GameStop to Permanently Shutter More Than 300 Stores

Following a fiscal quarter that saw GameStop slightly alter a downward fiscal trajectory, CEO George Sherman told analysts the world’s largest video game retailer would shutter more than 300 stores in the current 2020 fiscal year. Most of the chain’s current 5,500 stores remain closed to foot traffic due to coronavirus concerns, with commerce limited to online and curbside deliveries.

GameStop saw same-store sales drop more than 19% in the most-recent fiscal year while narrowing its net loss to $470.9 million from a net loss of $673 million in the previous-year period. The chain realized a 27% decline in hardware and accessories and a 22% decline in software sales. Collectible sales decreased 9% to $245 million, driven by traffic declines in domestic stores. As a percent of total sales, collectibles topped 11.2%.

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Speaking on the March 26 fiscal call, CFO Jim Bell said the store “de-densification” strategy includes winding down operations in the Nordic countries of Denmark, Finland, Norway and Sweden and rebranding select locations into newly designed concept stores.

“In 2020, we will continue our work to densify our global store fleet and anticipate store closures to be equal to or more than the 320 net closures we saw in fiscal 2019 on a global basis,” Bell said, alluding to 333 store closings and 12 openings.

Bell and Sherman view 2020 as a transitional year for GameStop and the gaming industry awaits new-edition consoles from Microsoft and Sony  launching in the late fall.

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“Notwithstanding the improved trend we’ve experienced over the past few weeks … over the first three fiscal quarters we expect a continued challenging sales environment, followed by a material sequential improvement of the console launch,” Sherman said.

Indeed, despite having most of its European stores closed for the last few weeks, increased demand for gaming products across the world due to governmental quarantines against the spread of the coronavirus, led to a positive 2% comparable sales results through March 21.

“Everyday brings a new challenge and new information as we navigate this very dynamic environment brought on by COVID-19,” Bell said.

GameStop Bounces Back With $21 Million Q4 Profit

No wonder GameStop tried to call itself an “essential business” and didn’t want to shutter stores during the coronavirus pandemic.

The world’s largest video game retail chain March 26 reported a fourth-quarter (ended Feb. 1) profit of $21 million, compared with a loss of $188 million during the previous-year period. Revenue dropped 28% to $2.2 billion from $3 billion as the industry grapples with a lack of new-generation video game consoles slated to launch later this year.

For the fiscal year, GameStop, which operates about 5,400 stores, narrowed its net loss about 30% to $471 million from $673 million last year. Notably, the chain’s collectables segment saw a 10% decline to $245 million from $270 million.

“We delivered profitability, on an adjusted basis, ahead of our updated expectations, marking progress on our strategy to evolve our operating model and position GameStop for long-term profitable growth,” CEO George Sherman said in a statement. “We accomplished this, despite industry challenges that led to an expected significant decline in sales.”

Sherman said the chain improved efficiency and effectiveness across the company, including a $130 million reduction in adjusted SG&A expense, reductions in inventory, accounts payable and debt.

“We accelerated our digital capabilities by elevating our web platform and further optimizing our retail footprint through market de-densification, while setting up a laboratory in our Tulsa, Okla., market to test experiential elements in 12 stores with promising initial results.”

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GameStop also spent $199 million repurchasing shares. Wall Street approved, sending the stock up 9% in after-market trading. Shares finished up nearly 6% to close at $4.41 per share.

Regardless, GameStop has shuttered most stores to foottraffic, with sales limited to curbside pick-up and ecommerce. GameStop has temporarily halted in-store game trades and sales.

Notwithstanding the Q4 results and upcoming console launches, GameStop finds itself one of many victims of the global COVID-19 pandemic, according to media analyst Michael Pachter with Wedbush Securities in Los Angeles.

“We expect the pandemic to have largely passed by the end of July, and have not adjusted our models materially for periods after the second quarter,” Pachter wrote in a March 27 note. “While we are quite optimistic that the company will return to profitability in the fall, the effects of the pandemic may linger beyond the time frame we have modeled, putting our estimates at risk.”

NPD: Video Game Sales Decline for Seventh Straight Month

Video game sales in February dropped 29% to $755 million from $1.06 billion in the previous-year period, according to new data from The NPD Group. Notably, the decline wasn’t just associated to hardware as console manufacturers ready next-generation device launches for the winter holidays.

Sales of new game software titles plummeted 36% to $307 million from $480 million last year. Hardware fell 34% to $183 million from $277 million.

As has been the case for the past year, Nintendo Switch was again the console sales leader in unit and dollar terms despite being down from last year. Microsoft’s Xbox Elite Series 2 Wireless Controller was the best-selling accessory.

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In a social media post, NPD analyst Mat Piscatella said the results were expected and indicative of ongoing industry trends.

“Lack of new releases always hurts, and the late cycle dynamics we’re seeing on hardware are what they are,” Piscatella tweeted. “Ring Fit Adventure [Nintendo] continues to climb, we’ll have to see if inventory challenges appear in the coming months.”

