Downfall Era

• GameStop was failing to adapt to a changing video game industry: GameStop was operating a bloated legacy business model that was failing to adapt to a changing gaming industry. GameStop had too many stores, and revenue was declining as more consumers shifted to downloading games and purchasing subscriptions like Xbox Game Pass and PlayStation Now.
• Ineffective corporate governance: the company was losing hundreds of millions of dollars annually while an oversized board approved millions in executive compensation and relied on costly, ineffective consultants in a failed attempt to reverse its decline.

Prior to 2021, GameStop operated primarily as a brick-and-mortar retailer, relying heavily on physical game sales and a well-established trade-in model. While this approach had long been a cornerstone of its success and identity, the company’s digital presence remained relatively weak. As consumers increasingly embraced online shopping and digital downloads, GameStop struggled to adapt its traditional business model to a rapidly shifting marketplace.

Over time, these changes contributed to steadily eroding sales. The billions in revenue generated by a previously reliable network of stores began to decline as both customers and the industry at large moved toward digital platforms, subscription services, and direct-to-consumer game distribution.

The COVID-19 pandemic in 2020 further compounded these challenges. Mandatory store closures, reduced foot traffic, and widespread economic uncertainty put intense pressure on the company. As more people turned to digital purchases, GameStop’s limited e-commerce capabilities prevented it from fully capitalizing on the surge in gaming interest, ultimately deepening the difficulties it faced leading into its 2021 transformation efforts.

In a brief interview at The Bitcoin Conference 2025, CEO Ryan Cohen provided some comments reflecting on the struggles that the company faced when he first got involved.