Last week, Polygon put out a report detailing the pressure GameStop employees are under as the company enters its final death spiral. As the home office flails about in a panic to keep investors happy, bad decisions are piling up and it’s getting ugly.
I saw this coming almost a decade ago when I left the company after 15 years. I can’t say I’m enjoying it.
It’s not like I had mystical insight into the future when I quit the retail world to become a fulltime stay-at-home parent. But it was pretty obvious that games were moving towards online sales, and that would eventually be the end of GameStop.
It’s like watching a replay of the death of Blockbuster for much the same reason: A stubborn refusal to acknowledge that their business model is no longer viable.
Let’s be clear about what’s happening here. The video game industry is the largest entertainment industry in the world. The fact that it is the most ignored by the mainstream is irrelevant. It pulls in almost $140 billion in revenue a year now. Compared to the roughly $160 billion that television, movies, and music pull in combined, video games account for just about half of what we normally think of as entertainment.
And yet, GameStop, the largest dedicated video game retailer in the world, is dying. Clearly, it’s not due to a lack of demand for video games. GameStop is just not keeping up with the changing demands of gamers, and they are paying the price.
This would not be the first time this has happened, although it may well be the last.
When GameStop merged with EB Games to become the single largest game retailer, they got a bit of a swollen head. Where once we were supposed to build a rapport with the customers to build loyalty, now we were supposed to dictate terms. After all, we were the big dog on the block!
Our sales goals became more aggressive and that meant we, as salespeople, had to become more aggressive. GameStop stopped becoming a place where gamers could come to bullshit about their favorite games with fellow gamers. Instead, we were always expected to sell, sell, sell.
A prime example of this was the Game Informer subscription. This was actually a really good deal. You got a 12-month subscription to an excellent magazine and 10% off of used games and accessories.
But the company was super greedy about it. Depending on how greedy they were at any given point in time, they expected employees to sell up to 20 a week. Which doesn’t sound like much unless it’s a slow week and you have all the rest of the work the home office demands you do on reduced hours because, hey, you don’t mind working off the clock to get that all done, right?
Amazingly, when a fellow manager and friend of mine, Joyce, sold a ton of subscriptions, management accused her of fraud. Why? Because they couldn’t believe she was doing exactly what they demanded she do. That should tell you something about the corporate mentality of GameStop at the time.
Parallels to Blockbuster
For a short time, I worked at Blockbuster during its final days and the parallels are eerie. Just like Blockbuster, GameStop has sought refuge in merchandise as a salve for its hemorrhaging sales.
Blockbuster brought in new blood to think outside the box and they tried selling movie-related merch to shore up revenue. It wasn’t a terrible idea, but it was never going to be enough.
GameStop’s 2015 purchase of ThinkGeek is pretty much the same idea on a much larger scale. Now most – if not all – of their stores dedicate a lot of their space to an objectively awesome selection of video game and anime-related merch. But since this is not GameStop’s primary business, they’re not very good at it – a fact revealed by the Polygon investigation.
Trying to make up for the revenue loss by focusing on buying and selling used phones isn’t going to cut it, either. GameStop is a game company, and has been one for too long to suddenly try to compete with T-Mobile.
Another problem is that as they cut hours, the workload to keep a store presentable doesn’t actually lessen. True story! The result is stores that look like crap. And stores that look like crap drive customers away even more. It’s a vicious cycle that management should know better than to steer into.
Is there a way to save GameStop?
As a game retailer? Almost certainly not. Much like Blockbuster, when the brick-and-mortar product you offer moves online, you cease to exist. GameStop could probably survive as a company by creating a Steam-like portal for buying and playing games but with so many services already well-established, they missed that window of opportunity. Blockbuster could have bought Netflix and evolved but they, too, refused to acknowledge that their business model was doomed.
I’m not going to say I didn’t enjoy my time at GameStop. The bullshit we got from home office was annoying, but I got to be around video games and talk to fellow gamers all day long. And they paid me for it! This was before I was a father, so the not-stellar salary was enough. It’s sad to see the company circling the drain, but it was always going to happen.
The question now is, how much longer will they be able to cling to life?