Despite the positive news that we’ve been hearing lately, such as strong sales for high profile titles such as Halo 4 and Call of Duty: Black Ops II, the video game retail industry is still on shaky ground. US-based retail giant GameStop is no exception, posting losses despite their shift towards digital game sales and having a strong foothold on physical game sales. In a report issued over their third quarter earnings in 2012, the decline in sales was easy to notice, leading the retailer to take action to curb future losses. Unfortunately, the casualty will be approximately 200 GameStop retail locations that are now facing closure, a move that will put hundreds of people out of work.
In the report, the decline in sales of hardware and software, both new and used, amounted to an 8.3 percent decrease from the previous year. While the amount might not seem staggering, GameStop has over 6,000 locations in the United States alone, with an annual revenue of well over $1 billion. The decrease in sales definitely impacts operations on the retail side, leading to the closure of several locations. The reasons for the downturn, according to CEO J. Paul Raines, is “the longevity of the current console cycle and the difficult comparison of major new software titles released during the third quarter of 2012.” Taking that statement at face value, it seems clear that game sales are not as high as they used to be. High-profile titles buffer the loss to an extent, but overall sales are on the decline.
The picture for GameStop is not all doom and gloom, however. Their endeavours into the digital and mobile realm have fared better in 2012, with digital media and mobile (tablet and used devices) showing an increase of 31 percent in 2012. Many speculate that the future of gaming will be largely digital, so this might be the beginning of a far-reaching shift for the company as they migrate away from video game sales as the demand drops. On the other hand, CEO Raines is optimistic that this loss will be short-lived. The upcoming launch of Nintendo’s Wii U will likely result in a fiscal upswing, while subsequent console releases will probably have the same effect. Time will tell.
As for the store closures, it has not been confirmed which stores will be affected and what timeframe this will occur within.