Watch out for FLUDD.
It’s hard out here for a brick and mortar. Online businesses are circling overhead, other major retailers are doing everything they can, and when it comes to video games it’s all about that growing digital download. Gamestop has been trying to compensate for the slow death of physical outlets, but according to their recent earnings report, they can only do so much.
For all of 2016, sales for Gamestop were down 8% and earnings were down 13.6% for the last fiscal quarter. Gamestop blames the sales slip on a slowing video game console market and competitor sales, but they are celebrating a raise in physical collectibles. These numbers have driven Gamestop’s stock down throughout the day. Gamestop somehow didn’t understand that the Xbox One and PS4, after selling at a record setting pace, would eventually slow down. However, they did declare the Switch’s launch a sales success, claiming it even increased traffic in their stores.
Gamestop’s take on their slow sales was pretty clear:
“The video game category was weak, particularly in the back half of 2016, as the console cycle ages. Looking at 2017, Technology Brands and Collectibles are expected to generate another year of strong growth, and new hardware innovation in the video game category looks promising.”
It’s hard to blame video games, which have grown in the past year, on Gamestop’s slow sales. Gamestop will continue to struggle unless they can confront the problem they’ve known about for years, the rise of digital games. Without an answer, expect to see more Funko Pops, more Pokemon cards, and more desperate sales practices until time finally catches up.