GameStop's situation has grown increasingly desperate for the past few years. Since the launch of the PlayStation 4 and the Xbox One, an increasingly digital games industry has threatened the company's way of life. Where the retailer once thrived on selling used games to the masses, it now struggles to compete with the growing convenience of digital downloads and a culture of gamers trained to wait for flash deals before buying games.
Now, the company faces a new threat - though not one many had considered. Coronavirus, the disease currently plaguing the world, is worsening, leading to the cancelation of the Game Developer Conference (GDC), and likely other events should it continue to spread. For retailers, coronavirus is a big enough problem as it is, but for GameStop, a company now seemingly hanging on by a thread, it could be yet another nail in the coffin.
GameStop is hedging its bets on next-gen consoles, with the company standing firm that they will inject some much-needed revenue into it. But, coronavirus has a very real potential to mess up those plans. The disease has hit Asian countries hard, lowering manufacturing output for things like consoles and cell phones. That lowered manufacturing could mean delays for the PS5 and Xbox Series X.
Those delays will, undeniably, adversely affect GameStop. Other retailers have the advantage of more diverse revenue streams, a luxury GameStop doesn't have. The company's emphasis has shifted a bit to collectibles and merchandise, largely due to declining physical games sales, but consoles are still what get people in the doors at the start of a new generation.
GameStop is planning something special for the PS5 and Xbox Series X, though the company has remained tight-lipped on what those plans will mean. It will allow players to get their hands on next-gen hardware before it releases, which is a good marketing draw, but with the potential lowered availability of consoles due to the coronavirus, that may not mean much.
The sad reality is that if there aren't enough consoles to go around, GameStop simply has nothing to offer those that come through its doors. Not only does that leave a sour taste in gamers' mouths– gamers that are now far less likely to return for other products- it means less revenue and fewer physical discs attached to consoles, essentially a death sentence for GameStop.
That's just one of the issues– and one that GameStop may not have any backup plans to combat. The company is planning redesigns for its stores, which will turn them into a sort of community cultural center of sorts. Fundamentally, that's a good idea. The few stores that have transformed paint a picture more akin to a local comic book shop than a retail giant, though that may be just what the company needs.
The issue, again, is the coronavirus, which is now confirmed in the United States and likely to spread further. GameStop hasn't offered an official timeline on when, or even if, all of its stores will undergo the refresh, but there's a good chance that it'll be sooner rather than later, at least if it plans on seeing next year.
However, if the coronavirus becomes a big problem in the US, that will, undoubtedly, keep people away from places branded as community centers, especially ones where sharing headsets, controllers, and chairs– all in a relatively confined space– is the norm. The remodel not working would be a death sentence for the company, especially after already closing 200 locations last month. The idea, quite plainly, is that the company is investing in itself, and if that investment doesn't pay off, there's little reason for it to exist.
Instead of journeying into physical retail stores, which will earn the reputation of being germ centers as fears of the coronavirus continue to grow, consumers will start to turn to the internet for their video game needs, meaning more digital sales all around. Even for those that seek out physical copies, GameStop likely won't be the first choice. Rather, Amazon tends to offer better prices and faster shipping– all bundled up in a more personalized experience that also has the benefit of better brand recognition.
It's a deeply troubling situation for GameStop to be in, as there's no easy solution for it. Even if it advertises its stores as being a sanitary environment, there's still going to be trouble proving that notion to a society that, unfortunately, still sees gamers as a bunch of sweaty basement dwellers a significant portion of the time.
GameStop, largely, is backed into a corner with few ways to get out. It can continue shifting its focus and hope that something lands, but as coronavirus continues to ravage countries that manufacture most of what GameStop has to offer, the company will have very few options other than continuing to close stores and layoff managers to cut costs if and when profits shrink again.
The truth is, GameStop can't afford coronavirus, as awful as that sounds. Companies like Apple, which has lowered the availability of the iPhone due to coronavirus, will make it to the other side relatively unscathed, though with a few unhappy shareholders. GameStop, however, will have its very existence threatened should the disease continue to spread and affect the availability of its product line up.
Of course, that isn't ideal. As much as the internet loves to criticize GameStop, it fills an important need in the industry. There's a demographic of people with weak internet connections or in rural areas that only GameStop can provide games for. If GameStop were to close down completely, either at its current pace or more rapidly due to coronavirus, those gamers are out of luck– and that means lower game sales in general.
In an industry where massive layoffs are the norm, coronavirus threatens the well-being of every studio, retailer, and even fan out there. It's a global issue, and if it were to actually lead to GameStop's closure, it could have massive implications for the rest of the industry.