GameStop Corp. Message Board
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why I'm shorting GME now
While some of your thoughts have some validity, they are not reasons to short the stock. Here are some "other" ideas that would say that GME is a great investment into the future:
1. Pay for bandwidth. There are numerous "tests" in markets where the bandwidth companies, ie comcast - time warner etc. are creating "pay for bandwidth" tier pricing. That will not help digital download companies at all. Netflix will get hit hard as well as some of these start up companies dealing in videogame distribution. The odds of this becoming a reality is more immediate and real than GME losing market share to digital downloads.
2. Used, new, whatever. Some of the unprecidented growth this entire industry has enjoyed is directly because of GME. They were the company reserving titles to help ensure companies like EA etc. knew what were hits and what were duds. They were the company that created a value position by being able to trade in games. They create excitement around gaming. For them it's all or nothing. Not like a Wal-mart where it's "just" another department.
3. The pie gets bigger. So what that the publishers don't share in the revenue of used games. If I remember correctly, each of their stocks have done tremendously well in the last 5 years thanks to GME. Without GME opening stores all over the world, used revenue would have been the least of their worries.
I could go on to talk about the strength of the management and executive leadership etc. but it just labors the point. GME is a solid company that is in the videogame business...for now. Who know who they could buy or become in future years. Like many great companies, you move, you adapt, you seek out additional opportunities. They generate the cash now to give the ability to have opportunities down the road.
Sometimes you invest because you like oil. Sometimes you invest because you like the companies who make the pipelines. At the end of the day it's hard to argue that GME is a very well run company. Not many of those around lately.-
Time Warner shelving plans for consumption based bandwidth due to the backlash.
http://finance.yahoo.com/news/Time-Warner-Cable-Charts-a-bw-14948483.html
If it was really about consumption they could boot people off, or slow down the speeds to modem levels to discourage use. So in other words it's about gouging, and I guarantee they won't do this in areas with competition like Verizon's FIOS, which has much faster upload and download speeds and unlimited bandwidth for similar cost to TW today (a third of the $150 TW wants to charge for unlimited use). -
I think Daniel is correct on a SHORT TERM basis. The history of the PPS of this stock says that another UNWARRANTED drop in PPS is in store (shortly). THEN, he (we) can cover and shift to a long position. That's what I am doing (with May puts).
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I think this is probably one of the best written discussions I've seen on this post or any post on the message boards I troll from time to time.
I thought I would chime in as a owner on the stock and more particular a gamers perpsective on material impacts of digital distribution. I do think there will be some transfer of gaming to the digital distribution model however I think consumer demand may prefer it as an option in lieu of the only path to acquisition here’s a few reasons why.
(a) It’s all about the consumer. People like to buy the physical games for a number of reasons. PC’s and consoles break, people want the comfort in knowing they have that disk.
(b) Disk space is another concern. People upgrade consoles and PC’s for a better user experience, a standalone digital distribution model is going to receive a bit of friction from the player community if they are going to have to spend money to upgrade consoles or spend more money on equipment just for the sake of storage. Take it one step further, it may grow into a situation where that user will have to choose what content to delete to make room for a new title and then be forced to juggle the same disk space.
(c) In particular reference to consoles gaming, people sell other people on games and here is a great example. We brought our guitar hero to a friend’s house for a guitar hero party, after that night they made the purchase as well.
I’m not sure why software developers should really be concerned over the revenue of the used gaming market after all the do have coders working on the next best thing. Video game makers should be happy to see the game find its way into that second hand as it may compel that consumer to purchase the next release.
Software Developers have more to gain in a hybrid model that gives the consumer what it really wants when shopping, and that is options. Take World of Warcraft and WOTLK for example. Great product and great fan base. GME hosted midnight openings around the country (as they did with the first expansion), consumers of all ages were lined up, socializing and chatting up the game. It was a great experience for the consumer, the developer and GME. That was just great buzz, marketing, and something you couldn't achieve in a digital distribution world. Nor can your children get handed that gift during the holidays that was sitting under the tree at Christmas.
I’m certain GME is not a fan of Digital Distribution, but consumer preference has always driven the gaming market. Co-existing with retailers and working together is going to drive consumer loyalty at the end of the day ultimately that is what the Software Developer should have its eye on. I may be naive, but that's my 2 cents.
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