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GameStop Isn’t Dead Yet, But It Smells Funny

Throughout geek history (as overseen and related by your resident geekstorian), there have been two staples of mall-based retail which have traditionally been guaranteed geek magnets. One of them, Radio Shack, we already covered in its determined kamikaze self-extinction. But the other, GameStop, honestly hasn’t done anything to sabotage itself. Yet the store’s days are numbered. The funeral isn’t yet, but the headstone is waiting.

All you need to know about the inevitability of GameStop’s demise is to ask yourself: When’s the last time you went into a store and bought a game at a cash register? We’re sure some of you are out there, but most of you prefer to download. You’re getting your games in new ways, on Steam, XBox Live, Gog.com, PlayStation Network, Android Google Play, or even just directly from indie developers on Itch.io.

The average teen spends $2600 per year on video games, according to the survey quoted in the above video, and 60% of those surveyed said they prefer to download them. That was in 2019, a sharp rise from 55% the previous year and 45% the year before that. As ReviewTechUSA points out, we have a whole generation who has grown up with digital distribution, weaned on BitTorrent and LimeWire.

Time to roll out this old meme again:


Add video game cartridges and disks to that photo. I keep pointing at this image when I hear people panic about robots taking away jobs. That slab of metal and glass in your pocket is what’s taking the jobs.

It’s a good thing that GameStop traded in used games

Throughout the last decade, game developers have complained bitterly about GameStop’s trading in used games. They claim that the used game market was hurting the sales of new games. A complaint like that goes to show that game developers flunk economics. Look, hop in a time machine and go back to GameStop’s inception to pass a law banning them from trading in used games.

Now what? People who don’t want games anymore and would like to recomp some of their investment will still sell their used games anyway! They would have just turned to eBay and Craigslist instead, or even just relied on that good old staple of a free economy, the spring yard sale. People who want to buy and sell things will buy and sell things no matter what you do; just ask the War on Drugs.

Meanwhile the used game, and eventual used console, economy sustained GameStop already into an extra decade of life. Otherwise they would have turned to stocking shelves of Funko Pops…


…that much sooner. Not that we don’t love the little vinyl freaks, but let’s face it: when you see a store that normally never dealt in figures suddenly become Funko Pop central, you know it’s because they can’t sell anything else anymore.

A speedrun GameStop history

This video glosses over GameStop’s origins when it mentions that it started out as an educational software company in the ’80s named “Babbage’s.” That’s Babbage as in Charles Babbage (you’ll never believe what context we wrote about him in last time), figurative father of computing from its steampunk years. The other fact that the video doesn’t mention is that an early investor in Babbage’s was Ross Perot.


This adorable little cornflake! The late Ross Perot was a successful businessman who turned to politics and came the closest a third party candidate has ever come to making a dent in a modern primary election. So yes, Babbage’s was partly Perot’s bankroll in its early days of selling cartridges for the Atari 2600 and Nintendo NES. A couple of mergers later, they’d abandoned the educational software angle to focus on games, which is where every educational software company ends up.

Speaking of doomed old-media retail, Barnes & Noble bought up GameStop and took them public in 2002, having merged them together with a few other acquisitions. And it wasn’t until then that GameStop started to taste some success, expanding into mall locations across the country just in time to see malls start dying out.

Now begins the slide to oblivion. At GameStop’s peak in 2007, their stock was $63/share with a market cap nearing $10 billion. This month, October 2020, their stock is $9.39 with a market cap less than a half-billion. Along the way, GameStop did pull their own version of a Radio Shack, buying into the phone market upon which they immediately wet themselves and had to sell right off again.


The digital distribution market in flooded now

GameStop, its spidey-sense tingling to tell it that there was only one way out of this jam, has turned to digital distribution itself. The trouble is by now, everybody is in the digital distribution model! Even companies that have no damn business being in this market, like Apple Arcade (sure Apple, getting into games worked so well before), and Google Stadia (is it dead yet? no? how about now?).

The same thing is happening to media and eCommerce in general, for that matter. Look what happened to TV: We went in a few years from “Netflix and chill” to now, where every studio that’s released a crummy straight-to-DVD flop thinks it can start its own streaming service for a bajillion dollars a month. When all content is digital, everybody can publish content.

So while you’re hearing a mourning band of newscasters acting like COVID-19 killed yet another business, GameStop was at least on its way out of brick-and-mortar retail years ago. Keep in mind that GameStop has already branched into alternative markets too. They own Game Informer magazine (so, duh, the website), ThinkGeek for an online merchandise retailer, and Kongregate, which was the premiere Flash games portal until recently.


Next we’ll have to write up a “What killed Kongregate” post. We can be certain that it wasn’t the death of Flash. They’ve been trying to kill Flash for twenty years now, but it keeps getting back up like a horror movie slasher.

Losing GameStop will hurt mostly just because we’ll all have to put up with Millennials crying about it for the next twenty years like they have about Blockbuster.


Don’t let them kid you, folks! Millennials stopped shopping at GameStop, that’s why it’s dying. As for Blockbuster, Millennials never stopped shopping there because they never started. That was Generation X’s job.