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GameStop Corp. Message Board

  • jesterbunk jesterbunk Jun 3, 2009 1:57 AM Flag

    MS and Sony digital news

    360 offering full games for download:

    First of all, not news. Molyneux leaked it months ago.

    I have a 20GB and it generally has 2GB-3GB free, after all the paid DLC I've bought, arcade games, and a couple of demos. That's not enough room to fit a single 9GB download even if I wanted to. If I did have the space, I might use it to "install to HDD" instead. I saw a recent stat that 90% of 360 purchases since the price drop to $199 were Arcade models with no HDD. The number of 360 owners with 120GB drives is probably a very small minority, like a few %. With that being the addressable market, it's hardly significant. The relative failure of GTA's first episode as digital only (the second is hitting retail at the same time) says a lot too.

    Sony's Go:

    PSP software sales are about 4% of total game sales. Who is the market for Go? Existing PSP owners have no reason to "upgrade" because they can't run their UMD's on the new machine. New users might look at a regular PSP that's $170 instead of the Go for $250, when the upgrades it offers are negligible except for form factor, or they might buy an iPod Touch instead. So the addressable market is the number of people buying a new PSP (instead of an iPod), who choose the Go over the regular model. Again, given that PSP software sales are currently 4% with a huge install base, it's not significant.

    All that said, it continues to be death by a thousand cuts for GME with attacks from all directions. Long term, I'm as bearish as anyone. Short term, let's not pretend either of these concerns are significant because they're not, and the CFO apparently agrees since he bought 50K shares with his own money in the past week. I think a high single digits P/E is fair, so high $20's this year, and I see it as a short at the 200ma around $29.

    As E3 demonstrated, there's a lot of great games coming, and what looks like a commitment from MS and Sony to keep this cycle going for several more years.

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    • I do wonder how we can store High Definition games or movies since these take a lot of space. My idea is that memory gets cheaper and more robust as time passes. You can a one tera-byte external hardrive for under 300 now a days.

    • No doubt. You'd think it would be cheaper than the current PSP (No UMD drive).

      No UMD means all software has to be downloaded (not a big deal).
      No UMD means the games can't be traded in for $$$.
      No UMD means the games can't given to a friend to try out.
      No UMD means current PSP owners can't realistically upgrade unless they want to repurchase/download all their games.
      No UMD mean it cost $60 more?

      I feel sorry for anyone who buy that piece of junk...

      Maybe Sony should try making games for the PSP instead of "trying" to fancy up their hardware. Sounds like a similar problem with the PS3.


    • Yeah I can buy a 16GB flash drive for about $15 at Fry's. I'm sure Sony can get them cheaper when buying millions of them directly. The other explanation for the high Go price is Sony stupidity and arrogance, which is certainly possible, but I imagine retail partners have something to do with it.

    • People buy the cheap 360 and upgrade the HD to much more than 120GB, for much less than the price difference between those systems. You're not thinking things through enough.

      However, I do agree that downloads just won't cut into GameStop's sales all that much - and certainly not if there's no price advantage.

      This becomes immediately obvious when you go look at who is returning games at gamestop - Mothers. The least tech-savvy people on the planet.

      I think this stock is doomed in the long-term (5 years) but there's still lots of money left to be made for GME on the trade-in market until Netflix finally realizes the cash cow they're missing out on with games.

      • 1 Reply to cosinezero
      • "People buy the cheap 360 and upgrade the HD to much more than 120GB, for much less than the price difference between those systems. You're not thinking things through enough."

        I think I am. How many people upgrade their 360 HDD's with unofficial upgrades? Really? I'd be willing to bet it's a very, very small number.

        Same with 360 piracy. I know it happens, but again I think it's very minor, certainly compared to DS and PSP.

        Certainly things would go smoother in the future if MS followed Sony's route and let people easily upgrade. Asking for more for a 120GB drive than a 1TB currently sells for is ridiculous, but I suppose they make a lot of profits off their peripherals like headset, HDD, wifi, etc.

    • Very well put. Short Term theres is no secular change and video game sales will be strong for GME. Long term there is a trend towards digital games. Maybe the next generation of consoles will boast massive storage drives.

    • I agree except I am actually bullish for the long term and think it should be valued above BBY (same eps, $38). The vast majority of people want something physical for $20+. They like to have a manual and a nice looking box and cd. I don't think that will change.

      • 1 Reply to roddedr
      • The same was said about music as well. People would want a physical copy to take to their car, pc, cd player, etc. What we saw were innovations that made it easy to put your music in different areas some never thought would be easy.

        Now think 2-3 years away when the next console cycle starts ramping up. The prices of harddrives will drop substantially. Faster connectivity will increase as Verizon FIOS and other networks upgrade.

        What you could see is software players offer DISCOUNTS to downloading a game online. Instead of a 59.99 price at the store, the price could be 53.99 if you purchase it online. The software companies don't deal with re-sales and they don't deal with the physical costs of shipping and materials.

        This is a real threat and those of you saying it isn't need to realize that digital distribution is going to terrorize this market.

        That said, I think this could be a trade to the upside short term. It all depends on how the market perceives this threat and the recent insider buying.

        But long-term, GME is in dangerous trouble of becoming the next KKD or BBI.

24.75Oct 25 4:01 PMEDT