The NPD Group illustrated on Monday just how dramatically the North American video game industry changed across 2012. Total game sales revenue is down as digital revenue increases at a slower pace than physical retail decreases. Put another way: people are buying a ton of games, spending less on them, and downloading them far more often than buying them in a store. It follows then that the biggest devoted video game retailer in the United States, GameStop, continues to shrink. The retailer announced on Wednesday that it will continue to contract in 2013, closing 250 stores.
Speaking at the Goldman Sachs Technology and Internet Conference on Tuesday, GameStop CFO Rob Lloyd explained that the chain will continue to mitigate losses incurred by games sales declines by shrinking down its operations. The plan is to close 250 stores total, 200 of which are inside the United States. It will replace some of these stores, opening between 60 and 70 new locations worldwide and acquiring 40 locations in France, but all told, GameStop will be a smaller entity by the end of the year.
“We’ve been successful at that for two years and we will continue to do that program in 2013,” said Lloyd.
As of November, GameStop only planned to close 200 stores during 2013, with a purported plan to open 156 new stores to offset the churn. “Net for this year, we expect our total square footage to be down 1 percent,” said GameStop’s Wendy Dominguez. “The strategy over the past two years has been to slow growth during the transition period to a new console cycle.” After just three months, though, GameStop’s plans for growth have slowed even further.
Why would GameStop plan to increase store closures around the world by 25 percent at the same time as opening fewer stores than planned? It’s possible that the company is not as confident in its place in the new video game market following the release of PlayStation 4 and Xbox 720. Following reports that the Xbox 720 would block used games, GameStop shares fell nearly 7 percent. While GameStop has grown some segments of its business, particularly digital goods, the company still predominantly relies on the sales of used video games for its profits.
Price isn’t the problem, it’s over saturation. When you have 2 Gamestops in a college town only 10 minutes apart from each other, you know it’s a bad business plan.
Peter there is no law about return prices, that’s set by each company.
Want more sales, the prices need to come down. Waaaay down.
You have to remember, they only make money on used games and their brand accessories. The mark up for new games isn’t much. Where as if you trade in your game originally worth $60 and get $25, they’ll resale it for $40 and make a $15 profit.
It’s the same trick with used book stores – buy a book for $200, sell it back to the University bookstore for for $60, they turn around and re-sell it for $120 to a new customer. It’s a gutsy stretegy to begin with, but it can fare some nice results as well as horrible outcomes.
People are bored with current consoles duh. Not to mention the economic collapse…
thats what happens when you over saturate the market with multiple store that you can see from each others doorstep!! how many game stops in your area??
gamestop maaaad greedy not the employees, jus the corporation
Well Amazon is cheaper.
It’s widely known that Gamestop was ripping people off from the start, they made people buy the included code cards for games as a separate item, which resulted in a recall, Gamestop also violated federal refund and return laws.
A store cant return anything less than 50% of the purchase price, or 90% as store credit. it’s the law, and Gamestop broke it trying to gain big from it. Good riddance to a chain of criminals! I’ll buy my games from Target thank you!
I feel bad for the people who are going to lose their jobs, but good riddance. GameStop always ripped people off. Also, I prefer digital copies anyway. Once you pay for it. It’s yours. It can’t get damaged or anything. If you need to delete it to temporarily make room for something else, you can re-download it for free. They’re also mostly a little cheaper than the physical copy.
I needed to get that off my chest because I’m tired of hearing a lot of people complain about how much they love their physical copies of all media in general.
basically ^^ wht he said and the overall fact tht they dont offer any good offers besides on used games.
GameStop needs to invest in an online, streaming game store. RedBox screwed Blockbuster, streaming games and mobile apps kill Game Stop
I miss funcoland
Chris Merkle – Steam has a very good market share with online gaming. But besides that, with the introduction of the new Xbox, it’s likely Microsoft will heavily deter any used game sales or trading due to several walls their looking to put up (ie; always on, Origin-like confirmation codes, etc…)
$7 cash for a $60 game you bought a week before is not good business. I better stop in there soon and pick up a bunch of Xbox classics.
Isn’t this GameStop right across the street from a mall with a GameStop?