GameStop: Revisited
Disclaimer: This is not financial advice, and any investments do carry a risk of losing your capital. Now, onto the article.
Gamestop. The Meme Stock?
Back in September 2022, I wrote an article about GameStop's past, the "meme" rally of January 2021, as well as the potential products that GameStop was pivoting towards (NFT marketplace, opening its own Crypto Wallet etc)
Unfortunately, as of November 2023, the GameStop wallet has been shut down due to regulatory uncertainty in the industry, while their NFT marketplace project has been put on hold. As of now, the first half of 2024, Ryan Cohen and his team of executives are focusing on expanding their revenue inflows through new and affordable hardware, so as to build up their customer retention and reputation.
CandyCon
One such product would be the CandyCon, which allows customers to customize and make their very own controllers, with a variety of faceplates, D-pads and thumbsticks to choose from. This product is still in its introduction stage, but over the past 2 months, the product has garnered a 4.7 / 5 rating on the GameStop website. Only time will tell how successful this product will be, but given that it gives gamers a sense of pride, whilst being a fair bit cheaper than the official controllers, with enough durability and good functionality, CandyCon may be flying off the shelves sooner than later.
Current Situation
As of Financial Year 2023, GameStop disclosed that of their sales, 57% stems from Hardware and Accessories (physical gaming stations and the related accessories), 29% from Software (in-game currencies, pre-owned and new gaming softwares) and 14% from Collectibles (toys, trading cards, collectibles etc).
The United States of America account for almost 65% of global GameStop sales, with Europe contributing the next 20%, while Australia and Canada are contributing 10% and 5.5% respectively.
Digital vs Physical
Now, I won't get into the intricacies of this debate, but I'll simply list the various advantages of each side:
Digital:
Physical:
Personally, I'm 100% digital, as I value the convenience it brings, and I don't need to fear the possibility of losing the physical game disc. However, I'm also aware of the fact that I'm fully at the mercy of Steam, and should I ever lose access or get banned on my account, all the digital games I own in my library would essentially be gone.
Unfortunately for GameStop, it also seems that publishers prefer a digital release (Steam, Epic, Humble Bundle etc) over a physical release, as it is much more cost effective for small indie companies. Other than that, the reach of a digital gaming platform is much wider than that of a physical retailer, as one would have to physically be in the store to purchase games for the latter. Therefore, in the not-so-far-future, I expect the revenue from the resale of physical games to dwindle. A handful of gamers might still prefer the security and collectability of a physical game, but I doubt that it would be a sustainable income source for GameStop.
The Ninth Generation of Consoles
The Nintendo Switch was released in March 2017.
Microsoft's Xbox Series X and Series S, as well as Sony's PlayStation 5 were released in November 2020.
Recently, both Microsoft and Nintendo have released statements teasing their new consoles. Although unclear, conservative estimates would put the release somewhere in the next 2 years. Until then, GameStop has to figure out a way to increase it's income streams.
Potential Solutions
It is imperative that GameStop demonstrates its superiority as the number one destination for gaming. After all, with Microsoft, Sony and Nintendo opening up their own physical / digital stores, what can truly make GameStop stand out among the crowd?
Customer Satisfaction
The newly released CandyCon is a right step in this direction. It appeals to the customer's taste by being customizable, whilst at the same time, it is a fair bit cheaper than official controllers. Like I mentinoed earlier, this product has to be outstanding in terms of its durability as well as usability (i.e., no stick drift, long life-span). I'm excited for the other products that GameStop has to offer, but most importantly, GameStop has to ensure that at the end of the day, the customer is satisfied.
Other currently implemented solutions would be the newly revamped GameStop Pro Membership, which really provides a generous amount of benefits for USD $25/year, as well as the efficient and responsive customer service representatives, spearheaded by CEO Ryan Cohen himself.
A New Market
Another potential solution would be to expand GameStop's market share by opening new stores in new regions. Unfortunately, GameStop deliveries are currently region locked to Europe, America and Australia; everywhere except for South-East Asia.
Potential locations which come to mind would be Japan, Korea or even Singapore. These countries are relatively well-to-do with a huge influx of tourists all year round. I'll be speaking for Singapore.
Reintroducing trade-ins:
Currently, in Singapore, there is a lack of physical outlets and platforms which accepts trade in of used consoles and games, and the ones that do are usually lowballing customers. GameStop would certainly be like a breath of fresh air.
Internationally Recognized Brand:
Currently, the retail games and electronics market share is spread across multiple, local individual shops, with little to no history or reputation, whilst, GameStop will be able to offer reliability and a peace of mind.
A one stop solution for all wants:
From video games, to consoles, to hardware accessories and collectibles, GameStop has it all. Currently, not a single shop in Singapore offers such a wide selection of goods and services. Although the prices might not beat those of Nintendo’s or Microsoft’s, if the price differential is small enough, Singaporeans will choose convenience over price.
A Global Business Hub & Travel Destination:
Singapore itself is one of the most destinations in South-East Asia (SEA), for both businesses and individuals. With the large influx of travellers from around the globe, a GameStop store in Singapore will be exposed to individuals from all walks of life, which will further improve GameStop’s reputation, if the service is done right.
Summary
Gaming will always be here to stay. The ultimate question is if GameStop is able to capitalize and maintain its position with continuous innovation, product improvements and great customer service.
As for myself, I like the stock.