B) I can’t believe everyone in this thread so far is talking about the actual company, and not what this means for the “I am 100% sure GameStop will make me a billionaire” cult!

That is by far the most interesting thing to me about this dying brick-and-mortar. There are god knows how many people on that subreddit convinced that GameStop is poised to become the new Amazon. It’s almost enough to get me to cross the reddit picket line out of curiosity…

They think they will become billionaires because they expect failures to deliver on naked shorts of shares they've directly registered

The 'true believers' in this stock's idiosyncratic risk are expecting a short squeeze due to a confluence of relatively unknown market mechanisms such as FTD, CNS, reg SHO, and the formation of a short-busting coalition between Carl Icahn via BBBYQ and others...

It's a rabbit hole, for sure. But the fact is that the DTCC, FINRA, and other SROs controlling the markets are inscrutable black boxes that don't provide enough data for anyone to know the extent of the fraud they may or may not be perpetuating by systematically creating 'synthetic' shares in the publicly companies regardless of the officially authorized outstanding shares according to the companies' charters.

Look at the ongoing BBBY CH11 bankruptcy proceedings for an example of how difficult it is to get an idea of 'TSO' or (Total Shares Outstanding) for a public company. The claim is that more shares have been created within the DTCC than the company has authorized, and the right corporate maneuvering could force these 'extra' shares to close or cover which would drive demand exceptionally high.

Disclaimer: I own GME because the number of FTDs is in the high millions some days, and the notional values in the 10s of millions. Something is (still, 2 years later) up with this security in particular, and even if I don't become a billionaire from this investment I hope to shine some light on a corrupt corner of the market that has become 'business as usual' while I strongly disagree that it should be tolerated at all. (FTDs and Synthetic Shares)

It is readily apparent why there are investors who think this way, starting with a conspiracy theory about secret messages in a children’s book.

1) How the market 'truly' operates and 2) how this operation is being abused

https://youtu.be/nLnw2_q5iMk

A sibling comment of yours summarized it best - I just understand their vision as an amalgamation of growing the online store considerably, replacing Steam, selling NFTs that in some way relate to in game functionality, and making GameStop stores “community centers” or smtn. All of this is backed up by mantras like “debt-free”, “based Ryan Cohen”, “warehouses full of product”, “corporate vision” etc etc etc.

I really despise finance so I have very little to criticize you on there, and wish you the best, but from your reasonable tone I’m assuming you’re doing this as a considered risk, not going all-in with 100% confidence that a short squeeze is coming any day now.

I oscillate between enjoying that whole part of the internet because it’s fun and interesting, and thinking of all the children who have their college savings tied up in the stock of a clearly dead-in-the-water legacy retailer :(

The plan included hiring a bunch of expensive Amazon execs, selling NFTs, and other very 2021 boom-time ideas that don’t seem to be working out too well.

Although I’m a crypto skeptic, YOShInOn shows me articles from Coindesk every day even though y’all will rarely vote for one if I post it to HN. I’m very aware of what is going on in the crypto world and if a marketing letter doesn’t make any sense to me it could only make sense to a handful of crypto bros.

I think what happens on HN is a subject matter comes up that often doesn’t get much attention on HN, so folks start chiming in with tangentially related but top of (their) mind thoughts/anecdotes.

It’s nice to discuss things like that with the HN crowd, to see what they’re also thinking about things we’ve been thinking about, even if it may not tie in directly with the linked article.

Was wondering this myself. Does this headline mean that this thing has been pumped and dumped and they're back to managing decline? Have unfolding events made the logic behind the bullish argument bad? Something else?

I still think back fondly on the early days of GameStop, and some memories of taking my kids there.

And I still buy physical mostly (particularly for triple A and first party titles), for a number of reasons, so I hope that physical still remains for a while, despite the broader move to digital.

But I won’t be sad when GS goes belly up. I’ve already mourned the “good ol’ days” — the GameStop I knew and loved is long gone.

