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GameStop worn out by the fear of ending up like Blockbuster?

2 years babelfish

GameStop worn out by the fear of ending up like Blockbuster?

GameStop unseats yet another CEO. Video game chain, responsible for closing family-run shops, can't find new business as the world of video games turns to the cloud and digital copies

The unsaid, on the upper floors of GameStop, is the fear of ending up like Blockbuster, giant of VHS and then DVD rental, buried by the arrival of Netflix (which had the same business model in its early years), Amazon & Co. Despite the numerous attempts to recycle itself, exploring new business avenues, the Texan group is still too tied to a market that seems to be numbered and this is leading it to moves that are difficult to read, especially by investors, such as the fifth change of CEO in five years.

ANOTHER CEO SUDDENLY EXEMPTED

In fact, Matt Furlong , a former Amazon executive, was also kicked out, called just two years ago to weave a new commercial strategy which, however, must not have satisfied the shareholders. However, Furlong had managed to bring the balance sheet back to surplus, at least in the last quarter, the only one with a "+" sign in the last two years. But at a very steep price, made up of draconian spending reviews and horizontal cuts.

His ax had fallen on the Irish stores, suddenly closed, from day to night. A decision that had worried the shareholders, given that one of the assets of the chain was precisely the presence of the territory, with about 5 thousand points of sale spread across all continents.

MANY CUTS AND DIFFERENT MISTAKES

The closure of the Irish GameStops represents the tip of an iceberg that under the surface of the water is now struggling to hide the dissatisfaction of its employees who on several occasions have denounced the speed with which they are hired, transferred and then sent home. A sign posted on the window of a suddenly closed US branch went viral on social media, in which employees left at home invited players to make their purchases elsewhere.

THE DIET IS SERVED (FOR NOW)

Furlong at least leaves the accounts in greater order than how he found them when he took office: the pandemic and the consequent explosion of virtual eshops had in fact given the coup de grace to a company that was already in a black crisis and had already closed in 2018 with a loss of $673 million.

In 2019 the partial relaunch, even through a rebranding: GameStop Zing, to indicate the new line of accessories (t-shirts, mugs, etc.) naturally with a videogame theme. And that's not all: the company had decided to create an eSports arena in Texas, where it is based, while in the rest of the world it had set itself the goal of organizing tournaments and thematic events in collaboration with the Kineticvibe agency.

THE BIG OF VIDEO GAMES TURN THEIR BACK TO GAMESTOP

Then precisely the pandemic, the lockdowns, the shutters lowered and the arrival of a generation of consoles increasingly hostile to physical media and increasingly attracted to cloud gaming: Microsoft has invested a lot of money in it and now Sony too will go in that direction.

And Sony, more or less indirectly, had dealt another blow to GameStop's balance sheets by providing a version of the console without a reader for optical media and therefore only able to read virtual copies downloaded from the PlayStation Store. GameStop's reply was not long in coming: it never sold that version.

In 2022 the unfortunate – certainly late – launch of a portfolio of cryptocurrencies and digital assets.

Through thick and thin, the company still closed the fourth quarter of fiscal 2022 (ended January 28, 2023) with net sales of $2.226 billion ($2.254 billion a year ago) and net income of $48.2 million. dollars (compared to a net loss of $147.5 million for the prior year fourth quarter).

GameStop reported adjusted earnings of 16 cents a share, compared to -$0.49 for the same period last year and Wall Street expectations for a loss of 13 cents. For the full fiscal year, it generated net revenues of $5.927 billion, compared to $6.011 billion in fiscal 2021.

THE REPLACEMENT AT ZERO KM (TERMINAL)

In short, this is why the torpedoing of Furlong surprised everyone, causing yet another vertical collapse of the stock on the Stock Exchange. Also because the replacement has not failed to arouse other controversies: Ryan Cohen , who is also the largest investor in the company. In short, an executive president at zero kilometer, placed there more for the processing of current affairs than to stay.

Cohen himself wrote a cryptic tweet ("Not for long"), which seems to suggest that his is a temporary assignment. But all this does not reassure the shareholders. In short, the bogeyman of ending up as Blockbuster could become the classic self-fulfilling prophecy.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/gamestop-logorata-dalla-paura-di-finire-come-blockbuster/ on Fri, 09 Jun 2023 11:38:09 +0000.