Will GameStop Follow RadioShack's Demise? A Bunch Of Redditors Think So

RadioShack's RSH fate as a doomed retailer has been observed by mall-goers for years. The brand has developed for itself an image as being irrelevant and outdated brand that peaked throughout the 1980s and 1990s.

As ecommerce boomed, retailers like Amazon.com, Inc. AMZN and traditional brick and mortar retailers like Best Buy Co Inc BBY offered consumers a compelling reason to longer frequent the mall – leading to declining foot traffic causing headaches for some retailers, but ultimately forcing RadioShack to declare bankruptcy.

An ‘Ask Reddit' thread posed the question following RadioShack's bankruptcy announcement: ‘What companies are on top today, but poised to be obsolete in the near future.'

The top ranked comment as of Monday morning by Redditor ‘KayBeeToys' suggested that GameStop Corp. GME is destined to follow RadioShack's ultimate fate.

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"It's an unsustainable business model," the Redditor argued. "Digital distribution is inevitable, and without physical media to pawn, GameStop is out of ideas. The game companies already hate them, and the customers certainly aren't sticking around out of loyalty."

The comment holds a lot of substance. Electronic Arts Inc. EA reported in its third-quarter results in January that on a trailing 12-month basis, net revenue totaled $4.337 billion of which $2.178 billion was digital revenue, marking the first time digital revenue accounted for more than half of total revenue.

"EA has driven another quarter of record-breaking financials," the company's Chief Financial Officer Blake Jorgensen commented in the company's third-quarter results. "Our ongoing digital transformation, including lives services like EA Sports Ultimate Team, coupled with ongoing cost discipline, enables us to deliver consistent cash flow and earnings growth."

However, some Redditors aren't convinced of GameStop's demise.

Redditor ‘callizer' defended GameStop's business model and stated: "Considering Xbox Live is constantly down, it makes sense [GameStop] still sells physical games."

One thing is for sure: the bull and bear camp will continue debating GameStop's relevancy in the retail space, analyzing every NPD video game and console data and quarterly report very closely for signs of trouble or success.