Console options without disc drives could be GameStop’s final death knell:
The latest quarterly earnings report from GameStop doesn't show much sign of a turnaround for the long-troubled game retailer. Sales were down 26.7 percent year over year for the April through June quarter. Even accounting for permanent store closures and COVID-related reduced operating hours, so-called comparable "same-store" sales were still down 12.7 percent year over year. GameStop's already depressed stock is down nearly 8 percent on the news, as of this writing.
GameStop still publicly sees an "opportunity to capitalize" on the upcoming release of new Sony and Microsoft consoles, which could help turn its business around in the short term. But there's some reason to believe the coming generation of consoles could actually make GameStop's long-term prospects worse, thanks to console options that get rid of disc drives entirely.
[...] In an earnings call, GameStop CEO George Sherman acknowledged that "there has been growth in digitally downloaded games" and said GameStop is "not debating the growth of digital gaming." But he also tried to put a positive spin on the fate of GameStop's physical game sales going into the next generation of consoles.
"First, new consoles have a disc drive," Sherman said. "So for the next seven years, the consoles will play both the physical and digital software that we sell."
That's only partially true, though. Both the Xbox Series S and the PlayStation 5 Digital Edition actually won't have a disc drive. And while GameStop does sell some digital software, the bulk of its business comes from the sale of new physical games and high-margin pre-owned games.
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GameStop shares rise, fall and rise again in roller-coaster day of trading:
GameStop shares spiked Wednesday, reaching $348 apiece, only to come crashing down to $172 each early in the afternoon, causing multiple halts in trading of the stock due to volatility. Stocks then moved back up and ended the day at $265[*], a 7% increase for the day.
The past two days were a buying frenzy for the video game retailer's stock since Monday, when it was $136. That surge coincided with a lift to the entire stock market after Saturday's passage of the COVID relief bill in the Senate, as well as with an announcement that the video game retailer is developing a new e-commerce strategy, with Chewy.com founder Ryan Cohen heading that effort.
Cohen, who made a large investment in GameStop last year, will lead a committee seeking to transform GameStop a "technology business," the company said in a press release Monday.
GameStop shares skyrocketed from less than $20 in early January to more than $480 at the end of January thanks to a massive push by traders on the Reddit forum r/WallStreetBets. The stock price has dropped dramatically since then.
Price quote on Yahoo!
Also at BBC
Previously:
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
Web Site thinkgeek.com Moving in with Parent Company GameStop
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
GameStop's Future in Question after Failing to Secure Buyout
GameStop (the stock) and GameStop (the retailer) continue to be worlds apart:
The last time GameStop announced its quarterly earnings, in early December, the stock market valued the video game retailer at about $1 billion. Following a worse-than-expected earnings report released Tuesday night, the company now has a market cap of just under $10 billion as of Wednesday morning.
Sure, that's down roughly 18 percent from Tuesday's closing price, and off roughly 44 percent from a January peak that saw the stock offering become a poster child for the retail investor-driven "meme stock" phenomenon. Still there's not much in this week's report to suggest that GameStop as a company is worth ten times as much as it was just three months ago, much less the higher valuations it briefly enjoyed in the interim.
[...] Overall, GameStop's latest earnings report shows a company still struggling to turn itself around. For the full fiscal year, the company lost $215 million on net, improving on a net loss of just over $470 million the year prior. Net sales for the year were down over 21 percent, to $5.09 billion, a decline GameStop blamed in part on its "de-densification efforts" (i.e. closing nearly 700 stores). Even taking that move into account, though, sales for comparable stores were down 9.5 percent for the year.
Previously:
GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
(Score: 4, Insightful) by PartTimeZombie on Tuesday September 15 2020, @03:43AM (2 children)
But where will the world's grandmothers buy overpriced games their grandchildren don't want?
It's an underserved market.
(Score: 2, Informative) by Anonymous Coward on Tuesday September 15 2020, @03:48AM (1 child)
Gift cards in stores that put credit in your Xbox or PS account. Xbox and PS get more money from digital game sales and some people will lose the card or let it expire.
(Score: 2) by mhajicek on Tuesday September 15 2020, @06:06AM
Steam gift cards have been my kids go-to present for several years.
The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
(Score: 2, Insightful) by Anonymous Coward on Tuesday September 15 2020, @03:50AM (14 children)
Markets change, businesses adapt or die.
Video streaming came, video stores died.
Game downloads will be no different.
