Will GameStop survive? Here's what its co-founder says

GameStop has faced an onslaught of challenges successful caller years, fixed nan quickly evolving gaming industry landscape.

Co-founder Gary Kusin, who has watched nan institution navigate turbulent times, including nan infamous 2021 short compression orchestrated by Reddit users (it sent nan banal soaring temporarily), says nan institution needs to trim its footprint until it tin find a profitable way forward.

CEO Ryan Cohen has "got to trim nan footprint of stores," said Kusin, who has a way grounds of building businesses successful nan unit abstraction from GameStop to Laura Mercier.

Kusin co-founded nan video crippled retailer Babbage's successful nan 1980s, which now operates arsenic GameStop. He stepped down successful 1995.

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A GameStop shop is seen successful New York connected March 4, 2024. (Shelby Knowles / Bloomberg / Getty Images)

Kusin said nan institution could guidelines to shutter astir 90% of nan stores that travel up for lease renewal each year.

This will "reduce nan request to support unit and each nan things they person to do for those locations until they tin fig retired immoderate categories that will put capable gross done nan 4 walls that they tin salary nan overhead, nan rent, nan group to beryllium location and make a return connected investment," Kusin said.

The company's original business model was geared toward trading beingness games. It couldn't compete arsenic integer downloads and online gaming platforms exploded. It has struggled to accommodate and announced an unspecified number of layoffs to trim costs and amended ratio aft taking a financial deed successful nan 4th quarter, according to a regulatory filing.

From left, GLG Social Impact Director Jen Field, erstwhile CEO and president of FedEx Kinkos and TreeHouse committee personnel Gary Kusin, and GLG CEO Alexander Saint-Amand be TreeHouse Hosts GLG Social Impact Fellows successful Austin, Texas, connected Oct. 17, 2017. (Rick Kern / GLG / Getty Images)

Kusin said nan institution has "tried a bunch of things and nary of them person worked" and noted that its monolithic storefront is partially to blame, saying that "nothing useful successful a 10,000-store footprint, unless it's a historically tremendous sector."

The champion point to do is trim "the effect of that ample footprint" and experiment.

The business GameStop is presently facing is not each that different from Blockbuster, whose outdated business exemplary grounded to compete pinch nan emergence of streaming services, according to Kusin.

Shoppers and workers are shown wrong a GameStop shop successful New York City connected Dec. 2, 2023. (Bing Guan / Bloomberg / Getty Images)

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But while Blockbuster had "nowhere to go," he said GameStop could person an advantage: utilized video games.

"There will beryllium a very agelong tail connected nan utilized extremity of that business for group successful little economical stratas who emotion video games but can't spend either nan bandwidth aliases nan monolithic multiplayer aliases everything they request to beryllium group up," said Kusin, who elaborate his profession successful nan upcoming book, "Always Learning: Lessons connected Leveling Up, from GameStop to Laura Mercier and Beyond."

He added that nan "used marketplace still has legs."

But while Wedbush Securities expert Michael Pachter agreed pinch Kusin that GameStop should shrink its beingness footprint, he based on that nan champion way guardant is to unopen down and waste nan brand.

A GameStop shop is seen successful New York connected March 4, 2024. (Shelby Knowles / Bloomberg / Getty Images)

"There is not an intelligent investor live who owns GameStop," Pachter said.

He based on that nan institution could person leaned into nan utilized marketplace 10 years agone because publishers who waste games coming for illustration integer downloads.

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"The constituent is that arsenic games get much digital, there's little beingness [games] disposable to waste and acquisition in," he said. "The percent that grows digital is nan percent [that] shrinks physical." 

Hardcore gamers who waste and acquisition successful each crippled will support buying a beingness product. The rumor is that utilized gross is straight correlated to caller beingness crippled sales.

"Physical income aren't going to ever get better," Pachter said. "It's not going to ever stabilize. It will proceed to decline. And nan logic it will proceed to diminution is we person a full procreation of kids increasing up who person ne'er seen a beingness transcript of nan game."