I used to fight this battle. I prefer physical, sure. But when I put the physical disc in, and theres a 25+gig download for the games patch or whatever it needs to update, I realized I'm fighting vs an opponent that doesn't exist. And I'm good not updating the game. But then I end up with an unfinished, sometimes buggy experience. I wish there was a physical vs digital fight, but really the companies that control it are not engaging in the battle.

Now I find myself repurchasing games I've only owned in digital form as physical copies, at least where the game does not have a mandatory download or always-online functionality that would make them useless in the event of service shutdowns. So it's more or less been Switch + older generation consoles.

This recipe lead to them expanding quickly, often nudging out other regional/local game stores. Unfortunately, during this time period they also began some pretty annoying practices. They started pushing magazine subscriptions and club memberships with every sale. Same with extended warranties. The checkout process was awful. At the same time, complaints about how management was treating the staff started coming in.

What really hit the nail on the GameStop coffin was digital downloads. Since PS4/Xbox One generation the consoles have had large enough hard drives and fast enough network connections to buy and download games from the internet. This began to cut into physical game sales. With the latest generation you have to pay extra money to have a disk drive, and the consoles have low cost subscriptions that include a access to a healthy library of games. These all hurt sales, and GameStop isn't in a position to replace those sales with anything else.

I don't understand how any business thinks opening retail packaging and selling the product as new is acceptable. There has to be some logic to it but it is baffling, and an absolute deal breaker, to me.

I'm not at all surprised to hear it's a business in decline.

I like it how it is a place to go and run into people like the teenage girl who is dressed like somebody from

https://www.thriftbooks.com/w/fruits_shoichi-aoki/299691/#ed...

and is arguing with her dad (my age) about the value of an anime plushie and I will definitely take her side. On the other hand there is very little inventory there, and frequently a game I buy for $5 doesn’t work and the replacements don’t work either. In a world where most of the gaming spend is on mobile, where downloading is the dominant distribution channel for consoles and PC and a game you buy on disc might need a 50GB update on day one, I can’t see how they are relevant. It struck me as really strange that two issues of Game Informer featured Genshin Impact which is a hit mobile game that entirely cuts Gamestop out.

In Binghamton NY roughly 50 minutes away there are two vintage game and entertainment stores that beat the pants off Gamestop. Both of them have sections of used XBOX and PS games that are about twice as big as our Gamestop. One of them has a lot of used music, DVDs and also a selection of comics. The other one has an arcade with at least 60 coin op video games and pinball machines. Both feature real retro games and cartridges such as Atari 2600, Colecovision and such, I even saw a C128 for sale. My son bought an N64 there and we were able to get a CRT television to go with it by special request at our local reuse center.

Hopefully some little indie game stores will have a little more room to breathe.

Better link:

https://news.gamestop.com/news-releases/news-release-details...

GameStop is such a far cry from that experience and has been this way (in declining fashion) for 20 years now.

I knew some folks who were in Software Etc & Babbages management both pre and post merger and they were saying back then that all of the problems with the company were top-down and it seems things haven't changed a bit. Their management has run this company completely into the ground.

On one hand, it's nice to just press "buy" on the console and get on with it, but it's also nice to have a physical copy (particularly so when companies can just shut down their digital store front whenever)

That being said, fuck GameStop's absurd pricing and trade in models.

Went over to the Target down the street: they had 3x physical copies. I picked up 2x copies for my two nieces so that they could play together.

Physical stores still serve a good purpose for quickly buying gifts on the go throughout my day. But Gamestop is not a reliable store anymore.

I think maybe the distribution channels messed things up for the smaller big box company. Could also be bad for independent ones.

Or could someone have just come in and bought them before you got there and it happened to be relatively more quick selling than at Target?

Gamestop is not a "smaller" company. They should have more volume than Target with regards to video games. I would expect Target to be the smaller between the two, because Target's video game section is kind of sad most of the time.

It is Gamestop who is messing up here, they don't want to stock the goods because Gamestop clearly doesn't have the money to keep their inventory count high.

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The Gamestop in question was in a busy mall. I was there for other reasons (food / hangout with family), but realized that an impromptu-buy could help out my nieces. I assume that most foot traffic is like this, I wasn't "planning" on buying anything (If I were planning, I'd have bought it from online). It was a spur-of-the-moment thing.

