GameStop's quarterly revenue takes a hit due to weak sales

Microsoft's and Sony's impending hardware updates probably contributed to the dent in GameStop's revenue as well.


Although GameStop posted a profit for the FY quarter ending July 30, weak sales of both software and hardware contributed to lower-than-expected revenues.

"As expected, the continued growth and increased profit contribution of our non-physical gaming businesses drove our second quarter results," said GameStop CEO Paul Raines. "Tech Brands sales grew more than 50%, omni-channel sales increased 16%, collectibles sales more than doubled and year-to-date, more than half of GameStop's operating earnings have come from non-physical gaming categories. These new businesses offset a tough quarter for video gaming and prove that our diversification strategy is succeeding."

GameStop declared an overall profit of $27.9 million, an increase from $25.3 million during the same period in 2015. However, its second quarter net sales dropped from $1.76 billion to $1.63 billion, short of analysts' predicted estimate of $1.72 billion.

Two issues likely contributed to those particular drops despite the company's overall profit. First, game launches during summer 2016 were comparatively weaker with launches during summer 2015. That means that the combined might of Doom, Overwatch, and Uncharted 4 couldn't stack up against earnings gleaned from the likes of Batman: Arkham Knight and Elder Scrolls Online.

Second, GameStop attributed its lower-than-expected second quarter results to announcements of PS4 Neo and Xbox Scorpio—the idea being that consumers who know better hardware is coming might wait instead of buying current models. Hardware sales dropped 33 percent to $216.4 million.

It's worth pointing out that Microsoft releases the Xbox One S at the beginning of August, so those sales wouldn't factor into GameStop's quarterly results. Microsoft recently announced "unprecedented demand" for Xbox One S, which might give GameStop a boost in hardware sales in its next quarterly report.

GameStop's loss in physical sales might be digital gaming's gain. Market research firm SuperData revealed that July saw high digital sales across all platforms, including premium and free-to-play MMOs.

Sources: Yahoo FinanceGameSpot

Long Reads Editor

David L. Craddock writes fiction, nonfiction, and grocery lists. He is the author of the Stay Awhile and Listen series, and the Gairden Chronicles series of fantasy novels for young adults. Outside of writing, he enjoys playing Mario, Zelda, and Dark Souls games, and will be happy to discuss at length the myriad reasons why Dark Souls 2 is the best in the series. Follow him online at and @davidlcraddock.

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  • reply
    August 25, 2016 3:34 PM

    David Craddock posted a new article, GameStop's quarterly revenue takes a hit due to weak sales

    • reply
      August 25, 2016 4:53 PM

      The beginning of the end. They'll be going the way of Blockbuster soon, I imagine.

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        August 25, 2016 5:03 PM

        I think they will be more like Radio Shack where nobody understands how they stayed in business for as long as they did.

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        August 26, 2016 7:22 AM

        We saw the negative reaction from consumers when xbone tried to head in this direction. People just aren't ready for it yet. And I doubt much as changed in the last 3 years.

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          August 26, 2016 7:53 AM

          Lots of people still buy physical games, but I'm not sure how many of them go to Gamestop to do it. It feels like online orders or bigger-box retail stores are dwarfing Gamestop's sales.

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            August 26, 2016 9:16 AM

            And those are major retailers have been around for a while. I don't know why there would suddenly be a heavy shift away from Gamestop.

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              August 26, 2016 9:19 AM

              Those stores didn't use to have trade-in programs, but over the years they have them. It certainly has hurt GameStop since they are less important.

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                August 26, 2016 9:20 AM

                Who has added trade in programs? Ok, I'll give you best buy. I'm not aware of anyone else.

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                August 26, 2016 9:22 AM

                And honesty, the experience for trading in at best buy sucks. Waiting in line at the customer service area. Having some dumb lady try and scan the game and figure how to do the whole process. It'd awful. Gamestop executes way better.

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                  August 26, 2016 9:25 AM

                  GameStop still has the biggest chunk of the trade-in market for sure, but all the retailers offering it (including Amazon) have been eating pieces of their market over time. Add that in with digital downloads still eating away over time, there is certainly evidence that GameStop continues to become less relevant.

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          August 26, 2016 8:05 AM

          People were upset about Xbone because they were moving the cheese, they were trying to change the way discs worked when they didn't need to changed. That had nothing to do with the shift to digital only that has been taking place.

          Every year the amount of people choosing digital downloads increases, and so that is every year that GameStop becomes that much more useless. Every quarter is just gonna be another death bell on the long road. The Blockbuster analogy is actually pretty apt.

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            August 26, 2016 9:19 AM

            They were heading in that direction. That's what I said. Their first step to try to steer people away from disks was to change the way they work. Make them not as useful. Make people think, hmmm, whats the point anymore if I can't trade it in or rent them anymore? Then once theyve got everyone thinking the way they want, end physical media. It didn't work out the way they hoped.

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              August 26, 2016 9:32 AM


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                August 26, 2016 9:39 AM

                I agree to this point on PC. Often times you can save money on gmg or steam on newer PC games. But with console, new games are pretty much the same price as physical or digital. I never see good prices on PlayStation Network unless it's s flash sale or a discounted older game. Shit, I see $60 games on there all the time for old games. And it'll be at Walmart for $40.

                I just can't ever agree with the "find the disk" or "get off my lazy ass and insert the disk" argument. I dunno, I guess I'm not lazy enough. For me it's just not that big of a deal. I've been swapping cartridges and disks in consoles all my life.

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