PC gaming seems to have already gone this way, I couldn't tell you when I last saw a physical PC game for sale anywhere.
EBGames (at least where I live) has been adding a lot more accessory ranges, and also adding in things like tshirts and figurines. They saw the way the industry was moving years ago and are taking steps to make sure they survive. Was gamestop blind to what is happening?
(Score: 0) by Anonymous Coward on Tuesday September 15 2020, @04:52AM (1 child)
Originally it was Software ETC, Electronics Botique and maybe a third company. Over the years they shifted focus then merged as mall demographics changed, eventually becoming the combined company that was Gamestop.I think EBGames was an earlier rebranding that held on in some markets.
The only way these guys could turn things aroundf is if they got their heads out of their asses, invested in a physical publishing deal with GOG/Steam for limited/non-drmed game images with same day/on-demand printing of media for people who prefer physical ownership. From there they would need to work out their own exclusives with independent developers, work out some sort of game signing/meet your dev situations (this is out until COVID is over, at least) and lastly, providing pickup and delivery services for gaming devices. Lots of people can order stuff from amazon, etc, but if they invested in customer service they could still survive, although not at the profitability they had in the past, particularly on scalping the used games market.
Personally I don't care. The writing was on the wall when they dumped their PC games section to focus on consoles, which was before steam took over the market. After that, who cared.
(Score: 0) by Anonymous Coward on Tuesday September 15 2020, @04:55AM
With flat cost service fees for cash purchased prepay cards, and percentages for credit card purchases.
I have yet to see GOG prepay cards anywhere, while Steam, Blizzard, etc all have them at every major outlet.
(Score: 2) by sonamchauhan on Tuesday September 15 2020, @04:56AM (4 children)
The one thing that kills old business models are new models which spur consumption at a lower effective price.
So music downloads killed CDs killed cassettes killed LPs killed phonographs killed theatricals killed minstrels. I doubt streaming will kill music downloads. People identify with music in a way they don't identify with video. There's a repeat factor there while video is much more transactional.
A practical thing Gamestop can do at this point it to fund exclusive, ultra-cheap games (i.e. become a publisher, a la Netflix/Amazon). Branching into edutainment or automated education may be a good idea (even to the point of leveraging their physical presence by setting up authentication and testing kiosks for certification-oriented education).
(Score: 3, Funny) by kazzie on Tuesday September 15 2020, @06:38AM (3 children)
MURDER!!!
(Score: 3, Informative) by MostCynical on Tuesday September 15 2020, @08:46AM (2 children)
...and video killed the radio star [youtube.com]
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 1, Touché) by Anonymous Coward on Tuesday September 15 2020, @08:55AM
...and deepfakes killed the video star [youtube.com]
(Score: 1, Funny) by Anonymous Coward on Tuesday September 15 2020, @09:02AM
better version.
https://www.youtube.com/watch?v=-DysigzGQvU [youtube.com]
(Score: 5, Insightful) by edIII on Tuesday September 15 2020, @06:14AM (5 children)
I've adapted by not playing games, or purchasing consoles.
I DON'T participate in the ludicrous notion of spending money on quasi-purchases where I receive no real property, and no strictly defined rights under copyright law to enjoy said material forever. There's a word for that bullshit... rentals. I'm not particularly interested in extremely overpriced rentals.
I'll stick to whatever the indie/piracy scenes are providing, thank you very much.
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 4, Insightful) by Runaway1956 on Tuesday September 15 2020, @06:33AM (1 child)
That, exactly. Back in the age of dinosaurs, I had a Comodore console thing, with a half dozen games. Then an Atari, with a half dozen games. The kids wanted a Nintendo, then a Super NES. And, that's the last time I spent money on anything of the sort. It just keeps spiraling on, and you're expected to keep spending money to keep up with Joneses or some such. And, as you state, you don't even get a physical copy of the 1's and 0's anymore. It's all in the cloud, where it can be evaporated at the whim of some corporate asshole. Don't need, don't want.
(Score: 3, Touché) by EvilSS on Tuesday September 15 2020, @01:40PM
(Score: 0) by Anonymous Coward on Tuesday September 15 2020, @11:43AM (1 child)
Most of the games my kids want to play these days have a multiplayer component, and as much as I hate it there is a sensible reason for requiring a company-hosted server intermediary: to include anti-cheat mechanisms on the server side.
So in effect we don't buy games, we're paying a hosting fee for the multiplayer servers.
I don't like it, but I don't know how to shift my kids' interest to offline single player games.
