NEW YORK - Shares of the video game retailer GameStop cratered on Wednesday after the company reported steep sales declines on gaming consoles and pre-owned software and hardware, highlighting fundamental challenges for the brick-and-mortar business selling digital media, akin to video and record stores of the past.
GameStop, which saw hardware sales fall by 35 per cent this quarter, said that much of the drop stems from consumers waiting for the next generation of consoles, since the gaming market is in a transition period when older platforms are aging out but the next wave has not arrived. Perhaps even more unsettling for GameStop is the explosion of online and mobile games that exists outside the traditional console world. Played on smartphones, tablets and web browsers, these games don't require the purchase of additional hardware.
In its 2018 annual report, GameStop warned shareholders that if the preference for downloading games increases and if technological advancements allow people to access games through other means at home,"customers may no longer choose to purchase video games in our stores."