And then they failed to have the stock, so I didn't buy anything. And I don't think "Advance Wars: Reboot Camp 1+2" is that obscure of a game. It was clearly 3x stocked at Target.

They're bigger as a company and more successful too.

The thing is that yeah Gamestop is putting focus on their product. But do they care?

A comparison would be Best Buy vs Apple Stores. Best Buy is bigger than Apple Stores, but Apple Stores is prioritized. But the only reason is because Apple is deeply connected to them to the point of owning them. The mom and pop mac stores get lower priority than Best Buy, even though they focus on selling macs. GameStop is at an arms length from the game publishers.

Also I wouldn't be surprised if there were more people walking through the video game aisles in a Target than in a Gamestop. If a gamestop looks quiet it probably is in fact quiet. Whereas there are a lot of bored people wandering Target stores because someone brought them there.

If no one was shopping at Gamestop, that was Gamestop's own fault. It was in a very busy location with regards to foot traffic.

Gamestop absolutely needs to make sure that these prime retail locations have the inventory to make impromptu-sales. Otherwise, why the hell else are you renting out prime mall real-estate?

Source: Myself. I walked by both store locations and know the area.

I loves me some dead malls.

Daughter got a great game for Christmas? She can’t share it with siblings, or friends in real life, or friends from another state (why not mail game cards once in a while?). Kind of a huge shame really if it was a single-player game with a finite beginning and end.

It’s dumber though for collecting too. As a collector, if you buy used… the games you bought for $35-40 will probably sell for at least $30-35 (if they are Nintendo). They might even explode like the GameCube or 3DS. And with 70%~80% of Switch purchases being digital, there’s going to be a real physical media shortage when the eShop goes down. (At a minimum though, if they keep even 75% of their value over a 5-year period after you bought them for $38 or so used, you could spend $1000 on Switch games, have it still be worth $750, and have paid about $50/yr to have a ludicrous catalog. Can’t think that way with digital.)

Which, that’s just great too. Digital is not very resilient to any kind of cyberwarfare, or AWS having a bad day. Just when you need it most, it’s gone. I rate our odds of keeping electricity available as being much higher than computers and digital equipment.

Edit: And while I keep adding reasons; remember that physical means you have the ability to always play the game version physically on the card. (If you update the game after inserting the card, you do need to factory-reset your Switch to go back to that older version for various reasons, but you can still get to it.) This matters quite a bit if a game becomes more bloated and slow over time (Minecraft), or if the game had useful duplication bugs that were patched (Zelda: TOTK). Digital downloads? You're stuck with whatever update they give you.

You can run the game on both Switches at once, with one license - something you can't do with physical. But it's a massive trade-off since no online or store shutdown means you're stuck, whereas a cart should work forever.

Potentially true, but less and less so these days. I have a couple of physical games that are unplayable without a day one patch. The cartridge doesn't have everything it needs to play the game. Once the servers stop hosting the content and I swap consoles, I won't be able to play the game.

Chances are, it'll outlive my interest in the game so it's whatever to me personally, but I do get that for some people who play older games it means that game will eventually become officially unplayable.

1. Games that require downloads are clearly labelled on the box. (Spyro being an example - clearly states that a ~10GB download is required on the back.)

2. Games that only include download codes are required to have a massive banner at the top of the box. There's also no "Smart Delivery" nonsense like on Xbox where the game might have a Xbox One version but no Xbox Series version on the disc.

3. Games can be updated offline from another Nintendo Switch. While not a perfect system (no upgrading directly from stored files), if Person A's Pokemon Scarlet has been updated to 1.4, and your version is 1.0; if the internet was not available, Person A could update you to 1.4; and then you could update other people to 1.4. Compare that to a PlayStation or Xbox which has no capacity for offline updating of games, of any kind. The catch though is that the Nintendo Switch System Software (OS) has no ability for offline updates unlike the PlayStation or Xbox, so keeping your Nintendo Switch System up-to-date is still important.

