The rise and fall

Currently Playing: What actually killed GameStop?

Thanks to Ahrefs for sponsoring this video. See whether AI systems are mentioning your brand, ignoring it, or recommending competitors with Ahrefs Brand Radar: https://ahrefs.com/brand-radar?utm_source=MGirdley&utm_medium=youtube&utm_campaign=partnerships GameStop once had nearly 7,500 stores and almost $10 billion in annual video game revenue. Today, its store count and revenue are dramatically smaller, yet GameStop has survived through one of the strangest corporate transformations in recent memory. In this business breakdown, I look at what killed its original model, how Ryan Cohen and the meme-stock phenomenon changed its trajectory, and what operators can learn from a company whose balance sheet became more important than its stores. Get the 2-minute cheat sheet for this video → https://girdley.com/youtube 👇 SUBSCRIBE for more business breakdowns https://www.youtube.com/@Michael-Girdley?sub_confirmation=1 ► Get my weekly letter to business owners: essential insights to run, grow, and stay ahead in your business → https://links.girdley.com/newsletter-yt ► For sponsorships or inquiries please reach out to: Contact@girdley.com ► Do you have a hat I should wear in a video? Send it to us: Contact@girdley.com ► Free events on all things small business: https://links.girdley.com/lectures-yt ► Deep dives on businesses for sale: https://www.youtube.com/@AcquisitionsAnonymousPodcast ► Follow me on Twitter/X: https://x.com/girdley The rise and fall of GameStop actually begins with Babbage’s, a software retailer founded by two Harvard Business School graduates in 1983. After surviving the video game crash by leaning into Nintendo, the business eventually became GameStop. Its breakthrough was used games: while new games could carry gross margins around 20% to 22%, used games could be closer to 50%. GameStop built a powerful flywheel around buying, trading, and reselling games—and benefited from an information advantage over customers trying to figure out what those games were worth. At its peak, that model was enormous. GameStop acquired EB Games for $1.4 billion, built a massive retail footprint, and reached $9.55 billion in fiscal-year revenue by 2011. But the threat was already developing. Steam and eventually the digital storefronts built directly into consoles allowed customers to buy games without visiting a store. Game publishers had another reason to embrace digital distribution: when GameStop resold a used game, the publisher got nothing from the transaction. GameStop saw digital coming, but seeing the future and executing against it are different things. The company tried online gaming businesses, merchandise, and even acquired roughly 1,500 AT&T wireless stores. None solved the fundamental problem. Meanwhile, aggressive in-store tactics risked alienating the very customers GameStop needed. By 2020, the company had become one of the most heavily shorted stocks in the market. Then GameStop became something entirely different. Ryan Cohen built a major position and pushed the company to change, while Keith Gill, better known as Roaring Kitty, made his GameStop thesis an internet phenomenon. The resulting 2021 short squeeze sent the shares soaring, and GameStop sold stock into the frenzy, raising nearly $1.7 billion that year. Later meme-stock activity helped give the company additional opportunities to raise capital. Cohen ultimately became CEO, cut costs, closed stores, and reduced the chain from its peak of roughly 7,500 locations to around 2,200. That leaves one of the strangest business stories I’ve covered. By 2025, revenue was down nearly 70% from its peak to roughly $3.6 billion, while GameStop had built a $4.6 billion cash pile and was making most of its profit from interest rather than its stores. It subsequently bought $500 million of Bitcoin and, in 2026, even made an attempt to acquire eBay. What happened to GameStop is no longer simply a story about why people stopped buying physical games. It’s a case study in technological disruption, failed pivots, internet-driven financial markets, and how a declining retailer found an entirely new source of optionality.