Could consoles without disc drives signal GameStop’s demise?

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It’s clear to see that digital gaming is becoming the leader in the way consumers access their games. The convenience of pressing a couple of buttons often outweighs browsing shelves and hoping the latest AAA title isn’t sold out of physical copies. There’s a much larger range online too. Plenty of fun indie titles and unique experiences can be found, rather than piles of the latest annual sports games and first-person-shooters you see in stores.

Which could be part of the reason that GameStop’s latest quarterly earnings report shows a 26.7 year-on-year decrease in sales from April to June 2020. As well as an 8 percent decrease on their stock.

Obviously the COVID-19 pandemic has had a factor in this, with permanent store closures and reduced operating hours over the last few months. But over a decade ago, the Xbox 360 and PS3 both began to take advantage of more widely available internet and offer customers new ways to buy games.

Will GameStop be able to find a place in a digital world?

Gamestop’s CEO, George Sherman, gave credit to the “growth in digitally downloaded games” in a recent earnings call, but he also makes it clear that “new consoles have a disc drive… So for the next seven years, the consoles will play both the physical and digital software that we sell.” However, this positive spin is only partially accurate. Both the PlayStation 5 Digital Edition and Xbox Series S have no disc drive. Microsoft dipped their toe into this ocean with the release of the Xbox One S All-Digital Edition back in May 2019, and even Nintendo’s e-Store provides plenty of choice.

The aggressive pricing of the Xbox Series S at $299/£249 makes it an attractive prospect for new or casual gamers, and Game Pass, along with PS Now on PlayStation, gives subscription-based access to hundreds of games. Some players won’t have the need or ability to head into a GameStop store and pick up the latest release.

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While GameStop has confirmed they will sell these digital-only consoles in their stores, Sherman has still tried to create hope and make it clear physical games are still relevant. “Consumers like the physical aspects of games,” he said. “They collect them and they add value as a trade-in.” He then went on to say “as software continues to evolve with dramatically better graphics, it does not take up valuable storage space and discs are available to those without broadband Internet.” Which is only partially true. Call of Duty: Modern Warfare still takes up almost 200gb when updated, and that’s even with a physical copy.

It feels like trends are moving away from physical gaming and are moving into a digital-first prospect. Sony has even confirmed that 74% of their game sales were through digital sales in the quarter ending in June. It’s going to be very interesting to see where GameStop take their business to evolve as the industry does.

What do you think? Do you still shop at GameStop? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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