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martyb writes:

GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet:

One of the world's biggest video game retailers just announced its worst annual performance in decades, raising renewed questions about the health of the physical video game market as downloadable games continue their ascent. Net sales for GameStop were down 3 percent for the 52-week period ending February 2, a slide that helped flip last year's modest $34.7 million profit to a sizable $673 million operating loss. On top of that, the company expects sales to decline another 5 to 10 percent in the next fiscal year.

GameStop's massive loss is the largest ever reported by the company, and only the third annual loss since it grew out of the corporate remains of FuncoLand in 2000. GameStop last posted a loss in 2012, when it lost nearly $270 million thanks in part to weak holiday sales near the end of that era's console generation.

But more than the amount, the reason behind the new loss could be cause for long-term concern at the retailer's thousands of worldwide storefronts. While hardware sales were roughly flat and new software sales fell about 4 percent year over year, pre-owned software sales cratered nearly 12 percent for the year, continuing a years-long slide.

GameStop has always relied on the high margins of buying low and selling high on used game discs to buoy an otherwise low-margin business. But the rise of downloadable games, which can't be resold, has taken the wind out of those sails to a large extent. "We continue to see declines in pre-owned software, reflecting the decline in sales of new physical games and the increasing demand for digitally offered products," GameStop COO & CFO Robert Lloyd said in an earnings call.

I'm curious how many Soylentils still prefer to buy their games on physical media and who prefers a digital distribution. What's your motivation? Also, what if anything, can Game Stop do so as to continue as a going concern?

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