GameStop was once a force in the industry, especially last generation when digital games weren't quite as popular, and the used game market was thriving so much that video game publishers made efforts to stop it (like with the dreaded online pass). Unfortunately for GameStop, the rise of digital gaming has seen it lose a significant amount of business, to the point where its stock has plummeted, and according to a new report, it is almost assuredly dying.

This report comes from Business Insider, which analyzed GameStop's low stock price, what that means for the company's future, and how it got itself into its current predicament. The report also consults with video game industry analyst Michael Pachter for added insight on why GameStop is dying.

Unsurprisingly, the report points to the start of the current console generation, where digital games were made more accessible than ever before. And with the ability to easily game-share between family members and friends, digital games became arguably more valuable to consumers.

Report Says GameStop is Dying, Analyst Predicts When It Will Go Out of Business

GameStop, perhaps realizing that there really wasn't anything it could do to stop the rise of the digital game market, started looking into other ventures. For example, in 2013, GameStop purchased Spring Mobile stores. But instead of generating significant profit for GameStop, Spring Mobile just ended up putting the retail giant in debt. "[GameStop] went from no debt and generating about $400 million in cash, to $800 million in debt and generating $300 million in cash," Pachter explained.

GameStop's struggles saw an attempt to sell the company off and go private back in February of 2019, but it failed to find a buyer. Pachter believes that GameStop couldn't find a buyer because at the time, it was unclear if the upcoming Project Scarlett and PlayStation 5 consoles would have disc drives, and so it would have been a significant risk to purchase the company, as its entire business model hinges on discs.

And now that we know both Project Scarlett and PlayStation 5 will have disc drives, Pachter believes that the new consoles will be enough to keep GameStop in business for at least another 10 years. However, as we continue to move toward an all-digital future, it's unlikely that GameStop will be able to survive beyond that, barring some sort of miraculous reinvention of itself.

Source: Business Insider