Blockbuster Video died because Netflix eliminated the need to go to a video rental store. Once you could stream movies to your home, physically visiting a store to pick up a DVD, which you then had to return, made very little sense.

As someone who grew up in the VHS era, I do miss the days when the clerks at Photographics, the video rental store in my hometown of Swampscott, Mass., could recommend a movie for me to watch.

Something was lost when brick-and-mortar rental stores closed, but knowledgeable clerks were never going to make up for the inconvenience of having to physically visit a store.

Video game retailers are largely in the same position. I can download any new release from my home, so why would I visit a store just to be able to get a disc of a game that comes with packaging?

“In 2023, digital game sales accounted for over 75% of total video game revenue globally, according to Ampere Analysis. This trend has only accelerated with faster internet speeds, cloud gaming services, and exclusive digital releases,” Alibaba reported.

This is bad news for retailers that sell video game software.

“As fewer customers visit stores to buy physical copies, GameStop’s core business model — relying on disc-based game sales and trade-ins — has become increasingly unsustainable,” the site added.

That’s largely why GameStop has been shrinking its retail store portfolio since 2024.

GameStop has runway in order to pivot

While GameStop’s business model may make limited sense, the company has capitalized on being a meme stock to replenish its cash holdings.

“GameStop is not in bad shape, especially as it has a great cash position and has now moved back into the black,” Neil Saunders, managing director, retail, at research firm GlobalData, said in an interview with PYMNTS.

That does not mean the company is in a good place.

“However, sales continue to slide, which raises a question over the company’s proposition,” he added. “GameStop is one of those firms where you periodically ask whether it is really needed as things become more digital. Both hardware and software sales shrank dramatically this quarter.”

Hardware sales, he noted, could recover, but software, he shared, will likely continue to slide.

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Physical game sales have continued to drop.

By December 2024, digital games accounted for 95% of the total market value in the gaming industry, according to a BCG Matrix analysis of GameStop’s business.

Gamestop has closed almost half its stores.

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GameStop has been shrinking its store portfolio

  • Fiscal 2024: GameStop closed 590 stores in the U.S. alone as part of a store portfolio optimization review, according to PYMNTS.com.
  • International cuts in 2024: In addition to U.S. closures, GameStop closed 336 stores in Europe, 33 in Australia, and 11 in Canada during fiscal 2024, added PYMNTS.com.
  • Continued global downsizing: The company exited markets including Germany and sold its Italian operations, ending those local store operations by the end of 2024, as reported by TheStreet.
  • January 2025: A large wave of closures occurred, including the announced 69 store closures in Germany as part of winding down operations, according to GamesMarket.
  • Multiple individual U.S. and Canadian GameStop locations were reported closed in the first weeks of 2025, from malls in Michigan to standalone stores in various states and provinces, reported TheStreet.
  • March 2025: GameStop publicly announced it planned to close a “significant number” of additional stores during fiscal 2025 (ending Feb 2026), though no specific totals were disclosed at the time, shared PYMNTS.com.
  • Total closures over the preceding 12-month period (through early 2025) were cited as around 1,000 global locations, with about 590 in the U.S. from earlier periods being identified, reported WFTV.
  • Dec. 2025: GameStop closed its only store in Grapevine, Texas (city of its headquarters), after lease expiration, according to the Spokesman-Review.
  • Early Jan. 2026: Multiple U.S. shops including in Pennsylvania, Missouri, and Ohio, were closing by early January 2026, with lease expirations and optimization cited as reasons, shared The Sun.
  • From a peak of 6,000+ global stores in the mid-2010s, GameStop has reduced its footprint drastically; by early 2025 it stood at around 3,200 stores worldwide, added WFTV.

GameStop is reviewing its stores

As a casual game player, I do still visit GameStop’s stores to look at new releases, but I don’t think I have made a purchase there in more than five years. The company itself appears to recognize that physical stores have become less necessary, if not entirely redundant.

“We have also initiated a comprehensive store portfolio optimization review which involves identifying stores for closure based on many factors, including an evaluation of current market conditions and individual store performance,” the company said in a 10-K filing with the SEC.

The company has also steadily trimmed its global footprint.

  • During fiscal 2023, it exited its operations in Austria, Ireland, and Switzerland.
  • During the fourth quarter of fiscal 2024, it closed down store operations in Germany.
  • During the fourth quarter of fiscal 2024, it sold its Italian subsidiary, GameStop Italy S.r.l, which operated the chain’s Italian stores and e-commerce business.
  • On February 18, 2025, it announced a plan to pursue a sale of its operations in Canada and France.
    Source: Gamestop SEC 10Q

Analysts are mixed about GameStop’s future

Wedbush analyst Michael Pachter does not think GameStop can survive and blames its CEO, Ryan Cohen.

“Mr. Cohen’s top secret strategy was (apparently) to ‘be like Amazon,’ and now that his Amazon executives are gone, it is unclear what strategy is guiding the company,” Pachter told TipRanks. “We remain convinced that GameStop is doomed, with declining physical software sales and a shift of sales to subscription services and digital downloads sealing its fate.”

Some analysts do like the company’s aggressive cuts to its expenses.

Stephen Guilfoyle said in his recent TheStreet Pro column that GameStop “did an excellent job of cutting back on both the cost of sales and operating expenses, which boosted margins sharply.”

Guilfoyle said GameStop had “one of the strongest balance sheets” one will see in corporate America.

“Talk about a turnaround story based upon fiscal discipline despite a core business that remains in decline,” he added. “This management team has done an outstanding job.”

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