GameStop has been in a rough spot as a corporation for some time now. After a 2019 that saw store closures and financial trouble, GameStop closed 55 stores in the US last month. Now, GameStop stock is falling drastically and the company appears to be on its last legs, but there is an opportunity coming later this year for GameStop to have the strongest holiday season it has had in years: the launch of the Xbox Series X and the Playstation 5.
When the PS5 and Xbox Series X are released sometime in the 2020 holiday season, most likely in between October and December, gamers will flock to retail stores to pick up these new machines. Having brand new physical consoles in stores could be the boost that GameStop needs to power through 2020 and still be a viable company in 2021.
GameStop has tried to pull itself up by its bootstraps with investments that have attempted to adapt. The pivot to toy retailer including acquiring ThinkGeek in 2015 and shuttering the company in 2019. In 2016, GameStop opened a game publishing division called GameTrust. It would publish few titles, the last of which was Insomniac Games’ Song of the Deep that same year.
A major contributor to GameStop's woes of the past decade has been the increased availability of games as downloads. As downloads become the way many gamers purchase games, GameStop has been seeing less business. It wasn't even until the launch of the current console generation in 2013 that all releases could be downloaded. At least on consoles that is, the viability of physical copies of PC games died down many years before 2013. Since the divide between downloadable indie and AAA $60 retail game have been blurred, there is more middle ground and more room for download-only games to exist at all prices and budgets, including free-to-play.
Free-to-play games like Fortnite and Apex Legends are raking in a great deal of revenue every month. The money in the games industry seems to be more from microtransactions and DLC than it is in selling games themselves, and there is more content than ever that can only be purchased digitally through in-game stores. That content can be sold directly to consumers without publishers having to cut in a middle-man, pushing stores like Best Buy and GameStop out of the picture.
However, there are still many players who live in rural areas or don't have access to high-speed broadband that need stores like GameStop and other physical retailers. With games getting bigger and bigger and the largest files sizes getting gigantic, there are many places where downloading a game just isn't worth the time. The convenience factor doesn't affect all users equally. For some it is more convenient to go to a physical store and buy their games. Especially considering how bandwidth caps are not growing at the same rate as game file sizes. Many Americans still have bandwidth caps that prevent them from downloading all the games they want, or updates to games they frequently play, without paying additional fees.
Players across the country still rely on local game stores to buy and trade-in games. Prevalent and restrictive bandwidth caps make downloading every game an impossibility for a number of people. Until that number is zero, it is unfair to consumers for companies to fully make the transition to digital-only game sales.
With the new consoles ready to launch in less than a year, GameStop needs to consider how the PS5 and Series X will affect its sales. Microsoft and Sony will want to sell consoles directly to players or through an online retailer like Amazon, but GameStop and brick-and-mortar stores will still play a major role in the console launch. But will GameStop sell as many new consoles as its competitors?
The fact that so many stores have closed, and will likely continue to do so throughout the year, puts GameStop at a disadvantage. While many stores are still open, it is impossible to predict when a mass closing could occur. Plus, the few that remain in business still have to compete with Best Buy and Walmart. The PS5 and Series X launches are close, but if GameStop continues to close stores and become devalued on the stock market then there might not be enough open stores for the holiday launch to make enough of a dent financially to "save" the company.
GameStop has an opportunity to have a strong 2020, but hopefully the deck is already not stacked against it. Players will flock to anywhere that is not sold out of their console of choice. If GameStop can stay afloat long enough to make a powerful push for the holidays, console sales could be the boost it needs to stay in business long enough to make a successful pivot to another side of the industry.