Game On or Game Over: Game Stops Fight in the Digital Era

By: Steven Magallon

Curtesy of AP newsroom.

The Struggle Amidst Gaming's Rising Popularity

Videogames have emerged as a transformative medium, captivating audiences of all ages worldwide into an immersive experience. Almost everyone has either heard of or played a video game at some point in their life. As video games continue to redefine entertainment and consumer habits, GameStop, the premier destination for gaming enthusiasts, finds itself at the intersection of technological evolution and consumer demand. GameStop stands as the preeminent retail gaming and trade hub on a global scale. Yet, over the past decade, the company has faced a massive set back that veer towards a downward trajectory. The disruptive force of technology advancing has played a pivotal role in this narrative, significantly contributing to decreasing sales and a decline in business prospects. As a prominent figure within the gaming community, GameStop faces the repercussions of technological advancements, while the gaming industry itself experiences the promise of innovation. By conversing with gamers who have cut ties with the store, which is another factor behind its decline, reveals a palpable concern. That concern being its potential demise could erase more than just the retail giant but also risk depriving past generations of their childhood experiences, leaving them with only memories.

A limited selection of videogames (Video by: Steven Magallon)

Games and the act of gaming are more popular in today's society than ever before, so how could a franchise like this struggle and what is it that they are doing to stay relevant?

Explodingtopics.com reports that the video game industry has grown drastically and increased in value at an all-time peak of $106.8 billion. “Since 2012, the video game industry has increased in value in eight of the last 10 years. In fact, the gaming space is now over 3x what it was in 2012 ($31.23 billion),” Explodingtopics stated.

Additionally, Explodingtopics also reports that in the last quarter of 2023, the number of gamers increased to approximately 3.7 billion worldwide across all platforms combined. Such high numbers emphasize gaming's popularity, generating substantial income, yet GameStop’s downfall remains undeniable, reflecting a significant and troubling decline in their business. The rapid advancement of technology is nothing new or something to be shocked about. However, it’s how fast it enhances the quality of something or how quickly it can end things. The franchise isn’t what it used to be. GameStop used to be the place for gamers of all ages, eager to purchase a game from a massive selection. Today it’s the exact opposite of what it used to be.

What Happened?

GameStop in Hurst (Photo by: Steven Magallon)

Technology has impacted this business in a number of ways and their lack of effective adaptations or responses to counter these challenges have been poorly received. According to GameStop’s 10-k form, found in section eight “Financial statements and supplementary data,” their number of sales have strongly decreased and have continued to do so. In 2021, their net sales went from 6,010.7 million to 5,927.2 in 2022, and further dropped to 5,272.8 million in 2023. Some may argue that the pandemic could’ve played a role in the reason why all retailers are seeing a financial crisis. However, this franchise specifically was already experiencing substantial losses before the pandemic even started.

In an attempt to seek the reasons behind the drastic declines within the franchise, GameStop's corporate office in Grapevine would not get back to me in a timely manner. In addition, Managers across North Texas refused to speak. However, technology experts, gamers and employees at these locations shared their experiences revealing major aspects that contributed to the corporation's massive setback.

Jason Brunson, a software engineer at Nutanix, spoke on how technology has impacted retailers and its ramifications.

“Technology advancing has allowed retailers to provide their goods via the Internet. By the Internet using e-commerce, it has allowed them to gather information on their customers and to help better serve them,” Brunson said. “However, in many cases it can augment what traditional store locations offer and it allows retailers to deliver goods in a very timely fashion. In some cases, it may overtake the traditional Brick and mortar store, which is what we're seeing here with GameStop.”

To comprehend the magnitude of the situation I conducted a survey that reached one hundred gamers, to assess how technological advancements have impacted their experiences with GameStop and the gaming industry. The survey revealed that 44% of gamers have not been to the store in over two years and 39% can't even remember at all. The reason behind that is because the emergence of online stores and introduction to next generation consoles have significantly affected the demand for existing products.

Survey (Conducted by: Steven Magallon)

Survey (Conducted by: Steven Magallon)

Courtesy of Pexels

The Survey's Results

According to the survey's findings there is a noticeable societal trend where consumers are shifting to obtain their content through other online platforms aside from GameStop, as well as buying digital versions of their media.

In addition to the survey, I left a unanimous section for players to further explain their choices and experiences. For one gamer they expressed digital is the now, resulting in their choice.

"I love the physical disc and going to a store, but the way everything is nowadays it just makes it easier to keep everything digital unfortunately," the unanimous gamer said.

