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Crumbling Wall: The Future of Brick and Mortar Game Stores

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The hard truth of the gaming industry is right there in the second word: industry. Everything that has to do with gaming does, at some point, come down to facts, figures, and cold hardcash. Some times are better than others, and right now times are tough for US based retailer Gamestop, who recently announced the impending closure of between 150-200 locations, roughly 2-3% of all their stores. While this might seem small now, to some it feels like the next piece of the Jenga puzzle that is brick and mortar retail. Are we witnessing the fall of the giant, and what does that mean for the future of gaming?

Let’s start by looking at what’s going on with Gamestop. Their recently published fiscal report isn’t exactly the most exciting of reads, but it does offer some interesting insights into the business behind the scenes. There’s a lot to go over, but here’s a basic breakdown:

  1. Total sales of everything decreased 13.6%, with an average drop of around 16% decrease in sales at each individual store.
  2. The fourth quarter was disastrous for the company, with weak sales of AAA games. Console sales were down nearly 30% and game sales were down almost 20%
  3. While consoles and software fell, Gamestop’s phone company Spring Mobile saw an 89% increase
  4. Collectible sales also rose an impressive 28%
  5. Despite all this the company is losing money, with stock plummeting 31% over the last year

Gamestop themselves largely blame the poor sales on two factors. First, and probably most obvious, is digital retail. Gamestop have long been at odds with digital retailers, and now that all three consoles have a strong online presence, many players prefer the ease of access, nevermind the ability to access the games at any time without worry of losing the disc. Sure digital games are hard to share with friends, and you can’t sell digital copies for a few bucks when you’re done, but its a small price to pay for many gamers. The PC has been almost entirely digital since at least 2013, and while concrete sales figures across all platforms are hard to come by, industry trends report that everyone has been moving to digital since 2014, with the number increasing every year.

Black Friday, normally the best shopping day of the year, but utterly dissapointing for Gamestop in 2016

Digital wasn’t the only thing Gamestop leveled it’s barrels at however, placing some of the blame back on the industry. In the transcript of his earnings report conference call, CEO Paul Raines discusses topics like publishers discounting AAA titles too early and running a holiday season more focused on promotions and discounts than normal. Interestingly Raines also makes the claim that the PS4 and Xbox One are underperforming, citing player fatigue and the early desire for a new console generation, rather than upgrades like the PS4 Pro or upcoming Scorpio. All of this added up to a terrible Black Friday, one that snowballed through the entire quarter and into 2017. Raines does end on a hopeful note, talking about the upcoming release of the Switch, as well as PSVR sales and the future of their collectible sales and Spring Mobile.

Gamestop seems poised to become the next in a growing number of retailers that find themselves being steamrolled by the online world. Blockbuster fell apart, as is GAME UK who also posted losses in 2016, making it the third year in a row for them. It’s not just Gamestop either, with JCPenny, Macy’s and Staples all announcing closings in the future as well, and Sears has said it seriously doubts its own survival in the long term. Brick and mortar is slowly crumbling under the extreme pressures of online sales, and anyone that can’t adapt or position themselves in the marketplace is doomed to fall behind. Gamestop at least seemingly have something of scapegoat thanks to Spring mobile, but their time as a game retailer may not last for much longer.

The unlikely savoir of Gamestop, with sales going through the roof last year.

So the question is, what does this mean for the rest of the gaming industry? Is there no more place in gaming for physical games, let alone game stores? When it comes to the physical version of games, while digital is by far the preferred choice, many gamers, especially console gamers, still seem to prefer a boxed copy. There’s an undeniable sense of pride that comes with having a huge library of games to show off, a display of your prowess in gaming, especially with rare or obscure titles. For older gamers its a holdover from a time before the internet, and long time collectors relish having entire franchises, stretching back to the 16 or even 8-bit eras on their shelves. Then, of course, there’s the matter of collectors editions, versions of the game that come with a little something on the side for being an extra big fan. Art books, soundtracks, statues, posters, physical objects that you just can’t enjoy digitally. There’s a reason why deluxe editions for games are often the first to be sold out.

As for physical stores, the answer to whether or not they still serve a purpose is a little bit tricky. On the one hand there’s the obvious reasons to use digital, even if you want a physical copy of the game. But stores still hold a special place for many gamers, and its unlikely the idea of a traditional game store will ever truly go away. First, there’s a lot of places that just don’t have good enough internet to allow people to download 20-50gb of data for a game, and for these gamers a real location is essential. That’s not just around the world, a recent report showed that millions of Americans still use dial-up, and while concrete numbers are harder to find, Canada isn’t doing much better. Gaming stores, especially small, independant shops also often go out of their way to get involved in local nerd culture, hosting tournaments and meetups and talking actively with their customer base. In some ways it echoes the way old men sometimes feel about hardware stores, that is, a place to get away from home and meet up with others that share your passion.

Collectors editions, like this one for Persona 5, are the reason people sitll buy games on disc

Then there’s the discussion of used games and retro games, and if anything keeps the brick and mortar game stores alive it’ll be these two. While the industry may detest the idea of a store reselling games without giving anything back to the publisher, gamers themselves don’t mind a bit. In fact some extremely patient gamers are more than content waiting months, years, or even entire console generations to get their hands on a title if it means paying $10 for a game that retailed at $60. And while the consoles that play them might be getting ever older, the retro games market is still alive and well. Yes, there’s Ebay auctions and Amazon listings for online retailers, but finding a true gem at your local game store can feel like hitting the jackpot on Antiques Roadshow, one that you can’t get from opening a package sent via the internet.

Even with its financial problems it’s highly unlikely Gamestop will cease function for some time, nor will physical game stores cease to exist. Gamestop is a big company, and a central figure in the biggest entertainment medium in the world, even if it seems to openly despise it at times. It may not stick around in the form we all remember it as, with the subtle shift towards their more profitable branches, but Gamestop will continue in one form or another likely as long as gaming remains a popular past time. And if, like some, the name Gamestop is near to blasphemy, then there might be another game store in your area you haven’t heard of yet, full of games waiting to be played, collectibles waiting to be collected, and people ready to share your passion for gaming.

Andrew Vandersteen has been watching movies and playing games since before he could do basic math, and it shows. But what he lacks in being good at things, he makes up for with opinions on everything nerd culture. A self described and self medicated audiophile and lover of anything and everything really, really terrible, he's on a constant quest to find the worst things humanity has ever published. He's seen every episode of The Legend of Zelda, twice, and thinks the Super Mario Movie was a war crime. When he's not playing games or writing about them, he's messing around with audio or fixing computers. Perpetually one paycheck short of breaking even, and always angry about something.

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1 Comment

  1. Ricky D

    March 30, 2017 at 5:03 pm

    I give a store like GameStop five years before they close down all locations. The problem with a store like this in the digital age is that they rely mostly on selling one product much like HMV did at one point. Eventually HMV went from being mostly a music store to selling more DVDs and BlurRays but even that wasn’t enough. Sure they sold clothes and other accessories but the bulk of their business was something most people downloaded illegally or could buy at other stores like Best Buy or Wallmart. It is hard to compete with Wallmart, Tartget, BestBuy and so on. You can’t survive selling only video games when you have monster companies like Amazon and Wallmart and Toys R Us doing the same thing. Wallmart doesn’t care how many triple-A titles they sell because they sell everything there from medicine to guns to toys to games. Personally, if I ran Gamestop, I would shift my focus on Table Top gaming something you can still buy online, but not digitally. They just haven’t done much in recent years to stand out. That said, there is a few stores here in Montreal that are independently owned and do rather well. They sell video games, consoles but also table top games.

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