GameStop is expecting sales of the PlayStation 4 and Xbox One to decline in the coming year, the game retailer said in a recent shareholder call.
Executives said that they expect new hardware sales to drop by around 10 percent year-over-year, with game sales to drop 5 to 10 percent as well.
There’s a whole list of reasons for the continued decline. The video game industry is growing, but it’s broadening as well. 10 years ago, consoles and PC gaming made up much of the market, and sales were primarily physical as Steam was still starting out and digital console games were very new.
Now, smartphones and tablets eat into the market, and free-to-play games like League of Legends and Candy Crush Saga are occupying significant portions of gamer attention and making up big percentages of gamer spending.
Further, digital sales are growing on consoles as well, pulling even more sales out of GameStop’s hands and into those of the console manufacturers. Both companies are rumored to be working on updated versions of their consoles as well, with reliable reports showing Sony working on PlayStation 4K and Xbox’s big boss talking publicly about the concept of an upgradeable Xbox One. Both consoles have seen price drops as well, and last-gen console sales continue to decline.
GameStop is diversifying with efforts like last year’s purchase of ThinkGeek and publishing games itself, as with Insomniac’s Song of the Deep, but in the short term the decline is hurting the company’s forecasts and, in turn, their stock prices as well.