(Score: 2) by EvilSS on Tuesday September 15 2020, @03:00PM
(Score: 2) by Freeman on Tuesday September 15 2020, @04:13PM
GOG.com is that digital equivalent to purchasing a CD-ROM/DVD with a game on it, no strings attached. The biggest difference is that you can't then re-sell said CD/DVD. I mean you could, but that'd be illegal.
Also, I was into PS3 for a good while, partly, because I had a friend that could come over and we'd play or he'd play at his house over the internet. We both ditched PS3 after getting into PC games, because Steam is Cheap. Assuming, you wait for the sales. Steam Sales are super awesome. Sure, Call of Duty titles remain $20+ forever, but most everything else gets a super deep discount every now and again. Which really helps for those of us who don't like to pay a lot to play.
Humble Bundle is an awesome service. For the price of about a couple AAA games, I get a bunch of games every month, for a whole year. I end up gifting a bunch of them, but it works out in my favor in the end. Sure, I have the problem of Too Many games now, but that's like saying you've got too big of a Music/Video collection.
I've come to the realization that some games are like going out and having a Fast Food meal. They're cheap and/or short games. I'll play it a couple hours and never touch it again. Whether that's because the game was just a short game or it was interesting, but just not something I'll ever finish. With something like Humble Bundle Choice (I got in on the classic tier, which you can't subscribe to new anymore.), you don't have to worry so much about how much you're spending. It's a set amount and that's that. You'll get some good ones, maybe you'll find a gem you would never have tried to begin with, but you're not going to be breaking the bank.
Then, there are the games I play. I play them regularly and the end is only, if I get bored with them, don't have someone to play with, or somehow Steam dies along with my collection. These are the few tried and true, would have ended up buying multiple copies over the years, if I didn't have it always in my digital collection. Dungeon Defenders, 7 Days to Die, Terraria, and Space Engineers. Those are the good stuff. Sure, I played Call of Duty on PS3 and Overwatch on PC. I stopped playing COD partly due to the kids that liked cursing. Then, I got into Overwatch, because a friend liked it. Admittedly it was much better in terms of kids cursing, but the whole spend extra money for loot crates is kind of evil. Those 4 games, I've played more than probably all the other games that I've played in the last decade combined. I would still recommend them for anyone who hasn't played them. While Dungeon Defenders is pretty empty nowadays, it's still worth playing.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by EEMac on Tuesday September 15 2020, @03:11PM
Wal Mart has PC games on physical media, partly for people who live in an area without good internet access.
But a lot of the games still require internet activation.
(Score: 2) by rob_on_earth on Tuesday September 15 2020, @09:30AM (3 children)
DVD player died and I already owned a couple dual pack DVD/Blu-Rays, so I bought the first Xbox One without the kinect and that was/is the family DVD/Blu-Ray player. As the kids got older it has been used more an more for games.
Then on the flip side: when the kids are given a physical game disk as a present, they have to insert it into the drive EVERY time they want to play the game. Even though the only thing the disk does is download the game. Whereas actual downloads, play seamlessly after downloading.
(Score: 3, Interesting) by takyon on Tuesday September 15 2020, @12:06PM
It's pretty funny that Xbox One X added a UHD Blu-ray drive while Sony's PS4 Pro didn't.
Now they will both have one, in their most expensive models, supporting up to 100 GB for 4K films (maybe 128 GB and 8K films later with a firmware update). It could be the final generation of consoles to support optical discs.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by EvilSS on Tuesday September 15 2020, @01:42PM (1 child)
Well that's the price you have to pay to be able to have physical media and be able to resell the game or buy used games.
(Score: 2, Interesting) by Anonymous Coward on Tuesday September 15 2020, @02:20PM
It's actually not true for all games. Some will let you install them to disk and play without it, but that's a feature the devs have to enable.
(Score: 2) by Grishnakh on Tuesday September 15 2020, @04:40PM (1 child)
"First, new consoles have a disc drive," Sherman said. "So for the next seven years, the consoles will play both the physical and digital software that we sell."
Does this idiot CEO not understand what "digital" means? Or what "software is?" There's no such thing as "physical software", and ALL software is digital (it's certainly not analog).
No wonder this stupid store is dying. I'm surprised it's lasted this long with such an incompetent moron at the helm.
(Score: 2) by takyon on Tuesday September 15 2020, @10:14PM
Nitpicking.
Notice how Sony calls its discless console the PlayStation 5 Digital Edition.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]