as to whats happening. It's likely they are simply offering them much better deals and there's nothing more to it, I mean their store isn't exactly revolutionary from any point of view is it ? So what else could there be ? If that's the case then all this is a rather weak attempt and more importantly it's also probably unsustainable.

There are industries out there where there is simply an unimaginable small chance that anyone would be able to compete, take IC manufacturing, how likely it is for anyone to start competing effectively with someone like TSMC at this point ? Same thing with the current situation of digital distribution of games.
Why would it not be sustainable? Why are we so convinced that Valve is running a tight ship with Steam revenue? There was no competition on that revenue and its the same cut as a physical store while they distribute digitally, their margin is *massive*. So EGS eats some of that margin and invests it into better publisher deals. Totally sustainable, and totally how the market works. Race to the bottom. The idea that its all Fortnite money, while true, is no different from getting an investment from outside your own company. Well there is a difference actually, EGS stays in control this way. Just like Valve.

I fail to see the problems here...

Completely agree its a hard marketplace at this point to get into though. You need some seriously big guns at this point, and Gamestop was unlikely to have them. They had their chance though years ago, but missed it completely.
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#43
moproblems99
Vayra86
Why would it not be sustainable? Why are we so convinced that Valve is running a tight ship with Steam revenue? There was no competition on that revenue and its the same cut as a physical store while they distribute digitally, their margin is *massive*. So EGS eats some of that margin and invests it into better publisher deals. Totally sustainable, and totally how the market works. Race to the bottom. The idea that its all Fortnite money, while true, is no different from getting an investment from outside your own company. Well there is a difference actually, EGS stays in control this way. Just like Valve.

I fail to see the problems here...

Completely agree its a hard marketplace at this point to get into though. You need some seriously big guns at this point, and Gamestop was unlikely to have them. They had their chance though years ago, but missed it completely.
I think it is these social games like borderlands that are going to start causing EGS some issues. Metro is one thing. I see the EG Launcher for about 10 seconds before it loads into Metro and I don't worry about it anymore. No friends. No anything else. Just me and post apocalyptic hell. Borderlands on the other hand, is going to need a good social connection to really thrive. Simply importing your Steam friends is likely not going to cut it. Especially when half the people that are playing are already pissed off at you because it is an exclusive.

I really like all the UE4 stuff being built into the launcher.
Posted on Reply
#44
Vayra86
moproblems99
I think it is these social games like borderlands that are going to start causing EGS some issues. Metro is one thing. I see the EG Launcher for about 10 seconds before it loads into Metro and I don't worry about it anymore. No friends. No anything else. Just me and post apocalyptic hell. Borderlands on the other hand, is going to need a good social connection to really thrive. Simply importing your Steam friends is likely not going to cut it. Especially when half the people that are playing are already pissed off at you because it is an exclusive.

I really like all the UE4 stuff being built into the launcher.
Agreed, its not convenient for those games. However, developers can easily offer a Steam Link functionality to their own network if they host it. Which is really the way it should be done. In Apex Legends for example, that is how it works...
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#45
moproblems99
Vayra86
Agreed, its not convenient for those games. However, developers can easily offer a Steam Link functionality to their own network if they host it. Which is really the way it should be done. In Apex Legends for example, that is how it works...
They have that now and Facebook integration which I assume would be messenger? I don't have a Facebook so I don't really know. I get what you are saying about it but if I was Epic, I would not want to bank on Steam Link as that just validates Steam's dominance in the market. Those short terms gains though....

Edit: Just realized you said developers and not EGS
Posted on Reply
#46
Vayra86
moproblems99
They have that now and Facebook integration which I assume would be messenger? I don't have a Facebook so I don't really know. I get what you are saying about it but if I was Epic, I would not want to bank on Steam Link as that just validates Steam's dominance in the market. Those short terms gains though....
*Game developers. Not Epic. This cuts the store loose from the social link aspect. In the meantime Epic can start building its own community feature if it wants to.

Anyway, this further underlines why a store such as GameStop never had any clue how they are going digital. They have no USP and as a webshop only they fight a horde of keysellers at lowest price.
Posted on Reply
#47
moproblems99
Vayra86
*Game developers. Not Epic. This cuts the store loose from the social link aspect. In the meantime Epic can start building its own community feature if it wants to.
Yeah, I missed that initially and didn't get the edit in before your reply. That said, you see it in the forums with 'that list' that is circling that is 'serious'. Epic has to get these features in regardless what options are available for devs.
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