It's no secret that GameStop is struggling. The once-dominant video game retail giant was put in a position where it was nearly sold off earlier this year, and it recently reported a stunning $673 million full-year loss to investors. GameStop is looking to reinvent itself by becoming a "cultural experience," but if a new survey is any indication, it may not be enough to keep the store alive.

Piper Jaffray, an asset management firm, conducted a survey called Taking Stock With Teens, where it asked 8,000 teens about their video gaming habits. Piper Jaffray discovered that 60% of game-playing teens now prefer downloading digital games over buying physical copies. Just two years ago, this number was as low as 45%, meaning that as time goes on, more people prefer digital over physical.

GameStop's entire business model is based around selling physical video games, and so this certainly isn't good news for the already-struggling store. It also buys used games cheap to sell them at a high markup, and if there are less physical games being purchased, it stands to reason that there will be less used games for GameStop to stock its shelves with. Moving forward, with video game streaming set to be a major feature of next-generation consoles, it seems like GameStop's business will continue to take a hit.

gamestop cultural experience 2.0 initiative

GameStop is already preparing its investors for a rough 2019. In an earnings call, it was explained that due to the impending announcements of the PS5 and next Xbox, consumers may be less likely to purchase the PS4 or Xbox One. This means a dip in GameStop's hardware sales, though a hardware sales bump could come next year when the next-gen consoles drop.

And when it comes to purchasing new consoles, that is one area where even GameStop detractors may miss the store. Larger retail chains like Walmart and Target can sometimes make getting a new console on launch a pain with long lines and basic or nonexistent pre-order services. And with Amazon, there's always the chance the console won't arrive on launch day, and some may not be willing to take that gamble. GameStop, meanwhile, has always been fairly reliable when it comes to pre-ordering new hardware; as long as a consumer can get to the store shortly after announcement, they can put money down to guarantee themselves a new console on launch day.

With physical games media continuing to shrink in favor of the digital future, it's clear that GameStop will need to make some changes if it hopes to stay afloat. Perhaps it can accomplish this by focusing more on retro offerings or maybe GameStop's cultural experience transformation will do the trick, but if the Piper Jaffray survey is any indication, it will be an uphill battle for sure.

Source: Yahoo Finance