While I, like many people, used to love browsing for new music at chains like Tower Records and Virgin Music, the economics of those businesses stopped making sense when digital downloads supplanted record sales.
In the record business, subscription services such as Spotify and Apple Music made owning records and CDs a novelty rather than a necessity. A Taylor Swift fan might want to own an album as a souvenir, and a Jack White fan may buy a physical record for audiophile reasons, but those are exceptions, rather than the rule.
In the console gaming space, the vast majority of software sales also happen via digital download.
Statista data from early 2025 show PlayStation software sales involved roughly 83% digital downloads.
Likewise, data analytics firm New Zoo revealed in a report that 72% of video games sold on consoles during 2022 were digital, while boxed video games accounted for 28%, My Nintendo News reported.
It’s an operating environment that has left GameStop, the leading gaming retailer in the United States, searching for a viable business model, while its United Kingdom rival, GAME, has made the decision to close its remaining brick-and-mortar locations.
GAME closing all its physical stores
“GAME, the iconic console and video game shop, will close its last three standalone high street stores,” Express reported. “Having fallen into administration this year, The Game Business confirmed that the high street retailer will begin to shut down its three remaining stores in Dudley, Lancaster, and Sutton within months.”
The closures are happening despite longtime Managing Director Nick Arran telling GameBiz.net in 2023 that GAME would be the “last man standing selling physical video games.”
At the time, he was optimistic.
“To be at the front of that has been exciting. We are creating a business for the future, right? I’m sure a lot of people when the pandemic kicked off were like: ‘That’s the end of GAME.’ To be honest, without Frasers Group [the retail conglomerate that acquired GAME in 2019], that probably would have been the case. But they have invested in us, given us what we need — mainly cash — to be able to run a successful business,” he said.
Arran will be leaving GAME as it closes its remaining stores.
“Despite the closure of its physical shops, GAME’s website will continue to trade as normal, as will its concession stands in Sports Direct and House of Fraser, which currently number around 200,” Press News Agency reported.
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GameStop has struggled, too
In January, TheStreet reported that GameStop planned to close more than 100 additional stores.
The company has runway to make changes because of the cash it was able to raise during its meme stock days.
“GameStop is not in bad shape, especially as it has a great cash position and has now moved back into the black,” Neil Saunders, managing director, retail, at research firm GlobalData, said in an interview with PYMNTS.
That does not mean the company is in a good place.
“However, sales continue to slide, which raises a question over the company’s proposition,” he added. “GameStop is one of those firms where you periodically ask whether it is really needed as things become more digital. Both hardware and software sales shrank dramatically this quarter.”
Despite their similar names, GameStop and GAME are not affiliated.
GameStop sales have dropped
GameStop reported its third-quarter sales in December.
- Net sales were $821. million for the period, compared to $860.3 million in the prior year’s third quarter.
- Operating income was $41.3 million for the period, compared to an operating loss of $33.4 million in the prior year’s third quarter.
- Excluding impairment and other items, adjusted operating income was $52.1 million for the period, compared to an adjusted operating loss of $24.6 million in the prior year’s third quarter.
The company has also greatly improved its cash position.
“Cash, cash equivalents, and marketable securities were $8.8 billion at the close of the third quarter, compared to $4.6 billion at the close of the prior year’s third quarter,” it shared in the earnings release.
Michael Pachter, an analyst at Wedbush Securities, noted that the company has made some strong moves to shore up its business beyond just closing stores.
“Pachter noted that GameStop’s recently released filings showed a profit margin of about 36%, suggesting the company is doing well in reselling used software and hardware. On the other hand, competition remains intense in the market for gaming consoles while the second-hand market for used software is slowly drying up as gamers shift to digital downloads,” he told Business World Online.
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