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GameStop is up for sale as video game market shifts online

It's because you're buying your games online.


GameStop had drawn takeover interest from private equity firms, according to Bloomberg.

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GameStop, whose motto is "Power to the Players," may be running out of steam. 

On Tuesday, the video game retailer confirmed it's conducting "exploratory discussions with third parties regarding a potential transaction." It added there was no guarantee a deal would happen.

The company had drawn takeover interest from private equity firms such as Sycamore Partners, according to Bloomberg. The reported interest follows a roughly 25 percent drop in GameStop's stock in recent years. The company's stock bounced more than 3 percent on confirmation of the talks.

The potential sale underscores the toll online retail and digital distribution of video games have taken on GameStop. Over the past few years, the company has attempted to diversify its revenue by expanding into geek merchandise, like genre-related figures and apparel. Still, it has faced competition in its core game market.

The retailer has acknowledged the challenge created by the flood of easy-to-purchase games for smartphones and PC titles that are available through services like Steam. 

"Video games are now played on a wide variety of mediums … Browser, mobile and social gaming is accessed through hardware other than the consoles and traditional hand-held video game devices we currently sell," the company wrote in its 2017 annual report. "Our business and results of operations may be negatively impacted if we are unable to respond to this growth in popularity of these new forms of gaming."

GameSpot's struggles are the latest among retailers facing online competition, particularly Amazon's dominance. Circuit City and Borders have shut their doors, as will Toys R Us in the next few weeks.

GameStop doesn't plan on commenting on the discussions for the time being.

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