GameStop, the iconic video game retail chain, is undergoing a radical transformation as its chairman and billionaire founder of Chewy, Ryan Cohen, takes the helm as CEO. In his first email to staff, Cohen emphasized the necessity of “extreme frugality” and warned against “time wasters” as the company grapples with financial challenges. Despite Cohen’s involvement with GameStop since 2021, the company has struggled to achieve profitability. Efforts to diversify, including ventures into online deliveries, NFTs, and non-gaming products, have not yielded substantial returns. GameStop’s profitability remains hampered by the industry-wide shift from physical game sales to digital downloads.
The recent departure of several top executives, including Cohen’s own choice for CEO, Matt Furlong, has left the company facing increased uncertainty. GameStop initiated multiple rounds of layoffs in 2022, even though it still holds approximately $1 billion in cash reserves, largely from the meme stock phenomenon. Cohen’s message to employees was blunt and uncompromising: “Every expense at the company must be scrutinized under a microscope, and all waste eliminated.” He stressed the need for employees to treat company funds as their own and emphasized that GameStop must operate efficiently and profitably.
The challenges facing GameStop are significant, with digital downloads gaining ground over physical sales. To compound matters, leaked information suggests that Microsoft may eliminate disc drives from future Xbox consoles. While collectibles like Funko Pop! have taken up more shelf space in GameStop stores, they have not offset the declining sales of used games.