In a letter to GameStop's board of directors, Ryan Cohen, one of the biggest investors in the company, is calling for greater changes to the video game retailer, including the closing of more store locations. Cohen's venture capital firm RC Ventures owns a 9.8% share in GameStop. The Wall Street Journal obtained Cohen's letter, in which the investor claims that GameStop is not doing enough to evolve alongside the video game industry, including keeping up with evolving trends, such as digital sales and streaming. The investor argued that closures should be made and that GameStop needs to "identify duplicative, underperforming stores and plan to forgo lease renewals."
In addition to store closures, Cohen also believes that operations in Europe and Australia need to be revamped or abandoned altogether. "While the Australian market has shown signs of life, it is not nearly big or strong enough to offset the losses linked to the Company's hundreds of stores across European nations," said Cohen.
GameStop executives blamed the company's dismal performance during the 2019 holiday season on lack of interest in the PS4 and Xbox One. Following the release of the PS5 and Xbox Series X, it seems that GameStop is positioned to have a much stronger finish in 2020. However, Cohen claims that "the next console cycle's temporary sales bump is not a justification for complacency and glacial transformation."
Cohen apparently wrote the letter after finding that his discussions with GameStop management had proven fruitless. Time will tell whether or not his letter to the board of directors will have any sort of impact, but it's clear that GameStop has made several moves over the last year to shift direction. The company has already closed more than 400 stores, and entered a strategic partnership with Microsoft, which will gives store locations upgraded technology, and a cut of lifetime revenue from Xbox All Access subscriptions.
It remains to be seen whether or not GameStop's changes will be enough to keep the company afloat. The growth of digital gaming and subscription services like Xbox Game Pass could have a major impact on the retailer. Still, there is a very large segment of gamers that prefer physical releases to digital, and it seems unlikely that will change. As the video game industry continues to grow, GameStop's place in its future remains in question.
Do you hope to see GameStop turn things around? Should the company close more stores? Let us know in the comments or share your thoughts directly on Twitter at @Marcdachamp to talk all things gaming!