General Gaming News

Gamestop reports a loss $488.6 million in third quarter

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Gamestop has put out its fiscal report for the quarter ending November 3, and things don’t look to good in the land of big corporate game stores. The company disclosed a net income loss of $488.6 million.

Noted by IGN, pre-owned sales were down 13.4% compared to previous quarters, which constitutes a significant part of Gamestop’s revenue. Although in other areas things looked better overall. new hardware sales were up 12.8% and software sales increased by 10.9%. Accessories also saw an increase of about 32.6%.

Strong performance for really popular titles like Red Dead Redemption 2 and Marvel’s Spider-Man definitely helped shore up the issues, but games floundering in controversy like Fallout 76 really didn’t help matters.

“Notably, software sales benefited from a compelling title line-up compared to last year, including strength from Red Dead Redemption 2 and Spider-Man, as well as the earlier launch of Call of Duty compared to last year.  We are especially pleased with our performance in October, a month where The NPD Group disclosed that the U.S. physical video game industry grew by 46% while our U.S. physical video game revenue outpaced the industry and increased 63% resulting in market share gains.”

And though it’s quite a stinging loss, there is some potential for recovery, assuming Gamestop can continue to grow its other revenue sources, while also regaining some ground in used sales. It won’t be easy, bu the holiday shopping season should help a bit. For context, Gamestop has reported net profit across the years of 2014 to 2017 of at least $350 million each year. So this means that these losses will weigh pretty heavily on the future of the company for the short-term. The meager yearly profit so far of $34 million has just been obliterated that’s for sure.

It remains to be seen what the future of the company looks like long-term, but things aren’t great. With retail sales slowly losing ground to digital distribution, and with rumors about full digital distribution on the horizon, the company will need a huge bump that may not even be in the cards.

Gamestop will need to bet harder on other sectors within their business model in order to keep going forward, and since physical sales might well continue to decline, hardware and accessories will probably become an even bigger part of the business model. I’d be willing to bet my local stores will feature even more gaming related knickknacks in the coming months.

Do I think they can recover? Sure, but to survive long-term the company needs a new approach to adapt to the times. The infamously unhelpful return policy could well use a look at.

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