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How Digital Downloads Destroyed GameStop

In May of 2018, GameStop CEO Michael Mauler resigned from his position, citing “personal reasons” for his withdrawal. Now, as we edge more and more into the time of digital gaming platforms, it looks like GameStop could be considering a buyout from a private firm. One of these firms, Sycamore Partners, is a New York based private equity firm that specializes in leveraged buyouts and corporate carveouts.

GameStop used to be the kingpin of retail game sales, but since almost every game is now available for digital download, the need to go to stores is obsolete. Because of this, GameStop stock has decreased 32 percent in the last year following a trending decline that began in 2007. Back then, the company’s shares were worth approximately $9.4 billion, when now it stands at a measly $1.42 billion.

Any company that has been on a downward trend for over 10 years is likely to seek alternative options in order to get the most out of their declining business; therefore, a buyout may be the best way to salvage the remainder of the company. GameStop is not the only retailer struggling in the digital age, as we see many companies not being able to stay afloat amidst the ease of online shopping, specifically Amazon’s domination of the retail market.

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