Sony Group Corp‘s (NYSE:SONY) plan to kill physical PlayStation discs by 2028 adds pressure on GameStop Corporation (NYSE:GME), a franchise scrambling to diversify beyond game sales.
"In response to shifting trends in consumer preference, new games will be released on PlayStation Store and at retailers in digital formats only," the company announced on Wednesday.
Sony framed the move as a response to current trends. Future titles are now being sold as digital downloads or as physical cases with a download code. For Sony, the change won’t affect games already released or currently in the pipeline.
"This is a natural direction for Sony Interactive Entertainment to adapt to consumer trends as the general preference for digital media significantly outpaces physical discs."
Physical Discs: Things Of The Past?
The change comes after it was announced that the highly anticipated "GTA VI" game from Take-Two Interactive (NASDAQ:TTWO) would be available as a digital release or as a physical gaming case with a digital code to download. The game is the first high-profile release to not be released with a physical version for consoles.
With new consoles expected from both Sony and Microsoft’s (NASDAQ:MSFT) Xbox division in the coming years, physical games could be a thing of the past. The current Xbox console has the Series S, which has no disc drive and counts on users downloading games digitally.
How It Impacts GameStop
For years, GameStop has been one of the top retail locations for video game fans to get their video games. After years of midnight releases and fans camping outside stores, the industry shifted. Digital downloads let players start as soon as the clock strikes.
This shift has led to less physical games bought each year, hurting one of the key lines of GameStop’s business.
GameStop counts on new game releases and used game releases for a key portion of its business. Those two items are both now under pressure with Sony’s latest news. While this is two years away, GameStop investors should be aware of the change.
The good news is GameStop CEO Ryan Cohen has recognized shifts in video games and has already been closing unprofitable stores and putting a greater emphasis on items like collectibles to offset lower video game sales.
In fiscal 2025, GameStop reported the following for its three segments:
- Hardware and accessories: $1.84 billion, -12.3% year-over-year
- Software: $729.3 million, -27.5% year-over-year
- Collectibles: $1.06 billion, +47.7% year-over-year
The software category that includes games saw the biggest decline. That segment represented 20.1% of overall sales, down from 26.3% in the prior year.
In the first quarter, software sales were $152.7 million, representing 18.3% of total revenue.
Enter eBay
While GameStop has put a bigger emphasis on non-gaming revenue, the company also has bid to acquire eBay (NASDAQ:EBAY). The auction company rejected the deal. However, Cohen remains confident in his ability to maneuver to get the company.
A merger with eBay would put even less emphasis on physical video games going forward and could make Sony’s announcement less material to the company.
Right now, the Sony news is painful for GameStop but likely baked into projections somewhat and already a concern that Cohen has been trying to outmaneuver.
Photo Courtesy: Girts Ragelis on Shutterstock.com
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