Video games aren’t going anywhere for a long time, but the retail landscape has been slowly and steadily changing for a while now. A lot of gamers have been speculating as to what the future of selling games will look like, and many seem to agree that physical retail is slowly being phased out as the prevalence of digital distribution and online retailers continues to increase.
Offline retailers have often experienced boom-and-bust periods that lead to lower sales and downsizing, but with the troughs getting deeper over time. GameStop isn’t immune to these problems either it seems.
According to a new press release from the massive game retailer, the holiday sales projections missed the mark. It was reported that its overall sales during the holiday season of 2018 were lower than the year before. Overall, it seems as though sales were down around 5% compared to 2017.
There are multiple potential explanations for this downturn. And the fact that it’s not a huge drop may be a good sign. It’s also worth noting that other areas of the gaming industry grew overall. Sales of video game accessories, collectibles, and digital currency for online games all saw an increase in 2018. However, sales of used games and consoles saw a slump. New games and hardware also saw a dropoff.
- New hardware sales decreased 6.1%, as a result of the successful Xbox One X launch in the 2017 holiday period, partially offset by strong growth in Nintendo Switch sales.
- Sales of new video game software decreased 8.3%, driven primarily by the difference in launch timing of Activision’s Call of Duty: Black Ops 4 which released in October 2018, compared to Call of Duty: WWII which released in November 2017.
- Pre-owned sales declined 16.4% reflecting declines in software and hardware.
- Video game accessories sales grew 28.7% on the continued strength of controller and headset sales.
- Collectibles sales increased 3.7% to $219.2 million. The sales growth was constrained by significantly lower promotional activity in fiscal 2018 in an effort to better manage gross margin rate.
- Digital receipts increased 16.8% to $352.9 million driven primarily by strength in sales of digital currency.
- Technology Brands sales, which are not included in comparable store sales, decreased 19.3%, driven by a decrease in store count and store traffic.
It’s still true that GameStop may be seeking a buyout, which could be completed before the year ends, and that’s a sign of dooming portent on it’s own. The company also wrote off huge losses in the third quarter of 2018 of hundreds of millions of dollars.
Source: GameStop
