Video Game Retail Giant Gamestop Confirms Rumors Regarding Buyout Talks

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If you’re a gamer who regularly purchases new titles, chances are you’ve visited a Gamestop at some point or another. The Texas-based retail giant has become the go-to store for anyone with a passing fancy in geek and gaming culture, and for many, it stands as the only video game-specific retailer.

Still, despite their dominance in the retail space, the company has been suffering financially for the past few years. Shares of GameStop stock fell by over 15 percent throughout 2016, and last year, the company reported a 16.4 percent drop in sales for the 2016 holiday season. This was followed by an announcement to close over 150 stores in 2017, though it’s worth noting that there are still over 7,000 GameStop locations throughout North America, New Zealand, Australia, and Europe.

Since 2017, company shares have continued to drop in price, and on January 31 of this year, CEO Paul Raines announced his resignation from the company, having been on medical leave since last November. Shortly after, Michael K. Mauler was appointed as the new CEO, though he resigned three months later, citing personal reasons. Less than a month ago, GameStop named Shane Kim as interim CEO. Kim, who has had a long career in video games, previously served as a studio manager and director at Microsoft Game Studios.

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Amidst all the change, rumors began circulating earlier this week regarding potential buyout talks. As reported by Reuters, the company had brought on a financial adviser to assist in discussions with third parties, including private equity firm Sycamore Partners. Shortly after this rumors went public, Gamestop confirmed (via a press release on the company website) that exploratory discussions had begun, though they did not confirm any buyout at this time.

Despite their ownership of Game Informer(the fourth largest print magazine in the country), as well as attempts to diversify their revenue streams by selling mobile phones, tablets, and other geek paraphernalia under the “ThinkGeek” label, GameStop has struggled to maintain steady revenue over the past few years.

Many attribute this to a shift in video game distribution over the past decade. While most console players still prefer physical games over digital copies, digital storefronts such as Xbox Live, PlayStation Network, Nintendo eShop, and Steam have become a more popular option for gamers, with convenience and price parity driving players away from traditional retail spaces. In the case of PC gaming, Steam, a digital distribution storefront owned by Valve Corporation, is estimated to have a market share of approximately 70 percent.