Another stating, "GameStop is a scam, buy the games online, most systems don’t even have a cd port anymore. Physical Game copies are dead."

PS5 (Photo by: Steven Magallon)

PS5 (Photo by: Steven Magallon)

“The reason why I know GameStop will die is because of technology and it’s that simple," Kobe Garcia, a professional PC gamer, said.

Garcia got into gaming at the age of 7 and has owned every console after the PlayStation. He explained competitors are no longer other retailers, but online stores instead.

“In-game purchases use real money," said Garcia. "With a large, dedicated fan base purchasing skins or other downloadable content can lead to the producer getting thousands and thousands of dollars, sometimes on one purchase. This is common through all platforms but especially through the PC platform.”

The Introduction of Next Generation Consoles

One of GameStop's risk factors in there 10-k forum is specifically related to next-generation consoles like the PlayStation 5 and Microsoft Xbox series X which debuted after 2020. After its debut, the demand for physical media decreased as new systems are being made without cd ports. This would bring rise to a new problem for GameStop, being in game purchases.

According to paypalobjectives.com, starting in 2018 between February and March, gamers were spending on average $36.31 on in game purchases and even more on streamer support. The average game in recent years is about $70. Despite this, while the average spending of $36.31 per gamer, multiplied by thousands of gamers who are likely purchasing in game content on a daily basis, proves that gamers have been spending more on in-game downloads than that of full games themselves. This has been a huge trend in major games that are free to play like Fortnite and Brawlhalla, games that have over millions of players.

Gamer playing Counter Strike 2 on PC (Photo by: Steven Magallon)

Gamer playing Counter Strike 2 on PC (Photo by: Steven Magallon)

Other Major issues at hand

An empty store with only one of two walls with media by: Steven Magallon

Lack of Business

Not only did GameStop's records and the survey conducted reveal a massive decline in business but it encouraged employees to come forward with their observations as well.

James Watson, 22, an employee at GameStop, shared his experiences.

"In the time that I have been here and from my past experience as a customer, people don’t come in as often and it’s not because games aren't popular, games are still very much popular it’s just the way we purchased them has changed," Watson said.

Another worker who asked not to be named added that gamers have a tendency to be antisocial, which is something to take into consideration as society delves deeper in the digital era. Especially when it's convenient to purchase something at home with little no human interaction required.

In Game Purchases

In-game purchases associated with free to play games generate revenue through microtransactions. This contributed to reshaping consumer spending habits while accumulating profits that go directly towards developers. As a result, traditional brick-and-mortar stores like GameStop find themselves marginalized in an increasingly digital market.

Physical media (Photo by: Steven Magallon)

Physical Media is Becoming Outdated.

The Digital Bits reported in October of 2023, that Best Buy is planning to remove all physical media. Stating that the way people watch their content today, is way too different. Since it's clear physical media will be the next to go, this led me to ask GameStop employees what is going to happen when other places get rid of their media or will they follow in their footsteps.

Mark Olmos, 28, a Game stop employee for 3 years with a past in retail spoke on what he's seen in the industry.

“I used to work at Movie Trading Company, and the reason why businesses like them and best buy can stay alive is because they sell a variety of things." Olmos said. "We sold movies, cd’s, vinyl's, old and new consoles, stuff that would be considered vintage. Look at Best Buy, they sell smart fridges and fix computers.”

Olmos also added that best buy planning to remove media wouldn't have a huge effect on them like it would GameStop.

"Unless whoever is higher in charge can implement anything great, but this is the way it is as of now," Olmos said.

GameStop promoting anything but video games on their Facebook page, (A Screenshot by: Steven Magallon)

GameStop promoting anything but video games on their Facebook page, (A Screenshot by: Steven Magallon)

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The Results

GameStop has an online store as well, but workers expressed if they had to shift to becoming completely digital, they wouldn't survive. The store continues to stay open generating as much profits as they can, selling other merchandise aside from videogames. However, the negative impacts posed by technology out way the positives and have done so or some time, causing job displacement and loss of financial income.

Nir Patel, COO of GameStop, helped GameStop's financial sales in recent years which was why I reached out to him for an interview. Despite the outreach, Patel did not respond. On April 4, 2024, streetinsider.com reported he resigned for failure to meet financial needs.

My research not only showed what consumers prefer but reveals that GameStop risks becoming the precarious future reminiscent of past industry giants like Blockbuster and RadioShack. The failure to adapt with changing times and consumer needs, has left them in a vulnerable position. Without any efforts to enhance in-store experience or pivot towards stronger digital platforms it's only a matter of when it will meet the same fate as its predecessors.