Other top-selling titles included No. 1 Call of Duty: Modern Warfare (Activision); NBA 2K20 and Grand Theft Auto V (Take-Two); Dragon Ball Z: Kakarot (Bandai Namco); Tom Clancy’s The Division 2 (Ubisoft Entertainment); Mario Kart 8 and Ring Fit Adventure (Nintendo); Madden NFL 20 (Electronic Arts); Super Smash Bros. Ultimate (Nintendo) and Star Wars Jedi: Fallen Order (EA).

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NPD: Video Game Sales Fall for Sixth Consecutive Month

A lack of new-generation video game platforms again undermines software sales with January totals (from Jan. 5 to Feb. 1) down for the sixth straight month, according to The NPD Group.

With both Microsoft and Sony promising new consoles by the winter holidays, consumers have held off acquiring titles and hardware. In addition, increasing numbers of gamers are playing online further impacting the transactional side of the business.

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Total revenue in January fell 26% to $678 million, from $918 million in the previous-year period. Accessories and game cards revenue declined almost 12% to $238 million, from $268 million in the previous-year period.

Hardware revenue fell 35% to $129 million from $199 million with sales again driven largely by Nintendo Switch — as was the situation in 2019.

Software revenue plummeted 31% to $311 million, from $451 million last year.

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“Generally, we are very late into the cycle for PlayStation 4 and Xbox One consoles … although we are in line with January 2016 and January 2017 comps,” analyst Mat Piscatella said on a video blog post.

Piscatella said the software decline was expected in part due to the strong year-ago new releases of Kingdom Hearts 3 and Resident Evil 2, among other high-profile titles.

“So, it was a pretty jam-packed January [2019] slate,” he said.

Notable software seller: Dragon Ball Z: Kakarot, which was the third-highest launch sales in franchise history. Other top sellers included Call of Duty: Modern Warfare and Grand Theft Auto V.

 

NPD: December Video Game Sales Fell 15%

As expected, sluggish video game sales declined for the fifth straight month, falling 15% to $2.98 billion from $3.5 billion in the previous-year period, according to new data from The NPD Group.

Hardware sales fell 17%, to $973 million from $1.17 billion. Software dropped 13% $1.14 billion from $1.31 billion. Accessories and game cards dropped 14% to $869 million from $1.01 billion.

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Overall, spending fell 13% to $14.6 billion from $16.78 billion. A dearth of new gaming consoles contributed to hardware sales plummeting 22% to $3.9 billion from $4.43 billion; software dropped 9% to $6.6 billion, compared to $7.25 billion; and accessories/game cards dropped 7% to $4.1 billion from $4.4 billion.

As has been the situation all year, Nintendo Switch was the best-selling hardware platform.

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Call of Duty: Modern Warfare topped the software dollar sales chart for the third straight month, and closed out as 2019’s top seller overall.

“That makes 11 straight years that the Call of Duty franchise was the year’s best seller,’ analyst Mat Piscatella said in a statement.

Meanwhile, Star Wars Jedi: Fallen Order finished No. 2; Madden NFL 20 (No. 3) and No. 4 NBA 2K20. No. 5, Luigi’s Mansion 3; No. 6, Pokemon Sword; No. 7, Mario Kart 8; No. 8, Super Smash Bros. Ultimate; No. 9, Pokemon Shield; No. 10, Minecraft.

 

30th Anniversary Blu-ray of ‘The Wizard’ Due March 24

Shout! Factory will release The Wizard: Collector’s Edition on Blu-ray Disc through the Shout Select premium imprint March 24, 2020.

The 1989 film tells the story of young Jimmy Woods (Luke Edwards), who runs away to California with his brother, Corey (Fred Savage), while being pursued by their father (Beau Bridges) and older brother (Christian Slater). Along the way they encounter street-smart teen Haley (Jenny Lewis), and discover Jimmy’s hidden talent for video games, leading them to enroll in a tournament at Universal Studios.

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The two-disc collector’s edition includes a new 4K scan of the film and new bonus features, including an audio commentary from director Todd Holland and never-before-released deleted scenes.

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Featurettes include “The Road to Cali-forn-ia,” a retrospective with new interviews from Holland Savage and Edwards, writer-producer David Chisholm, producer Ken Topolsky and more; “How Can I Help You? Confessions of a Game Play Counselor”; “A Clinical Analysis of The Wizard”; and a post-screening Q&A from the Let’s Play Gaming Expo 2019 with Edwards, Chisholm and Topolsky.

The set also includes trailers and a photo gallery.

 

Microsoft Unveils Xbox Series X Video Game Console Launching Winter 2020

Microsoft formally unveiled its next-generation Xbox video game console, dubbed Xbox Series X and set to launch at retail for the 2020 winter holidays.

The new gaming console, disclosed at The Game Awards 2019, claims to be eight times faster than Xbox and twice as fast as Xbox One with terabyte of storage and UHD Blu-ray Disc drive. The console will use the Elite Series 2 controller currently included with Xbox One.

