Digital Downloads Forecasted To Cost 'GameStop' 7% In Sales For Q1

With the rise in the popularity of digital downloads, traditional brick & mortar stores have long feared a loss in revenue due to the competition. A research done by Estimize has finally given truth to this fear, with forecasts placing the loss in sales for the first quarter by 7 percent for “GameStop.”

With major videogame companies like “Electronic Arts” considering digital sales as major revenue movers and worth focusing on for the high growth potential, “GameStop” and other retailers are expected to feel the effects. With “GameStop” in particular, sales have already hit negative numbers several times, largely in part due to the weak software sales.

According to Estimize, the store’s revenue has dropped by 8 percent since the holidays, while estimates have dropped by as much as 11 percent.  Year over year, it seem profitability is declining by 9 percent, while sales are dropping by 5.

The research did point out that “GameStop” stocks are still holding strong. However, with losses adding up to 30 percent throughout the previous 12 months, chances are high that investors are still nervous.

These results are in line with the trend that Market Realist noted back in January. In their analysis, “GameStop” shares fell 21.8 percent during the 12 month period when the results were published. The piece also made notes regarding the losses in the physical sales of software and games where some areas had it worse than others.

Combined with the recent analysis from Estimize, it can be reasonably assumed that digital sales in both video games and software are definitely having a negative impact on the revenues of traditional retailers. As such, if “GameStop” and other stores such as “Walmart” and “Best Buy” do not act soon, they will lose out on a huge chunk of video game revenue. It’s not as if demand for video games have gotten lower either, since it has actually increased.