GameStop's console sales drop as users await newer launches

(Reuters) - Video game retailer GameStop Corp GME.N reported a bigger-than-expected quarterly loss, as the current console cycle neared its end and consumers increasingly shifted to downloading games rather than physically buying them.

FILE PHOTO: The GameStop store sign is seen at its shop in Westminster, Colorado January 14, 2014. REUTERS/Rick Wilking

The company’s shares plunged 15% in extended trading.

GameStop reported a 41% fall in new hardware sales for the second quarter, as users preferred to wait for the next generation of Microsoft’s Xbox consoles and Sony’s PlayStation scheduled in 2020.

The results also came against the backdrop of technology giants like Alphabet Inc's GOOGL.O Google and Microsoft MSFT.O developing game streaming services. Sony Corp 6758.T and Nvidia Corp NVDA.O also offer game streaming services.

In March, Google announced its Stadia game streaming service, allowing users to play games through their internet browser, while Apple Inc AAPL.O announced the unveiling of its subscription-based videogame service, Apple Arcade.

The GameStop stock hit a 14-year low when Apple launched Apple Arcade.

However, the shares recorded their best day in 16 years last month, when Michael Burry’s Scion Asset Management revealed a 3.3% stake in the retailer.

Burry famously foresaw the 2008 subprime crisis and captured popular imagination with Christian Bale portraying him in the movie “Big Short”.

GameStop reported a loss of 32 cents per share for the second quarter ended Aug. 3, bigger than the average analyst loss estimate of 21 cents, according to IBES data by Refinitiv.

The company’s revenue declined 14.3%, with same-store sales falling 11.6%.

GameStop forecast 2019 same-store sales to be down in the low teens, against its previous guidance range of a fall of 5% to 10%.

Reporting by Neha Malara in Bengaluru; Editing by Maju Samuel