For over two decades, GameStop has been one of the key competitors in the video game industry. GameStop stores were started at a key time when the video game industry was at a peak for retailers and customers alike. GameStop was the go-to store for all the accessories necessary for gamers. However, by the mid-late 2010s, the video gaming world was changing to downloads and online shopping, causing GameStop to struggle with its sales.
GameStop started in 1984 as a software retailer called Babbage’s Etc. from the Dallas, Texas area and became well-known for its video games in the late 90s. As the desire for gaming grew, the Babbage’s Etc. company introduced GameStop, an establishment totally dedicated to satisfying the gaming audience. GameStop stores were prospering well in malls across America and was definitely a place of growth for the gaming business even before there was an internet to compete with. GameStop stores were well-known for their variety of available games to purchase but were also becoming the place to meet a fellow gamer friend to hang out and play a newly released game.
Barnes & Noble Bookstore secured their purchase of Babbage’s Etc. in October 1999, along with securing another purchase of FuncoLand in May of 2000, totaling a purchase price of $350 million. There were over 400 FuncoLand stores that were then turned into the gaming store called GameStop. It wasn’t long after this that GameStop stores put in motion their trade-in program, allowing customers to sell back old games and receive credit for purchasing something new.
After the release of the Sony PS2 and the Xbox in 2001, GameStop stores reached over 1,000 gaming stores in America. In 2002, GameStop was willing to take on the risk of depending on the sales of gaming consoles to keep their business from collapsing.
In 2004, GameStop became an independent company and bought EB Games for $1.44 billion dollars causing GameStop to be the largest gaming store chain in the world. This allowed the business to grow to over 4,400 gaming stores worldwide by 2005. Young and old, both were enjoying the opportunity to purchase their favorite games easily. Along with new releases, GameStop stores would host major events for their customers to help draw in more business. People of all ages would hang out at the store’s doorstep for days or weeks ahead of new releases and enjoy the spirit of what a new game or console would bring to the atmosphere.
The year 2007 brought GameStop stock to an all-time high through its thriving customer purchases allowing the company to expand its stores internationally in 2008. By 2010, things weren’t going so well for the company when other competitors led to the birth of Amazon, Best Buy, and other retailers using their own trade-in ideas. At this time, GameStop began offering games digitally, allowing customers to download games and content from their stores. Other competitors began offering the same digital download services removing GameStop as the middleman.
Online handheld games were now becoming available for most phones or tablets and were a big hit to those customers not wanting to mess with consoles or purchase high-dollar games. Online games continued to be the fad for gamers and became a concern for GameStop investors. Inventor, Zynga, began launching popular games on Facebook, causing big challenges for GameStop.
In 2013, Xbox and PlayStation 4 consoles were introducing their improved digital consoles with faster download speeds, but GameStop didn’t address this improvement for themselves. Instead, they purchased two new retail stores, Simply Mac and Spring Mobile. These purchases were the beginning of a downfall for the company.
The Nintendo Switch came out in 2017 but wasn’t big enough to help get GameStop out of the crunch they got themselves into by not investing in digital services and building themselves a digital platform when other companies were setting themselves up in a positive way for the future. GameStop ended up having to close more than 150 stores across America.
Competitors were releasing free multiplayer games, which attracted more than 125 million players within a year’s time, causing GameStop to be unable to do anything economically to stop this money-making attraction from overtaking their business. The gaming market was no longer needed in stores and malls since the downloading of games was the attraction now.
GameStop shares plummeted to $15.85 a share by the end of the fiscal year. GameStop decided to sell the retail store Spring Mobile in 2018 for $700 million, hoping to get the company out of debt but instead left the company in debt. By the year 2019, GameStop had a net loss of $673 million dollars and only 5,800 stores in 14 countries. By the year 2020, GameStop stock hit a record low of $3.18 just before COVID 19 hit the United States.
