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Mobile and Online Games Threaten Gamestop's Bottom Line

| 5 Apr 2013 14:27
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Gamestop is trying to figure out how to integrate these new forms of gaming into its business structure.

Gamestop, one of the major brick-and-mortar retailers of videogames is little by little fading into the night, and fighting desperately against the new ways we play and purchase games to avoid slipping into redundancy. Mobile and online games specifically, which simply cannot be sold in a physical store, are the biggest threat to the company's bottom line, according to a recent financial filing.

"Browser, mobile and social gaming is accessed through hardware other than the consoles and traditional hand-held video game devices we currently sell. If we are unable to respond to this growth in popularity of browser, mobile and social games and transition our business to take advantage of these new forms of gaming, our financial position and results of operations could suffer," the filing said.

Gamestop is currently looking for ways to integrate mobile and online games into its current business structure. "The company has been and is currently pursuing various strategies to integrate these new forms of gaming into the company's business model, but we can provide no assurances that these strategies will be successful or profitable."

The filing claims that the popularity of browser, mobile and social gaming has increased greatly and this popularity is expected to continue to grow. This is pretty obvious to anyone who has been watching the way videogames evolve, with mobile hits like Angry Birds and free-to-play success stories like Team Fortress 2 dominating a large portion of the gaming landscape.

The document also stressed the importance that Gamestop has with hardware manufacturers such as Sony and Nintendo, offering a breakdown of its biggest partners. "Our largest vendors worldwide are Sony, Activision, Nintendo, Microsoft and Electronic Arts, which accounted for 17 per cent, 16 per cent, 14 per cent, 13 per cent and 11 per cent, respectively, of our new product purchases in fiscal 2012."

Gamestop, which was recently voted the 10th worst place to work, lost $269.7 million in fiscal 2012. Is this inititive a case of too-little-too late? Do we even Gamestop anymore? What's the point of a brick-and-mortar store when online sites like Amazon, or digital download outlets like Steam or the Playstation Store can offer a better service at a cheaper price?

Source: Gamesindustry.biz

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