4. Nintendo occasionally revises cartridges to have newer versions of games, quietly. Super Mario Maker 2, for example, has had 5 cartridge revisions going from version 1.0 to 3.0.1. Breath of the Wild has had 4 revisions from 1.0 to 1.6. Third-party studios don't do this that often, unfortunately, but you can read the revisions list at http://www.benoitren.be/switch-cartridgerevisions.html.

Also, neat information about Switch consoles being able to share game updates locally. I did not know about that feature. It would be really nice if the Switch could allow local OS updates, like save the update package on the SD card and copy it over that way or something.

It's a crapshoot.

For Xbox, many new games advertise "Smart Delivery." Code for, "we'll install the version of the game that's best for your console." Great, right? Not if you are a collector! The disc is only so large, so almost all games have to choose whether to have the old Xbox One version on the disc; or the newer Xbox Series X version on the disc. Almost all games opt for the Xbox One version because that's more backwards-compatible. The exception to this are Series X-exclusive games which are... uncommon.

This, obviously, sucks as a collector because it means almost all of your games, even new ones, are really just Xbox One games with a digital download for the newer Series X attached to them. PlayStation was a little kinder (or not?) on this, by simply selling two versions of games, one labelled PS4, the other PS5. No free upgrades - but at least it is patently clear which version you are getting.

But there's more to the story than just this. AAA game releases for Version 1.0 are typically horrifically buggy - so a day-one update is almost always a necessity. Nintendo isn't immune to this (Pokemon Scarlet and Violet), but Nintendo Switch cartridges cost a fortune to make compared to a Blu-ray Disc (dollars per cartridge) and Nintendo Switch systems are much more likely to be used in offline environments, which helps disincentivize this behavior. Better to release a physical Switch version later, when the bugs have been worked out, and when the lower margins are more acceptable. Blu-ray Discs cost... pennies to make, to go into systems that are almost always online, so a buggy 1.0 on disc is no big deal. And those updates can be monstrosities (take, for example, Star Wars Jedi Survivor. It's Series X-exclusive, so no Xbox One version on the disc. Great - except that it has 46GB of data on disc, but 104GB worth of updates and added content downloadable. No warning on the box because it is still technically playable from disc only. PS5 version has the same issue with download required after the initial mission. Yuck!!)

In fact, sometimes, having no game at all on disc is no big deal on Xbox. Case in point: Call of Duty: Modern Warfare 2 which comes with none of the game on the disc, just a 100GB+ download upon inserting the disc. The disc is only 70MB to contain licensing data and an installer. There is a small warning on the front ("Requires content download") but that kind of undersells the situation. At least the Nintendo games that require a download (Spyro) have at least some of the game available and playable.

Edit: For more information, see https://www.doesitplay.org.

I went legal with Steam, but stopped when microtransaction galore got adopted everywhere, on top of DRM. Arrgh matey!

1- Physical games don't go away with GameStop, and their decline coincides with a larger contraction around physical retail stores generally as people shift to buying things online (even, ironically, physical copies of games they could have downloaded). And, you can always load up a hard drive with the digital copies and them load them back into the machine when you want to play (depending on your console).

2- I feel like the decline of GS has more to do with your final point, which is that trading in games got to a point where it wasn't fun/useful for the consumer (hey, that AAA title you bought 6 months ago for 70 bucks? 15 dollar trade in, buy used for 40!) combined with the overall decline in physical retail.

(edited for typo)

Games have values: the value goes up at launch so that you can play it before spoilers leak to the internet. Then, after it is a bit stale, it declines in value a few months later. After a few years, it might go up in value if people have fond memories of the game and it becomes retro, but otherwise it probably becomes completely worthless.

But imagine if you go to someplace like a pawn shop and they say "gosh this thing just isn't worth much at all, best I can do is $1." Then you see them stick it on the shelf with a $100 price tag and turn it around a few days later. Seems like maybe you should have gotten more than $1 out of it, right? Its the same thing without as extreme of a markup, they'll offer you like $10 for a game they then stick on the shelf for $40-50. I realize they need some amount of margin, but it just felt more and more like a bad deal as they kept used prices closer to launch prices while offering less and less for used games.

