Downfall Era

• Failure to adapt to digital trends – GameStop was operating a bloated legacy business model that was failing to adapt to changing gaming industry. As more consumers shifted to downloading games and purchasing subscriptions like Xbox Game Pass and PlayStation Now, GameStop failed to establish a strong digital presence.

Prior to 2021, GameStop operated primarily as a brick-and-mortar retailer, relying heavily on physical game sales and a well-established trade-in model. While this approach had long been a cornerstone of its success and identity, the company’s digital presence remained relatively weak. As consumers increasingly embraced online shopping and digital downloads, GameStop struggled to adapt its traditional business model to a rapidly shifting marketplace.

Over time, these changes contributed to steadily eroding sales. The billions in revenue generated by a previously reliable network of stores began to decline as both customers and the industry at large moved toward digital platforms, subscription services, and direct-to-consumer game distribution.

The COVID-19 pandemic in 2020 further compounded these challenges. Mandatory store closures, reduced foot traffic, and widespread economic uncertainty put intense pressure on the company. As more people turned to digital purchases, GameStop’s limited e-commerce capabilities prevented it from fully capitalizing on the surge in gaming interest, ultimately deepening the difficulties it faced leading into its 2021 transformation efforts.