GameStop (GME), the video game retailer, reported third-quarter revenue that fell short of analyst expectations on Tuesday. The company continues to face challenges in its transition to digital downloads and streaming services, causing its shares to drop 6% in pre-market trading.
Headquartered in Grapevine, Texas, GameStop was once a dominant force in physical game sales and became a poster child of the 2021 meme stock frenzy. However, as gamers increasingly prefer online purchases and subscription platforms over visiting brick-and-mortar stores, the company's transformation efforts have struggled to gain traction.
GameStop has expanded its e-commerce platform to offer digital downloads and related merchandise while partnering with game publishers to sell exclusive editions and collectibles. Despite these initiatives, the results have yet to materialize.
The retailer's difficulties reflect broader industry trends, with major publishers like Microsoft and Sony aggressively promoting subscription services and cloud gaming, reducing reliance on physical game discs.
Meanwhile, e-commerce giants such as Amazon have become the preferred shopping channels for gamers and general consumers, steadily eroding GameStop's market share.
According to data compiled by LSEG, the company's Q3 revenue reached $821 million, missing analysts' estimates of $987.3 million.
Since the meme stock frenzy briefly thrust it into the spotlight, GameStop's stock has remained highly volatile.
This quarter, hardware and accessories sales—including new and pre-owned video games—declined by approximately 12%.
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