The lifecycle of consoles is growing, meaning GameStop likely won't survive if all it does is hope to ride the current upgrades until the next cycle bubbles up. With new systems lasting seven years or more on average, GameStop needs to do something now if it wants to be around then.
To an extent, it is -- the pandemic showed the retailer how to leverage its online presence and physical footprint to grow revenue. E-commerce sales jumped 800% in the second quarter after having been up as much as 1,000% during a six-week period in the first.
GameStop has hired a new chief digital officer to focus on how it confronts the challenge. It has also redesigned its mobile app, which it claims will make a gamer's experience more meaningful, whether he or she is in the store or outside it.
Management noted e-commerce sales are on track to be a $1 billion business this year, yet they have only achieved 20% penetration, suggesting there remains significant growth in the years ahead. Coupled with arguably one of GameStop's most important developments, the just-announced 10-year agreement with Microsoft to modernize the retailer's back-end operations and expand its digital and physical game options, there is hope for the company's future.