GameStop, the world’s largest video game retailer, has seen a 1500% increase in online sales between March 1 and April 10. Overall video games sales hit $1.6 billion for the month of March, the best totals for the month since 2008 when the Nintendo Wii was at the height of its popularity.
Not surprisingly, Nintendo was again the big winner this time. The Switch outsold both the PS4 and Xbox One in hardware sales for March and Animal Crossing: New Horizons was the best-selling title, topping the likes of Call of Duty: Modern Warfare and Capcom’s Resident Evil 3 remake.
GameStop has experienced a massive downturn in business over the past five years. Shares in the company have fallen 84% since 2016 and a recent turnaround plan titled GameStop Reboot was launched in 2019 to improve the company’s performance. However, there has been little effect seen with same-store sales for the first nine weeks of 2020 plummeting 23%. The wait for the next generation of hardware and software from Sony and Microsoft has been marked as a reason for the sluggish results.
As the COVID-19 pandemic has forced people indoors, sales figures for video games have improved and more consumers are forced to procure their favorite games via online markets. GameStop has been well-poised to meet this demand, particularly with Nintendo products that are not as readily available from other distribution platforms. GameStop even managed to best retail giants Apple and Best Buy by the end of March in overall online sales.
It’s probably too early to signal a reversal of fortunes for the company, but there has been an undeniable silver-lining for GameStop during the coronavirus health crisis. The video game giant will have to continue cost-cutting measures and develop its business model away from purely brick-and-mortar store sales if it wants to keep up. Digital game sales are only going to continue growing and if GameStop isn’t prepared, it could eventually go the way of video rental outlets like Blockbuster and Hollywood Video.
With the PS5 and Xbox Series X on the horizon, GameStop still has time to restructure in order to capitalize on what should be a unique holiday shopping season. While quarantine restrictions will hopefully abate by then, it is presumed that social distancing regulations will remain. Online shopping will likely take an even larger piece of the market with retail stores relegated to assisting as a shipping apparatus as well as offering curb side pickup for consumers that do visit physical locations.
GameStop will be hoping this trend continues into the summer season with titles like The Last of Us Part 2, Ghost of Tsushima, and Paper Mario: The Origami King releasing over the next couple of months.
Source: Business Insider, The Motley Fool
