EB Games: The NZ Collapse Is a Warning Shot, Not an Outlier

So, the Kiwi arm has been amputated. Just like that. Thirty-eight stores in New Zealand, gone by the end of January 2026. The official press release from GameStop HQ was a masterclass in corporate sterilization: the New Zealand market was "no longer commercially viable," but—and here’s the kicker—the Australian operations remain "unaffected."

Rubbish.

If you believe that the economic forces obliterating physical retail across the Tasman stop at the border like a fruit fly inspection, I have a bridge in Sydney Harbour to sell you. The closure of the entire NZ division isn't an isolated tragedy; it is a structural forecast for the Australian market. The ongoing impact of these closures marks the definitive end of the "retail resurgence" myth we were fed post-2021.

The 'Containment' Fallacy

Let's look at the numbers without the PR filter. Managing Director Shane Stockwell cited "multi-million dollar losses" and a sluggish retail environment as the executioner for the Kiwi stores. But look at the Australian landscape. Are our rents cheaper? (Ask any Westfield tenant). Is our inflation lower? Is our shift to digital downloads slower?

No. The exact same pathogens killing the NZ host are circulating in the Australian body. The only difference is the size of the patient. Australia has 336 stores compared to NZ's 38, providing a larger cash flow buffer, but the trend line is identical.

"We are witnessing the slow-motion liquidation of the dedicated video game retailer. The only variable left is the timeline."

The Funko Pop Band-Aid

For years, the counter-argument has been the "Zing Strategy." The idea was simple: as physical game sales plummet (down another 14% in late 2025), fill the shelf space with high-margin pop culture tat. Harry Potter wands, Pokémon plushies, and the endless wall of Funko Pops.

It worked, for a while. It turned game stores into gift shops. But here is the reality check: you have to sell a mountain of $20 keychains to replace the revenue of a single $120 Grand Theft Auto launch copy. The volume required to sustain prime retail leases in Australian mega-malls is astronomical.

The Digital Guillotine

We are arguably the most digitally connected nation per capita. When 85% of game sales are digital, the physical store becomes a showroom where people browse boxes before going home to download the game on a fibre connection. EB Games knows this. That's why they push the 'Trade-In' model so aggressively—it's the only loop that keeps a customer physically returning.

But what happens when the physical media itself disappears? Xbox and PlayStation are moving rapidly toward discless consoles. The next generation of hardware might not even have a disc drive option. When that happens, the trade-in economy—the engine room of EB Games' profitability—evaporates.

What does this really change? It signals that the "hybrid" era is over. Retailers can no longer survive by straddling the fence between physical and digital. The NZ closure proves that once the balance tips past a certain point of profitability, the corporate mothership (GameStop US) will cut the cord instantly. There is no sentimentality in private equity.

Australian gamers need to prepare for a drastic consolidation. We might not lose all 336 stores in 2026, but the days of having an EB Games in every suburban shopping strip are done. Expect a retreat to major flagships and a heavy push to online-only fulfillment, mirroring the very fate they just assigned to our Kiwi neighbours.