GameStop, the largest video game retailer in the world, is set to release its earnings report amid declining sales of physical video games. As more gamers opt for digital downloads, the company has struggled to adapt to the changing landscape. This has led to uncertainty among investors, with many questioning whether GameStop can survive in an industry that is rapidly evolving.
In this article, we will take a closer look at the factors that have contributed to GameStop’s decline, what experts are saying about the company’s future prospects, and what investors can expect from the upcoming earnings report.
Why Are Physical Video Game Sales Slumping?
The video game industry has undergone significant changes in recent years, with digital downloads becoming increasingly popular. According to a report by SuperData, digital game sales accounted for 83% of total video game revenue in 2020, up from 73% in 2017. This shift has had a major impact on GameStop, which relies heavily on physical sales.
In addition to the rise of digital downloads, the COVID-19 pandemic has also played a role in the decline of physical video game sales. With many retailers forced to close their doors during lockdowns, consumers turned to online marketplaces to purchase games. This has led to a decrease in foot traffic for brick-and-mortar stores like GameStop.
What Experts Are Saying About GameStop’s Future
Despite the challenges GameStop faces, some experts remain optimistic about the company’s future. One factor working in GameStop’s favor is its strong brand recognition. The company has been a fixture in the gaming industry for decades and has a loyal customer base. Additionally, GameStop has made efforts to diversify its offerings, expanding into areas like collectibles and esports.
However, not all experts are as optimistic. Some believe that GameStop’s reliance on physical sales leaves it vulnerable to the changing industry landscape. With digital downloads continuing to gain popularity, the company may struggle to compete in the long run.
What Can Investors Expect From the Upcoming Earnings Report?
GameStop is set to release its earnings report on March 23, and investors are eagerly awaiting the results. While the company has faced challenges in recent years, there are some signs of hope. In January, GameStop’s stock price surged after a group of Reddit users banded together to drive up its value. While this was largely seen as a short-term phenomenon, it did demonstrate the potential for GameStop to make a comeback.
However, it’s important to note that GameStop’s earnings report may not paint a rosy picture. The company has already warned investors that its sales will be down in the fourth quarter of 2020. Additionally, the ongoing pandemic may continue to impact physical sales in the near future.
While GameStop faces significant challenges, some experts believe that the company can adapt and succeed in the long run.