With COVID 19 causing a massive stop to in-person shopping, online shopping picked up, and competitors started responding to customers purchasing demands. GameStop was sort of sluggish during this time and closed 1,000 stores. Then when the pandemic hit and lockdowns were enforced, online sales began to soar, with sales reaching over 1500% by April of 2020. After receiving a lot of ridicule for deeming itself an essential business and needing to stay open for public services, the release of the PlayStation 5 and Xbox Series X during the lockdown gave GameStop a refreshing burst of energy. Customers purchased games to play at home during the pandemic lockdown, boosting sales for the company.
Ryan Cohen, one of the company’s largest investors, had plans to challenge Amazon, encouraging GameStop to develop more of a technology mindset over a physical location approach. This advice helped boost GameStop’s stock prices for a small window of time but then took a drastic fall. In January of 2020, a group of non-expert traders on Reddit noticed that big institutional investors were laying bets on GameStop’s stock price falling.
These nonexpert traders started buying shares and encouraged others to buy as well. Shares began to skyrocket to $483, helping the investors make some quick bucks, but GameStop was unable to benefit from the rally. In February, another trading group watched as share prices were rising and were in hopes that this rise in shares would help GameStop turn around and allow the company to be worth more than it was at this time. Even though GameStop is still half a billion dollars in debt and has over 5,000 stores open around the world, they are in high hopes of surviving with the help of Matt Francis, Amazon’s chief technology officer.
Additional GameStop Information
GameStop Points Redemption
- There is an expiration date on each coupon
- Accumulated points can be traded for coupons that are allowed to be used online or in-store
- Traded offers or points are non-refundable
- Points can be accumulated and auto traded at each threshold – $5 coupon for 5,000 points
GameStop Points Accumulation
- Pro members can achieve points for extra activities connected with GameStop’s loyalty program
- Pro members collect 20 points for each dollar paid out
- Player members collect 10 points for each dollar paid out
- GameStop returns are free and simple
- Return unworn apparel with tags within 30 days
- Return unopened accessories or products within 30 days
- Return defective products within 30 days or exchange for the same item
- POSA cards, digital content, Gift Cards are not eligible for return
- Return pre-owned merchandise within seven days (for any reason)
- Products purchased either on sale or during a special promotion can be subject to additional restrictions
- Returns can be started online or in the store
GameStop Cash or Credit
- Most GameStop stores offer either in-store credit or cash for select items. The credit value is usually higher than the cash value on trade-in items by 20%.
- GameStop stores are accepting smartphones, iPhones, video games, smartwatches, consoles, headphones, tablets, video game accessories, and more for cash or credit
- Selling merchandise to GameStop is easy. Bring your items to a participating store, and a manager or associate will evaluate the item(s). Don’t forget to bring any accessories that belong to the item you are selling, such as cables, chargers, controllers, and any hardware that came with your product. Fully charging the product is highly advised so as testing of the product can be done quickly.
GameStop SWOT Analysis
As with any business, there are strengths, weaknesses, opportunities, and threats for GameStop.
- Employees have a full understanding of gaming products and plenty of experience
- The powerup rewards program is advantageous for all customers, whether they are frequent shoppers or a one-time customer
- Membership offers instant discounts on pre-owned games
- Membership gives points towards monetary reward coupons
- GameStop has a limited supply of products manufactured themselves
- Most of their inventory consists of pre-owned games
- Current games and accessories are dependent on other manufacturers
- Advertising is focused on Powerup members through weekly emails
- Expanding stores internationally
- Compatible external hard drive sales for popular game consoles
- The in-house stock of collectibles and accessories for those nostalgic gaming customers
- Console’s online stores bring an economic challenge to GameStop’s sale in newly released games and pre-owned games
- Modern consoles with more storage space make it easier to download games rather than buy physical cartridges
- Downloading games is becoming more popular than owning the physical game
Top Competitors for GameStop
It’s obvious by now that there are a lot of GameStop competitors, and they’re not all conventional businesses. Here are some of the biggest competitors to GameStop’s business.
