Retail* in general is hurting, and gaming retail is even more specialized, so of course GameStop has become a strugglebunny . However, gaming as a whole is growing so $GME could have found ways of stemming the tide but they failed to innovate in the “games delivery” under the false assumption that Steam and it’s ilk (cloud-based distribution systems) would never encroach on their primary console territory. In fact, they openly mocked Valve in it’s early years, “deigning” to carry Steam cards because they didn’t consider them a threat.
Then when Sony and Microsoft started announcing Xbox 360 and PS3 would allow updates, DLC, and offer their own digital storefront, GameStop again said not to worry. Nobody would download “a full game from the internet”, saying it would be “too expensive” to monopolize phone lines for gigabytes at a time…again making the assumption that gamers would prefer to do the initial install with physical, in-box media. And assuming that digital transmission speeds and costs would remain the same, despite vast advances since the 1990s when internet became mainstream.
Finally, even when they realized they were the next Blockbuster, what did GME focus their cash on? Buying questionably connected businesses with little-to-no synergy (no overlap to save money after merging) like ThinkGeek website, Sprint Mobile stores, or AT&T stores…or they bought liquidated retail space like 163 RadioShack locations with the hopes to commercially flip them (wait, what is GameStop good at?). Not to mention they bought back all shares Barnes & Noble still owned after their initial spinoff, even though they definitely should have considered keeping B&N as a major stakeholder instead of handing them $37mil in cash and $74mil in 5.5% promissory notes which further weakened their financials at a time when they needed to be expanding in the right directions.
Not that they completely mismanaged their cash hoard during the glory years. Some good acquisitions that made some sense: they own Kongregate, an indie digital distribution platform with some really good games and decent engagement that works as both a publisher AND a decent developer; Micromania $700mil purchase gave them 332 stores in France; also, Impulse which could have been used to compete against Steam. These all helped them expand digitally, but it was too little too late. Now they are losing $643mil/year (highest loss on record) with declining revenues and severe lack of cash as they sell off their good assets (those that other companies want) just to keep doors open.
I don’t consider GameStop (or it’s leadership, or it’s employees) evil though. It’s just a dinosaur. And it was pretty fair during it’s existence (overall), despite having a few obvious blunders and missteps. Every once in a while I would buy a game from them growing up, if it had a good deal. They also brought Red Dead Redemption to my attention, for which I thank them because that game flew under a lot of gamers’ radars. And they quite often accidentally leaked future release dates, which I appreciate even if they were tentative and prone to getting pushed back. More information is usually good, allows us to make better informed decisions.