After two CEO changes in 2018, Gamestop’s sale expected to be announced by Mid-February

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Tell them that Gamestop CEO Paul Reines is dead and Gamestop died with him.” ~ Michael Mauler, who replaced Reines and then quit 3 months later for “personal reasons”


It seems 2018 hasn’t been so good to Gamestop.


Wall Street Journal and Gamespot are reporting Gamestop’s sale is expected to be announced as soon as mid-February. The video game retailer for the better part of 23 years was not immune to the same struggles as other specialty brick and mortar stores in recent years. The recent surge in digital downloads on both PCs and Consoles seemed to be enough to affect even their profits from preowned sales.

Gamestop doesn’t just sell new video games but they also “buy” physical consoles and console games. Consoles and Console Games sold to them are also taken at half or less than market value so in short, the seller always sells at a loss. The amount of money offered can’t be negotiated up either, it’s take it or leave it. Said games or consoles are in turn resold as Used or Preowned games at slightly less than a new copy of the same game or console. For example Pokemon UltraSun is $40 New. A Preowned copy is $35. Yeah. It’s worth noting approximately 70% of Gamestop’s overall profits come from Preowned sales so there ya go.

It’s no secret video game companies have always had a BIG problem with Gamestop’s Buy and Sell Model. The reason: They don’t get a cent from those Preowned sales. Taking cues from Steam and other PC video game stores, console game makers launched digital game stores of their own. Sony’s Playstation Vue streaming service took it a step further. No longer were gamers forced to only buy physical copies of video games and this has been true since the Xbox 360, PS3, Wii U and PSP were current. Now gamers have the choice of physical or digital games.

Game makers have been offering digital-exclusive incentives to console makers normally seen with PC games. The biggest reason to go digital with high-profile games is you can pre-download the full game in advance, then play it after a small update at the stroke of midnight of the official launch day. A great option for a mega popular game you don’t want to have to wait in line to pick up, go home, run the install and then play. Of course, video game consoles only have so much storage space. A big upside to going digital is you don’t need to swap discs (or game cards in the case of the Vita, Switch and Nintendo 3DS). Mobile games have been making their way to consoles minus microtransactions as well.

Getting back on topic though, Gamestop’s current lack of leadership appears to be its downfall. Of course, most of the rank and file employees don’t know about the problems at the top of the company even though they’ll be the first to lose their jobs. While yes Best Buy, Target and Wal Mart sell video games too, by the mid-90s it was obvious a store that exclusively sold video games was needed. By 1996, the industry was in the back end of what most gamers called The Golden Age of Gaming. The aformentioned department stores had a dedicated video game section (as did Toys”R”Us and KB Toys) but also had a hard cap for their video games.

I dare say the rapid rise of Gamestop in the late 90s helped pave the way for Video Games to become mainstream by the early 2000s. On that note, it would be fair to say the first decade of the 21st century was a Golden Age for the retailer. Several gens of consoles came and went between 2000 and 2010 from the PS2 to the Dreamcast to the Wii to the Xbox 360. Gamestop also bought Game Informer along the way, saving it from Bankruptcy. By 2015, Gamestop was doing well enough to expand its offerings to video game-themed merchandise from clothing to other stuff. The renewed interest in retro gaming in recent years fueled speculation the retailer was going to bring back older consoles and games for sale in its stores.

What happened?

Longtime CEO Paul Reines died suddenly early last year. His death destabilized the retailer to the point it is literally selling itself now. That speaks to the lack of willingness of anyone from within the company to step up. Either that or a cash-out given Reines’ immediate successor left after 3 months for “personal reasons”. This morning it was announced GameStop is abandoning its attempts to sell itself. The reason given they feel they no longer have the assets or value that would attract a potential value. To say the company’s future is in doubt goes without saying.

In this case, it would be fair to say GameStop succeeded in putting itself out of business. The rising popularity and profitability of digital purchases and streaming is clearly what the industry is all in on. I do think new versions of the current consoles will be released in a year or two to reflect that as well.


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This entry was posted in Blog, Brendan Aurabolt, News, Serene Adventure, Video Games and tagged , , . Bookmark the permalink.

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