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GameStop Corp. Message Board

  • hayden.cole hayden.cole Sep 2, 2009 6:19 PM Flag

    A reality check for those that think DLC will kill GME

    MS paid TTWO a bundle (estimated at about $20 mil) for a download only, 360 exclusive GTAIV expansion.

    Well, '"One of the lessons" of that release, said Zelnick in a conference call following Take-Two's latest financial results, is that "it's clear that retail is the channel for the foreseeable future."'

    The next expansion is getting a simeltaneous release at retail this time around.. if you read between the lines it's obvious this is because their sales expectation were WAY down because of the download-only platform.

    The consumers has spoken IMO and while DLC has it's place it isn't even close to be ready to seriously challenge retail at this point.

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    • DLC won't kill GME, it'll just become a DLC company.

    • JesterBunk,

      Here's a little factor your missing entirely... GAMES WILL KEEP GETTING LARGER at the same rate storage space increases. They a directly related... The cheaper hard drive space gets.. the more textures and resolution game designers add the their 3D worlds. Games will soon be filling 50GB blu-ray disks! My playstation 3 is only a 60GB version. So i can only have 1 downloadable game in the future on my system.. that sucks. Not to mention... Playstation 3 is trying to sell HD movies also... If the average gamer downloads a few HD movies... They won't have any space at all left on their HDs.

      So you probably won't in 10 years see MODERN WARFARE 6 or whatever, being sold via the download market. It would take DAYS to download... And eat up far more bandwidth than the telecom companies would like the average gamer to use.

      There infrastructure issues that will hold back downloadable games are likely to hold back this market. Until FIBRE channel lines are piped into most homes.. Bandwidth will remain a huge issue for downloadable content.

      GME's days a a profitable company many be numbered.. But I'm in this for the short term.. It'll probably double from this low before starting another downward trend.

    • "I think even 10% full DLC is at least a couple of years off, with more growth after that, perhaps."

      I think we're at 10% already. WoW alone may be 5%. Add all the MMO's, all the other PC digital sales from F2P (some hugely profitable companies in there like Zynga, Playfish, etc.), and then casual portals like Popcap, and Steam also, and that'll be closer to 10%. Then there's the console sales including many million sellers (it's a growing list). Every uptick to that percentage reduces GME's used game supply and margins, which they can counter by opening more stores. They can't do that forever though. In my area I have 12 GME stores within 12 miles. In my previous area, different state, 13 GME stores within 12 miles. Take away store expansion in recent years and see what effect that has on their earnings story.

      Kotaku story last night:

      "The sales figures for digital games are rarely disclosed. So we rarely get an idea of just how many of them are selling. A reveal by Microsoft Australia, however, shows they're selling a lot.

      At a recent Xbox press event in Sydney, Microsoft Australia told Kotaku AU that the 360's downloadable games aren't just giving retail game sales a run for their money, they're often outselling them.

      Case in point 1: Microsoft's Summer of Arcade (or, as it was known down here, the Winter of Arcade). All five games - 'Splosion Man, MvC2, Turtles in Time, Trials HD and Shadow Complex - would have made the Australian retail top 10 charts in the week they were released.

      Case in point 2: Two slightly older games - Worms 2 and Battlefield 1943 - wouldn't have just made the charts, they'd have topped them.

      Now, there are obviously a few disclaimers to note here. Firstly, it can be a little unfair to compare $10 games to $50 ones. Of course $10 games are going to sell well. Secondly, these are Australian numbers we're talking about here, not global figures. And Australia is a pretty small market.

      Then again, it's also a nation with poor (relative to other Western markets) broadband speeds and (relative to other Western markets) higher prices, so who knows, in other regions the numbers could indeed be similar, if not higher."

    • Jester, I don't have an answer to if or when GME's earnings turn negative due to DLC issues. I don't know how anyone would accurately measure the percentage first off, and second, as we are debating, I think even 10% full DLC is at least a couple of years off, with more growth after that, perhaps. Just my opinion of course.

      One think I believe is misleading is that while it sounds like a whiners excuse over and over again, GME, like the industry is up against impossible comps from last year so this year looks bad. There are several blockbusters on their way this holiday, and surprisingly, a large and growing number for early to mid 2010 due to delays and strategic pushes. This holiday's numbers should look pretty good, and then early to mid 2010 will look like a blockbuster YOY. Just the opposite of this current year.

      Not trying to get off DLC topic here, but the stock market has a short memory and simply refuses to accept the cyclicality of this stock and others in the industry. They just want numbers that constantly go vertical without excuse or exception. Having said that, I think the market forgets the 2008 blockbuster, and simply compares 2010 to 2009 and this stock really flies later this year into next.

