The history of big business is littered with bad decisions. To be fair though, a lot of decisions are made based on good information at the time. Then, it turns out to be the wrong call later on down the line. Look at Blockbuster’s decision not to buy Netflix back in 2000. No one really knew at the time how much Netflix would explode. The idea of streaming media wasn’t even on the radar and who would want to keep sending DVD’s back and forth in the mail all the time? 2026 is a much different landscape than 2000. That’s also true for GameStop and why they’re trying to buy eBay.
The video game industry has changed and GameStop is not in a good place. The company has been struggling to adapt to things beyond their control. Video game developers and publishers has been cutting staff, cancelling projects, and losing money. Companies like Ubisoft and WB Games who previously pumped out reliable franchises are faltering. And while big studios like Capcom and Nintendo are still thriving, they can only do so much to put games in stores. Indie games have been thriving and reducing costs by not having physical copies they have to produce. GameStop can’t stock their shelves with that.
Many physical GameStop locations have been turning to the collectibles market, including selling and appraising cards. That’s a market that seems to be booming. People want to sell, trade, and find rare cards and games. You know who else has been in that market for years? eBay. As physical game sales dry up, GameStop is trying to find someplace to pivot to, and this is an area that they can work with. There’s a problem though: GameStop is failing hard and fast.
GameStop’s CEO, Ryan Cohen is putting on a stalwart front but he’s got to be masking his fears. His company’s future is perilous and everyone knows it. That’s why he’s making this grandiose play to buy eBay for $55.5 billion. It’s not that it’s a completely horrible idea in some regards. If GameStop is going to try to pivot to the collectibles and rarities market it makes sense. There’s just the issue of the fact that they don’t have the money to actually buy it. They have to rely on outside funds including a commitment from TD Securities. So basically, taking on substantial debt in order to try and buy their way out of financial losses.
Not to mention the issue for GameStop here is that they need eBay but eBay doesn’t need them. Cohen is trying to present this purchase as a good thing for both companies. By having the physical locations that GameStop already has in place, eBay can do more verification of items and have in-person interactions. That would be great if eBay needed those things but they don’t. The online auction company is doing just fine without GameStop. They don’t need the cost that comes with having all those brick and mortar stores. Hell, GameStop can’t even keep up with the cost of them, that’s why they’ve been closing locations!
This is an offer that just reeks of desperation. There’s an adage that states “necessity is the mother of invention.” When you need to achieve something, you find a way to make it happen. Desperation is different than necessity. Desperation happens when the need has become so intense that rational thought and other processes have gone by the way side. It’s not the place to be making decisions like this from and it’s hard to imagine a scenario where eBay accepts the offer.
