Piper Jaffray, an asset management firm, conducted a survey called Taking Stock With Teens, where it asked 8,000 teens about their video gaming habits. Piper Jaffray discovered that 60% of game-playing teens now prefer downloading digital games over buying physical copies. Just two years ago, this number was as low as 45%, meaning that as time goes on, more people prefer digital over physical.
GameStop’s entire business model is based around selling physical video games, and so this certainly isn’t good news for the already-struggling store. It also buys used games cheap to sell them at a high markup, and if there are less physical games being purchased, it stands to reason that there will be less used games for GameStop to stock its shelves with. Moving forward, with video game streaming set to be a major feature of next-generation consoles, it seems like GameStop’s business will continue to take a hit.
GameStop is already preparing its investors for a rough 2019. In an earnings call, it was explained that due to the impending announcements of the PS5 and next Xbox, consumers may be less likely to purchase the PS4 or Xbox One. This means a dip in GameStop’s hardware sales, though a hardware sales bump could come next year when the next-gen consoles drop.
With physical games media continuing to shrink in favor of the digital future, it’s clear that GameStop will need to make some changes if it hopes to stay afloat. Perhaps it can accomplish this by focusing more on retro offerings or maybe GameStop’s cultural experience transformation will do the trick, but if the Piper Jaffray survey is any indication, it will be an uphill battle for sure.
Source: Yahoo Finance