Because Best Buy has almost a thousand locations placed all over the United States, Mexico, and Canada, it has become one of the biggest electronic retail stores in the United States. Customers who are looking to purchase consoles, PC games, or any type of electronic items find Best Buy to be one of their favorite stores.
Even though Best Buy is known for retailing General Electronic merchandise, digital games have become one of Best Buy’s main sources of revenue. Best Buy started out by offering a plethora of music to their customers from all sorts of genres but has realized that their business needed to enlarge their electronics department to keep up with other store competitors in this field of gaming genres.
Customers are able to purchase new console and PC games as well as used games if you’re willing to take the time and search the store shelves. Each store has an exclusively dedicated section for selling video games, personal computers, and handheld devices. Most stores keep in stock the latest game for almost every genre. Pre-ordering is available for certain approved games. Best Buy offers online resources for ordering your favorite game and having it delivered directly to your home.
The major area that Best Buy fails in compared to the well-known guru, GameStop, is the area of used games. Best Buy does stock its shelves with used games of many genres but doesn’t come close to the stocked shelves of GameStop. GameStop has always been a step ahead of Best Buy as gamers prefer selling their games to a store that has been part of this type of industry for a longer period of time.
Known to be one of the largest online stores in the US and around the world, Amazon, since 1994, has built a great reputation and become a favorite way of shopping. Amazon has made available all sorts of consumer products to fulfill the needs of individual desires and necessities, including digital games.
Amazon is known for being one of the leading companies for e-commerce through the use of the internet. The gaming business has been a large part of helping Amazon contribute to e-commerce sales in the US. Third-party retailers or in-house sellers offer used and new games on the portal. Amazon, however, is not as well-known for international marketing as is GameStop.
Although Amazon is ranked higher in overall sales compared to GameStop, GameStop is much more popular in the international market compared to Amazon. Customers enjoy and prefer to shop at the physical store than online, whether it be Amazon or GameStop.
One of the biggest video game manufacturers is the Japanese multinational organization, Sony Corporation. Travelers will have no problem finding Sony products anywhere around the world. Sony stores or products can be found in most domestic or international airports as well as most cities on the planet.
Sony’s merchandise, such as Play Station, can be purchased at a GameStop store. In essence, these two stores are not really considered competitors unless you can find a Sony store located near a GameStop outlet advertising in-house sales or discounts on products causing competition for its customers.
However, if you consider that you can buy Sony products online from their website, they compete against GameStop in the online market and make it much easier to purchase consoles and games.
Microsoft is owned by one of the richest people in the world. This company is basically known for computer distribution and manufacturing. Their focus today is not what it once was back when Microsoft games were at an all-time high. Today, Microsoft barely has anything to do with PC games. However, Xbox, Microsoft’s console used for gaming, is a centerpiece for Microsoft in the present-day competition with gaming consoles like the PlayStation.
It’s hard to say that Microsoft is a GameStop competitor when their annual revenue is over $140 billion. However, there has been competition between local stores that are located in the same area across the US. GameStop stores also carry several Microsoft games and PC consoles on their shelves.
Founded in 1889, Nintendo was once manufacturing handmade playing cards for family entertainment. Today, Nintendo has acquired a devoted fanbase that loves and enjoys Nintendo’s digital electronic products.
The Nintendo Switch has been a top contender in the video console market. GameStop is considered the official store where customers can shop for Nintendo products, so while these two companies aren’t direct competitors, you can still purchase Nintendo products online through their website, taking business away from GameStop stores.
Richard Stewart and Martin Bromley, American gaming entrepreneurs, established Sega Corporation over 60 years ago. Developing from an arcade game company, Sega entered into the video game entertainment rage in the ’80s and ’90s. Sega and Nintendo were the only two companies that provided video game consoles. New competitors put Sega in a bind, and they struggled while Nintendo flourished.
Sega’s game consoles were left behind when Sony and Microsoft were introduced to the video game world. GameStop is now selling and helping to promote Sega Genesis products, which are the only video games that Sega manufactures today. Maybe someday, Sega will make a comeback and give the other competitors a run for their money.
