Saturday, 30 January 2021 14:10

Why GameStop Will Likely Still Go Out of Business Despite the Stock Situation

Written by Stan Hogeweg
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GameStop's spike in stock value makes it look like it's getting a new lease on life, but the company probably won't benefit from it.

The battle for GameStop's soul on the stock market doesn't look like it's going to end anytime soon. Traders will get a bit of a reprieve over the weekend, but odds are good that investors will be battling over GME as soon as the market opens again on Monday. In fact, with government entities keeping an eye on GameStop's situation, this could easily spin outwards into a long and complicated legal debacle. GameStop really didn't do anything to get here besides having a low value stock, and it's just caught in the crossfire of a battle over stock trade ethics, forced to ride it out.

Eventually, the situation will come to an end, yet that doesn't necessarily mean things look brighter for GameStop on the other end of this. GameStop's low value stock largely reflected the problems that the company has yet to solve. It's trying to run a physical store for games in an increasingly digital age. For many years, GameStop's model worked—one couldn't exactly shop for Super Mario World digitally and install it onto a SNES. Now, consoles are all connected to the internet, and PC gaming is stronger than ever. All this means that GameStop's future is looking bleaker by the day still.

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The advent of the internet streamlined shopping for games in a lot of ways. For instance, it made digital services like Steam and the Epic Games Store possible. PC gamers used to have to shop for CDs with game data on them, but now tons of games can be bought and installed from the comfort of one's own home. It's largely possible on consoles too. The Switch is far from the first Nintendo console to have an eShop on it, and services like Xbox Game Pass ensure that players never want for something to play.

The same is true for video game accessories. If a Smash player wants a GameCube controller, it's just a matter of visiting an online retailer and having one shipped directly to their home. Further innovations like the Stadia's foray into cloud gaming show that the industry isn't done innovating, and there's lots of commonplace facets of the game industry that would have seemed like total fantasy 30 years ago. All of these facets come together to make one thing clear: GameStop is becoming obsolete. It once professed to be the very best retailer of video games and their accessories, but now it's just a face in the crowd.

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It's not even necessarily that players aren't interested in physical copies of games. One thing that's not helping GameStop is how many other retailers sell games and consoles nowadays. GameStop was founded when video games were still a bit more niche as far as entertainment was concerned. Now they're highly popular, and everyone from Target to Walmart to Best Buy can sell you a PS4 or the latest Assassin's Creed game or whatever else someone wants. GameStop is so focused on video games that it can't compete with these huge businesses for whom video game fans are just one more market to serve.

GameStop's stock market chaos may have grasped the nation's attention, but it actually isn't really helping the company to suddenly be worth hundreds of dollars a piece. If government regulators step in and do something, odds are good that GameStop's value will plummet again. The stock can be worth anything from a dollar to a thousand dollars, but the fact of the matter is that GameStop's model isn't really working anymore. Fans have found other ways to get their hands on the games and gear they need. GameStop has to adapt to the modern age fast, or else odds are good it'll be left behind.

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