Pain and Anguish: GameStop Reports $270M Net Loss

Ouch. There just aren't too many other ways to say it. As the video game world enters a period of rapid transition, the old players are starting to show signs of wear. The home console market just isn't what it used to be, and neither is the importance of physical media and retail shops. As more and more gamers find their fix in mobile gaming, it's getting tougher for the mainstays to remain relevant. GameStop is a company in search of its next move, and it's losing a lot of money as it tries to find it.

The company's Q4 2012 earnings saw a loss of $270 million, on sales of $3.56 billion. Consolidated comparable store sales decreased 4.6% compared to the prior year quarter, while Q4 sales were relatively flat year-over-year. The company included 60.3% growth in digital receipts and $100 million of mobile sales offsetting weakness in the core business. Paul Raines, chief executive officer, stated, “While 2012 was a challenging year for console gaming, we focused on factors within our control. We expanded our market leadership position, maintained our financial strength and controlled our spending. Perhaps most importantly, we invested in our mobile and digital businesses to position the company for future success. These channels delivered as planned and significantly contributed to our highest ever gross margin and profitability.”

Overall, the company saw a 7% drop in total sales compared to 2011, and that trend isn't apt to change. More people are getting their games through digital channels, and we're likely to see iOS, Android, and Steam sales increase while GameStop flounders. Hopefully, the company can target a turnaround; it's a staple of a brand, and it's worrying to watch these losses mount.