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GameStop Corps posted some less than stellar results for the fourth quarter of its fiscal year, overshadowing the Dallas-based game seller’s otherwise strong showing in 2014.
The store reported $3.48 billion for its 2014 Q4 earnings, missing its earlier projection of $3.6 billion by over 3 percent. Its overall earnings for 2014 were up slightly from the previous year, but that did not stop the news of the company’s weak weak Q4 from leading to a small drop in share prices.
“2014 was a year of continued growth, diversification and expansion of the GameStop family of specialty retail brands,” GameStop CEO Paul Raines said in a statement, looking on the bright side of his company’s most recent earnings report. “In our core video game business, we achieved our highest market share in history. With 28-percent share of next-generation hardware, 46-percent share of next-generation software and an estimated 42-percent share of downloadable content.”
While GameStop is known primarily as a traditional brick-and-mortar storefront, the company has been delving into the realm of digital distribution as well, and its digital sales were up 41 percent over the previous year, accounting for $948 million of the company’s total 2014 revenue.
GameStop has plans to expand its number of stores, as shown by its deal to purchase up to 160 RadioShack locations after the company went bankrupt, but the new locations likely will not be game sellers. GameStop says that while it plans on adding 350 to 550 locations to its Technology Brand segment (Simply Mac, Spring Mobile and Cricket Wireless), it also plans on closing 3 percent of its video game storefronts as part of its “on-going sales transfer initiative.”
Although 3 percent may sound like a small reduction, that number represents hundreds of storefronts across the country, suggesting that GameStop has little faith in the future of the brick-and-mortar video game sales model.
With the extreme popularity of online distribution platforms like Steam, which sees millions of concurrent users at any one time, it is easy to see why GameStop might think that diversifying is not such a bad idea.
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