I don't mind the idea of spending $$$ on a game and not expecting to sell it later. Most of my game spending these last few years has been entirely on digital marketplaces with practically zero chance of resale. I'm just saying Gamestop's used market made me ultimately like brand less over time as their spread between what they'd buy at versus what they'd expect to sell at got fatter and fatter. If the game's supposedly only worth $10, I shouldn't see it on the shelf for 4x the price the same day.

The marketplace is dying. Gamestop is losing money. Even with those tricks its still not looking profitable.

-----------

We're not quite at the level of BBBY where the shelves are literally empty. But we all can see that Gamestop is entering a death spiral here.

Nothing against the store or anything, but its just not a useful place to shop, and its increasingly becoming a less useful place to sell games too.

But you see that's my point. In my opinion, pushing away their core audience through such crappy buy-ask spreads they've accelerated their own demise. They treated it as their cash cow for a while and kept jacking up their spread, and now most people just don't care about trading games anymore. From my perspective there's almost zero benefit to trading in the physical game or buying used since the discount isn't much at all, might as well just buy it direct from the digital marketplace.

I know for me, they'd have made significantly more off my friends and me the past several years if their bid-ask spread hadn't driven us away from the store seeing them as a greedy store. A few dozen used trades each versus literally $0 as there's no point in shopping there versus Target or Walmart or the digital marketplace. They had one thing that made them unique, and they ruined it over the years.

And I disagree that the entire used games marketplace is dead, but I do agree its dying. There's a small local chain of used movies, music, and games nearby they seem to turn of a good bit of merchandise. They don't set up locations in expensive real estate locations and they're not spending a lot of money trying to make NFT marketplaces, and from what I gather they're probably pretty low debt so they're not forced to make a lot of interest payments.

I feel like that's on you for perceiving it that way. They're not saying that. There's no intended deception. They're stating they're willing to buy it from you for X. They, unlike you, have a large network of game-buyers. They're merchants.

(Your metaphor is also flawed as the theater and home theater experiences are very different, where as "playing a game for the first time, in my own home now" vs "playing a game for the first time, in my own home, 3 months from now" are pretty marginal differences, especially for single player games. It's why I rarely buy games at launch, but I also don't care about video game "spoilers")

Bid-ask spreads are inversely proportional to volume. The less volume there is in a marketplace, the larger the bid-ask spreads get.

If you trade in the Options market, you'll see 30% to 50% differences in bid-ask spreads on the thinly traded stocks. Similarly, video game used-market has been dying (or at least, the marketplace owned by Gamestop), so we're seeing that lesser volume with an increase in bid-ask spread.

Play an obscure trading card game like Magi Nations, you'll see the same thing. There's just not a lot of players, not a lot of traders, so the spreads are huge.

Play a popular game with a popular marketplace like Magic the Gathering, and the bid/ask spreads are much closer.

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The less popular a marketplace is, the longer inventory will sit in warehouses (leading to higher risks and possibly larger losses for the market-makers). Thereby, forcing Gamestop to increase the bid-ask spread.

When Gamestop was popular 10 to 20 years ago, there was enough volume to keep the used-buy vs used-sell prices closer together.

Good luck with the dragons or whatever!

If the spread was only 30-50% I wouldn't mind. Gamestop's spread between bid-ask for used games (even popular new ones) is like 400-500%.

The worse and worse a marketplace does, the more and more the owner is forced to increase the bid-ask spread. Not everything is as efficiently run as the New York Stock Exchange. When you start getting to more obscure games and such, the bid ask spread balloon.

2023 is a different time than 2003. The used market is dying, and its dying because its dying, and the market is forced to make prices worse because its dying and that's causing worse prices to happen. Its a death cycle.

Now maybe with good management and good investment, Gamestop can try to stop this spiral by losing money on sales and trying to offer a smaller bid-ask spread. But the company is more aligned to the lotto-tickets they got from the memestonk APEs and is more interested in building a new internet store than fixing the fundamental marketplace issues.

Its just not true anymore, it seems...

I look forward to the documentary that clarifies why these seem so much more numerous than I remember from 20 years ago.