GameStop will be closing 180-200 store locations globally, the company announced earlier during its Q2 earnings call, as a bad 2019 continues to get worse for the retailer. GameStop has already been reporting major issues with financial profits and future outlook, while the company has laid off several employees in sweeping cuts that took place in August - one of which heavily affected gaming outlet Game Informer, which lost seven members of its staff unexpectedly, some of which were out-of-country reporting on Gamescom 2019 at the time of their release.
GameStop has been suffering for years now thanks to the growing importance of digital distribution in video games. Consumers simply don’t purchase physical copies of games in the same volume anymore as digital downloads have become much more palatable, often offering discounts, speedier delivery, or early access to titles. That also means trade-ins don’t happen at the same frequency they used to, hindering a major source of revenue in video game profits for GameStop. As a result, the last few years have seen the retailer pivot to a more hybrid business model that focuses heavily on collectibles like Funko Pops and the ThinkGeek chain as well.
Apparently, that hasn’t been enough to stop what appears to be the need for extreme cuts - according to a report from GamesIndustry.biz, GameStop will close between 180 and 200 “under-performing” stores globally by the end of 2019. CFO James Bell stated that despite these cuts, 95% of GameStop locations were profitable - but that the company still planned to rollout more closures over the next two years, expecting a “much larger tranche of closures” coming over the next 12 to 24 months.
Obviously, Bell’s claims about profitability and the announcement of huge numbers of closures don’t necessarily complement each other, but it’s worth noting that GameStop is in the middle of a major reboot to its financial planning that saw the company acknowledge its dwindling profits - or outright losses - and the need to revitalize its business model. What that model is remains unclear, though, as Bell simply alluded to looking into alternatives for the unprofitable arms of its business internationally despite not stating what those were or what solutions were being considered. GameStop’s stock value also plummeted as a result of the earnings call, painting an even bleaker picture for the company.
It’s been an incredibly tough 2019 for GameStop, and it doesn’t look like it’s going to stop anytime soon, even if the retailer managed to host one of the most surprising gameplay reveals in 2019. It will be interesting to see if the company will be able to pivot into a business model that remains profitable with so much of the video game industry focusing on digital innovation, but the future of the brick-and-mortar gaming store continues to look grimmer as 2019 rolls on.
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Source: GamesIndustry.biz