Valve has become very popular in the digital game age of today. The company was started in 1996 and was instantly successful with its forerunner, Half-Life, which was enjoyed by gamers all around the world. Most of the games that were created by Valve are considered first-person shooters. After joining Blizzard Entertainment, World of Warcraft, a multiplayer online battle arena, was released into the gaming world.
Valve is well-known for its Steam software, allowing end-users to have unlimited access to a variety of games. Surviving many software battles with other competitors, Valve has been able to develop popular games like Counter-Strike, Portal, Team Fortress, Day of Defeat, and Left 4 Dead.
Not having any physical stores to provide hands-on purchasing was a definite handicap to Valve as a company. Online was the only way to purchase any of their merchandise. Valve has teamed up with other physical stores such as GameStop to help sell their merchandise. Valve may not be a direct competitor, but there’s still some potential for online purchase competition.
Epic Games was created in 1989 by a nineteen-year-old who lived in Potomac, Maryland, named Tim Sweeney. Sweeney was a mechanical engineering student at the University of Maryland. On weekends, Tim would spend his time helping customers with computer problems. However, the business wasn’t very lucrative, so he decided to create a video game from scratch. After developing his own text editor, he created an action-packed adventure game named ZZT that was compatible with MS-DOS.
Tim created a game engine that other companies could use for gaming as well as for creating future games, making licensing available to other game developers. This engine that Sweeney created was enjoyed by almost everyone.
Epic Games became big because of its online shooter-type games that were enjoyed by everyone. Today Epic games are one of the largest video game developers in the world and are comparable to other well-known game creators as well. So, if you’re into developing or creating games, Epic Game’s gaming engine is where to start. If you’re one that enjoys playing games online, Epic Games can be one of the choice places to purchase that game.
This gaming company offers some of the lowest prices on games available. Prices are so low that customers question if it’s a legitimate website or a scam. CD Keys offers games online-only, and they specialize in digital games. This helps to keep games at a low price since there are no overhead expenses like brick and mortar stores or warehouses.
CD Keys is not a disorganized marketplace but an online seller of games that has a great customer service team, helping their customers directly if anything goes wrong. CD Keys has made it easy to purchase your favorite games after your account is set up. A game code is sent directly to your email. CD Keys makes purchasing your favorite games quick and easy at an affordable price. If you’re looking to stay at home and leave the hassle of game stores to others, CD Keys is the way to go for purchasing those games you’ve been waiting for.
There are a lot of unknowns about GameStop. Their business model doesn’t seem to be relevant or particularly innovative, and their stock has fluctuated so much that it’s surprising they’re still in business. These frequently asked questions may help you understand a bit more.
Question: Is GameStop declining?
Answer: GameStop has had a year-over-year decrease in net sales for the past several years, but they claim it could have been worse. They have developed an e-commerce department and worked on ramping up their online presence.
Question: Who is GameStop’s biggest competitor?
Answer: While GameStop finds some online competition in companies like Sony, Microsoft, and Nintendo, their largest competitors are those that have retail stores and a large online presence. Walmart, Best Buy, and Target are some of GameStop’s largest competitors. Amazon also owns a large market share in gaming because they cater specifically to the online market.
Question: What is GameStop’s target market?
Answer: GameStop targets young males with a lot of free time. That’s not to say that there aren’t women who shop there, but they’re not the primary consumer. GameStop stores are meeting places for customers who like to socialize about video games.
Despite struggling to stay relevant, GameStop still operates thousands of stores worldwide and seems to be up and coming in the online market. While they continue to experience a year-over-year decline in sales, their hope is to reverse the trend.
However, there are plenty of consumers that seem to do it better. With the exception of used games and consoles, which GameStop does well, there are other retailers that offer what GameStop does and more. They make it easier to shop for what you want, but they don’t offer the same social aspect of communicating with other gamers in person.