      I know it hasn't moved much since GC added to the CB list, but as hated as they are, most agree they are the best in the business and if they really wanted to push this little thing higher just to prove themselves correct, I believe they could.

      Finally, regardless of the outcome, everyone has the opportunity to make money both long and short here. I know I have.

    • "since you've proven yourself to be both lazy and a liar"

      Wow. So in addition to being a fortune teller your telepathic abilities also extent to mind reading. If I were you I wouldn't be wasting my time on the GME board - I'd be at the casino.

      Like I said - I didn't read the article, because it was still wrong at the point I called you on it and I'd assumed that was still the case. The change to the article was NOT my source disproving your post.

      I didn't need the post to be correct to know it was crap.. it was common sense if you thought about it for 5 seconds.

      Anyway I don't want to argue semantics about when a freakin blog post was updated. It is a total red herring and completely irrelvant to the discussion.

      For the record I do not dismiss everything you are saying. I just call into question the credibility of your fortune telling and the assertions of GMEs fate you seem so confident about, despite your glaring lapses in logic with regard to the digital distribution market.

    • "But hey, at least I'M willing to admit when I'm wrong."

      No, you lied. There's a huge difference. Just like you're willing to dismiss everything I've posted because a news story I forwarded was later updated, I can certainly question anything you ever post since you've proven yourself to be both lazy and a liar. Not a good combination.

      "you say they changed the article on you later when in fact it never changed. The article was wrong to begin with and it's still wrong now... Ha. You got me there. I didn't bother to even check it."

    • Ha. You got me there. I didn't bother to even check it.

      Having said that, it's completely immaterial to what we're actually talking about.

      But hey, at least I'M willing to admit when I'm wrong.

    • "The funny thing is, you say they changed the article on you later when in fact it never changed. The article was wrong to begin with and it's still wrong now."

      That would be some of your "erroneous facts". Obviously you were deliberately lying here since the article now clearly has been updated, and in fact it was updated that same day (after I cited it here). Care to explain your statement that is has never changed and is still wrong?

      "UPDATE - EA got in touch to let us know that the IGN piece was a little off. They say that the average buyer is spending $20, not the average player. So revise that number - and your respect for the sum - downwards a touch."

    • Homersby,

      I've always maintained the key is when digital (and other threats) lead to GME's earnings growth turning negative, and I believe that will be long before 50%. So all these bullish comments from various people here about how digital may never be 51% are irrelevant, unless they believe that up to 50% of sales can go digital and it's still all roses for GME.

      "even with the rumored 250GB 360 kicking around, that's still not a lot of space for someone with lots of games."

      That would fit about 35 games, and the average tie ratio is about 8.

      It's worth noting that while Sony and others are talking up retail, because they need retail to stock the low margin consoles, at the same time they're selling full price current cycle games online. I agree some of the pricing looks off, but it's always easier to start high and move lower, than start low and move higher. As you say, those prices could change in a heartbeat. Look at Steam's frequent sales for example.

      The question is, given GME's near saturation of stores in the US and their highest fixed costs ever, at what point does their earnings growth turn negative? At 25% digital? 30%? 35%?

      Curious to hear your thoughts on that.

    • Jester you sure love the word disengenuous. I am not bashing you or your ideas, but it seems you should be on the Fox channel since you only see your side and will consider no one else's even in the slightest.

      Perhaps you are a cutting edge type person who is an early adopter and would love full DLC for convenience and lack of tangible stuff like boxes, discs, and manuals taking up space. I simply think that most people that make up the masses will not go with full DLC anytime soon, if ever.

      I totally think add ons and small episodes have succeeded and will continue to do so. Song DLs for the music games are gold mines and to your point, can make an older version last a long time without having to buy the next one. But some people will always be there to buy and want the store experience or want the package in the mail from GME, AMZN or BBY.

      At this point Sony and Nintendo have dismissed the idea of full DLC and while MSFT is doing it with older titles, at the very least, their pricing is waaaaay off. Granted that can be corrected in a second, but so far, it sucks. And even with the rumored 250GB 360 kicking around, that's still not a lot of space for someone with lots of games. If the 1TB rumor is or was true, then you have some space!

      Bottom line for me is that I do not dismiss your point as you do others, but I know myself and literally dozens like me, who may never embrace full DLC. Might even get me off gaming if I am forced into it. Haven't bought Madden in any form since the locked up the NFL. Just an example of my dedication to a cause. Prior to that, I can pretty confidently say I owned a copy evey year since it first hit the Genesis.

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