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Xbox Series X will be our fastest, most powerful console ever and set a new bar for performance, speed and compatibility, allowing you to bring your gaming legacy, thousands of games from three generations and more forward with you. Its industrial design enables us to deliver four times the processing power of Xbox One X in the most quiet and efficient way, something that is critically important in delivering truly immersive gameplay.

“We … designed Xbox Series X to support both vertical and horizontal orientation,” Phil Spencer, EVP of gaming, told GameSpot. “It’s bold and unique, very much like our fans around the world and the team of collaborators and innovators who built it.”

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“This generation, we’ve really focused on 4K visuals and how we bring both movies through 4K Blu-ray and video streaming,” Spencer added. “And with Xbox One X allowing games to run at 4K visuals will make really strong visual enhancements next generation.”

GameStop: Surviving the Waiting Game

As the world’s largest video game retailer, GameStop has big expectations for new generation consoles coming a year from now from Sony PlayStation and Microsoft’s Xbox platforms.

In the meantime, the Grapevine, Tex.-based chain continues to absorb fiscal body blows as gamers halt spending on packaged media and/or explore digital alternatives.

Global sales decreased 25.7% to $1.4 billion in the most-recent fiscal period. New hardware sales plummeted 45.8%, while new software sales decreased 32.6%.

GameStop CEO George Sherman

“While the near-term top line environment remains challenged, we do not believe these results are indicative of what we would expect for the business in the long term,” CEO George Sherman said on the fiscal call.

As previously reported, GameStop has begun to divest operations in the Nordics, including Denmark, Finland, Norway and Sweden.

“While this will take several months to complete, we believe this effort will yield roughly $15 million in [pre-tax earnings] improvement,” Sherman said.

GameStop also reduced in-store inventories 30%, in addition to investing $115 million in the company and repurchasing 22 million shares for a total investment of $175 million in the quarter.

“Despite the near-term demand headwinds for current generation gaming hardware and software products, GameStop’s evolution as an industry leader to reposition the business model are on track,” Sherman said.

The executive said the chain is also in the process of “re-imagining” the GameStop in-store concept with new layout tests in 12 stores in the Tulsa, Okla. region.

“We’re very encouraged by what we are learning from the numerous customer immersive experiences we are testing,” Sherman said.

Video Games, Hardware Spearhead Record Online Black Friday Sales

Sales of soccer-themed video game FIFA 20 and NFL-based Madden 20 helped drive record online sales on post-Thanksgiving Black Friday (Nov. 29), according to new data from Adobe Analytics. The Nintendo Switch console ranked among the most-popular online purchases — as it has all year in the video game market.

Adobe said consumers spent $7.4 billion online, which trails only the all-time $7.9 billion spent a year ago on Cyber Monday. The software giant, which tracked the majority of Web retailers, is projecting $9.4 billion in online spending on Cyber Monday (Dec. 2) this year.

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Consumers tallied 39% of Black Friday e-commerce transactions and 61% of online traffic from their mobile phones.

Adobe said online Thanksgiving sales topped $4.2 billion, upped 14.5% from the previous-year period.

Regardless, of the e-commerce boom, more than 165 million people are projected to frequent retail stores from Thanksgiving through Dec. 1, according to the National Retail Federation.

“They’re making it easy for you to purchase however you want to purchase, whether it’s going into the physical store, ordering online and picking it up or ordering it online and having it shipped to you,” Sucharita Kodali, analyst at Forrester Research, said in a statement. Forrester partnered with Adobe on the data.

Google Stadia Online Gaming Platform Set to Launch Nov. 19

The new dawn of online gaming is upon us as Google readies the Nov. 19 launch of Stadia, the broadband-based platform affording users cloud-based access to games.

The platform promises to allow users access to major games heretofore only available on disc and playable on traditional consoles. Indeed, users will actually be playing games streamed to their PC, TV or mobile device from Google servers. Whether that ubiquitous access will actually be present at launch remains to be seen.

Online previews of the platform have been underwhelming with complaints ranging from limited titles available (about 22, but reportedly including Destiny 2: Shadowkeep, Doom Eternal and Rockstar’s Red Dead Redemption 2, among others; poor 4K resolution, no multiple user play yet; no LTE network service, among other issues.

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At the launch, the only way to use Stadia will be through the sold-out $130 Founder’s Edition, which includes a controller, 90 days of the Stadia Pro $10 monthly subscription service, and a Google Chromecast Ultra streaming media device to connect with the TV.

In a media interview last week, Phil Spencer, head of Xbox, said the next-gen Xbox Project Scarlett console coming from Microsoft next year would not be inferior to Stadia.

“I would say a learning from the Xbox One generation is we will not be out of position on power or price,” Spencer said. “If you remember the beginning of this generation we were a hundred dollars more expensive and yes, we were less powerful [than PlayStation].

“For us, the console is vital and central to our experience. A console should be designed, and built and optimized for one thing, and one thing only – gaming. This decisive moment of discovery is etched in your gaming history.”

Xbox Project Scarlett is set to launch for the winter holidays in 2020.