When Sony said it would stop making physical discs for all new PlayStation games starting in January 2028, the obvious take was that GameStop was in trouble. The company built an empire on selling and reselling physical games. No discs, no reason for GameStop to exist, right? That was the assumption everyone reached in about ten seconds.

Then the stock moved. And it moved up. Not down. Not a flat shrug. Up.

If your mental image of GameStop is still the cluttered mall store buried in pre-owned cases, this feels backwards. But the truth is the company has been changing itself for years, quietly, while most people kept laughing at the 2021 meme stock saga. By the time Sony made its announcement, GameStop had already become a different business. The death of the disc barely grazes it now.

The numbers say it plainly

Start with the raw data. For the 13-week stretch that ended May 2, 2026, GameStop brought in $835.3 million in total revenue. Software, which covers new games, used titles, and digital games, made up just $152.7 million of that. That's 18.3% of the whole business.

A year earlier, software was 24% of revenue at $175.6 million. So it's shrinking two ways at once. Less money in absolute terms, and a smaller slice of the pie. The direction is not subtle.

So what's plugging the hole? Collectibles.

In the most recent quarter, collectibles, stuff like trading cards, apparel, toys, and pop culture merch, pulled in $348.9 million. That's 41.8% of total revenue, and it jumped 65% year over year. Hardware and accessories came right behind at $333.7 million, or 39.9%. Put those two together and they're more than 80% of what GameStop actually sells now.

Sit with that for a second. The store that everyone still pictures as rows of used game cases is, in practice, a collectibles shop that happens to stock games on the side. The identity lagged behind the reality by a few years.

Discs ending is not the world ending

Sony phasing out physical discs by January 2028 is absolutely a hit to the legacy side of the business. Nobody should pretend otherwise. But it's not the extinction-level event it would have been ten years ago, for a couple of reasons.

First, it's two years out. GameStop has that long to keep pivoting, and they're already most of the way there. The timeline is a gift, whether Sony meant it that way or not.

Second, even with no disc inside, GameStop will still sell the box. Rockstar's GTA 6 is probably the most anticipated game of the decade, and it won't ship on a disc. But GameStop will still put a physical box on the shelf with a download code in it. For collectors who want something to display, that box matters. For GameStop, that box means a reason for someone to walk into the store. Foot traffic is the whole game.

Sony framed the move around the fact that most of its users already buy digital. Analysts expect the PS6 to launch as a fully digital machine, probably no earlier than 2028. By that point GameStop will look even less like a game store than it does today. That was always going to happen. The question was never if, it was whether GameStop would still be standing when it did.

Ryan Cohen and the eBay swing

A big part of why the stock behaves the way it does comes down to CEO Ryan Cohen. In May 2026 he did something that caught Wall Street off guard. He sent eBay an unsolicited offer to buy the company for roughly $56 billion in cash and stock. The pitch was to turn GameStop into a real e-commerce player, and more specifically, a reseller of digital gaming items.

eBay's board said no. That's where it ended. But the attempt told investors something. Cohen isn't tinkering at the edges. He's aiming at a completely different scale of business.

What really got people's attention was what he did next. Cohen pulled back a potential $35 billion performance award, a pay package that would only have paid out if he pushed GameStop's market value up more than ten times. His stated reason was that he wanted leadership focused entirely on running the company and closing the eBay deal, not distracted by a giant personal payday hanging in the balance. A CEO walking away from $35 billion is not normal behavior. Markets notice that kind of thing. It reads as someone playing the long game instead of cashing a check.

A company that got rebuilt

None of this happened in a quarter. Under Cohen, GameStop cut costs hard, closed hundreds of stores that weren't pulling their weight, and moved into product categories with better margins. The scoreboard shows it worked. GameStop posted record quarterly net income of $389.6 million in Q1 2026, up from $44.8 million the year before. Operating income hit $143.3 million, against an operating loss of $10.8 million a year earlier.

The balance sheet is the part that surprises people who haven't looked in a while. At the end of the quarter GameStop was sitting on $9.7 billion in cash, marketable securities, and digital assets. The board signed off on a $2 billion share buyback. A company about to die doesn't hoard nearly ten billion dollars and buy back its own stock. Those are the fingerprints of a business that already made it through the hard part of the transition.

Why the old story doesn't fit anymore

The line everyone repeats is simple. Physical discs are dying, so GameStop is dying. It made sense in 2015. It doesn't now. GameStop still sells games, and yeah, losing discs hurts that slice. But that slice isn't the company's lifeblood anymore. Collectibles and hardware are.

The actual story here is about adapting before the floor drops out. GameStop read the room early enough to stop depending on plastic. Now it serves a wider gaming and pop culture crowd. Funko Pops, limited controllers, gaming chairs, and maybe someday a digital resale market built on an eBay-sized acquisition. The bet is that gaming culture is bigger than any single format it gets delivered in.

That bet is working so far. The market priced it in. The stock climbed after the Sony news instead of cratering. And GameStop is showing that even in a fully digital future, there's still space for a retailer that knows what its customers actually want, whether that thing ships on a disc, in a box, or as a code on a receipt.

The disc is on its way out. GameStop, against the obvious prediction, is very much not.

What this means for the next two years

It's worth being honest about the risks, because the bull case isn't flawless. Collectibles are a trend-driven category. Trading card demand swings hard, and a slowdown there would hit the exact part of the business carrying the company right now. Hardware margins are thinner and tied to console launch cycles that GameStop doesn't control. If Sony and Microsoft go fully digital, the accessory and box-sale cushion gets smaller.

But here's the thing. GameStop has time, cash, and a leadership team that has already proven it will cut dead weight instead of defending it. Two years is a long runway to keep pushing into higher-margin stuff and to actually close some version of the e-commerce move Cohen clearly wants. The old GameStop would have spent those two years hoping discs came back. This one will spend them building something the disc's disappearance can't touch.

That's the real reason the stock didn't fall when Sony spoke. Not because discs don't matter. Because by the time they're gone, GameStop will have already left that business behind.