Has GameStop Averted a Game Over?

Even though the pandemic still had a major impact on global supply chains and movement restrictions in 2021, GameStop managed to bounce back from its worst year in recent history. The video game retailer announced a year-over-year net sales increase of roughly $1 billion on March 17, with revenues hitting approximately $6 billion this past year. As our chart shows, its software segment still has a long way to go to reach pre-pandemic levels though.

With a revenue of $2 billion in the software sector, the company is still $1 billion shy of its 2019 result. Without considering the pandemic year, the only product category that constantly improved since 2017 is the collectibles sector. This includes items like action figures, trading cards, gaming merchandise or mangas and generated $824 million in revenues in 2021. Whether this increase in sales can be attributed to GameStop becoming a meme stock in early 2021, a short-lived movement that the company's base share price profits from to this day, is unclear.

The decline in physical video game sales is not a phenomenon exclusive to GameStop but a trend that can be witnessed across the industry, with major players shifting their business towards digital sales and subscriptions. Xbox manufacturer Microsoft, for example, continues to acquire video game studios to strengthen its digital subscription service Game Pass with first-party titles, and yesterday Sony announced its revamped Playstation Plus service which aims to offer over 400 games for a monthly fee of $14,99 in its Extra tier. According to an analysis by NPD Game Pulse, 2021 saw only 226 physical console games released in the U.S., almost 100 titles less than in 2018, compared to 2,182 video games released digitally.