RYAN COHEN'S GAMESTOP PIVOT: GAMES ARE 18% OF REVENUE AND FALLING
GTA6 goes digital-only, Sony ends physical discs, and GameStop's CEO says that's fine because the company now sells toys.
by editor4 min readcomments soon
THE ONE WHERE THE CEO DOESN'T FLINCH
Ryan Cohen gave one of the stranger CNBC interviews in recent memory, and the headline is this: he is perfectly happy that the entire physical games market is about to vanish. Grand Theft Auto 6, the biggest launch in entertainment history, will arrive in November as a digital-only product. GameStop will not sell a single used copy. Sony announced it will cease production of new physical PlayStation games starting in 2028. And Cohen, the GameStop chairman and CEO, shrugged.
he said of the end of physical games, according to the interview. That is either a toweringly confident strategic bet or a man whistling past the graveyard. The numbers suggest it is the former.
THE PIVOT NOBODY SAW COMING
GameStop is no longer a games retailer. Not really. Game sales accounted for just 18 per cent of the company's revenue in the most recent reported period. Trading cards and toys, including the dreaded Funko Pops, made up 41 per cent. The company has quietly become a collectibles shop that happens to carry a few discs near the till. The shift has been deliberate: Cohen has spent years reshaping the chain from a place you go to buy a new release into a place you go to hunt for a rare Pokémon card or a limited-edition action figure.
The numbers work in his favour. If games are only a fifth of revenue, then losing the physical games market entirely — and with it the used-game margins that once made GameStop a profit machine — hurts less than it would have a decade ago. The collectibles business has higher margins and is less vulnerable to digital disruption. You cannot download a Funko Pop.
THE EBAY DREAM THAT DIDN'T HAPPEN
Cohen's vision extends beyond the shop floor. He revealed in the same interview that he pursued a plan to acquire eBay for around $55 billion. eBay rejected the unsolicited offer in May. Cohen argued that a combined GameStop and eBay could create a $1 trillion business. Whether that number holds up under scrutiny is questionable: eBay's current market cap sits around $25 billion, GameStop's about $10 billion, and the gap from $35 billion to $1 trillion is a chasm. But the ambition tells you something about how Cohen thinks. He wants GameStop to be a platform, not a store.
The eBay bid failed, but the idea lingers. Cohen is comfortable thinking in billion-dollar leaps. The challenge is executing on the ground while the industry he started in dissolves around him.
WHAT HAPPENS WHEN THE DISCS STOP
If Sony follows through on its 2028 deadline, and if Rockstar's GTA6 decision sets a precedent for other publishers (which it almost certainly will), the shelf of physical games in a GameStop store will become a nostalgia display in a few years. The used-game market, once the spine of the business, will wither to zero. Cohen's answer is that the company has already moved on.
The risk is that the collectibles market is not infinite. Trading cards and toys are fad-sensitive. A Funko Pop glut or a Pokémon card bubble could leave GameStop stranded again. Cohen is betting that the company's physical retail footprint — increasingly an anachronism in a digital world — can be repurposed as a destination for physical toys. That is a bet on the fact that people still like to browse, touch, and buy things with their hands. It is not an obviously bad bet, but it is a narrow one.
THE BIT THAT SHOULD WORRY COHEN
For the GameStop employees who spent years pushing pre-orders and used-game subscriptions, the message from the top is: your expertise is obsolete. The chain that employed them as gaming specialists now needs them to sell trading card packs and plush toys. The cultural shift inside the company may be more jarring than any external announcement about GTA6.
For investors, the story is cleaner. Cohen has a plan. He executed it. The stock, for all its meme volatility, has stayed alive. The question is whether the plan has legs once the last disc leaves the shelf. If collectibles revenue falters, GameStop will have no games business left to fall back on. That is the risk Cohen is taking, and he sounds remarkably calm about it.
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