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GameStop Corp. Message Board

  • jantrou jantrou Feb 22, 2010 11:23 AM Flag

    Gamestop undervalued

    What do "investors" think? Nothing I guess.

    Nobody can figure out if digital distribution will take at all. There are just so many disadvantages too. I am honest and I say I cannot figure it out.

    But I do know that digital distribution is just not possible today. Games are huge and downloading takes a long time, hard disks are way too small now. Wiiware has a 30mb size limit..

    So digital is not a threat until the next gen arrives. Remeber what Iwata said? 3 or 5 or 8 years.. Of course I don't give a shit on what Iwata says but fact is that neither Microsoft nor Sony has made a profit on their consoles so far. So they will try to prolong the current gen ("at least 10 years", bla bla). Natal and that Sony motion controller will hit the market soon enabling totally different games. A big indication that next gen is years away.

    Then we have the console manufacturers running into compatibility problems. We already have digital distribution (although only for "casual" and crap games, interesting indie stuff and catalogue titles). Consumers will demand that all their acquired digital downloads run on the next gen too. If not many will not switch as the type of games that are digitally distributed now are exactly the type of games that will not profit from more hardware power.

    With next gen and digital distribution for AAA games being years away there is no reason to be afraid. Digital will not take over the whole industry because we still have Nintendo, a company dependent on controlling its hardware platform and so sceptical to digital distribution, we still have the consoles themselves, hardware addons etc. so retail is here to stay.

    Although with much less market share. But less market share in an industry that will grow over the next 5 years will probably mean the same revenue for retail as now. There won't be any growth though.

    Gamestop is a value investment. Hope they will get it right and recognize that there isn't any growth left and stop opening new stores.

    So far I don't own any Gamestop shares..

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    • I think you're arguing semantics. The benefit EA and others have with the digital model through areas like Live is no COG's, direct contact with consumers and therefore improved products, no physical distribution costs, and in the case of iTunes, total flexibility in pricing.

      Steam has around 70% of the PC market and no, GME doesn't have near enough cash to buy them. The platform holders own the portal to their gamers and GME will never ever get a cut of that, except for the low margin scraps from points cards. This is not a market where GME can set up a store and take business. It can't happen on the consoles or the iPad.

      As for GME's plans, I thought GameFly would have been a great fit. They could have earned money on the inventory they currently have sitting idle. I also wonder what if any plans they'll have for digital, since they set up a new office in California and created a new exec position last summer, and so far we've seen nothing. It shouldn't take this long to decide who to acquire and do it.

    • Jester: GME already is an owner of a digital publisher, Jolt OnLine gaming. It's for browser games but the same business, publishing\distributing, video games as Steam. Someday when you buy from Steam you might be buying from GME.

    • Jester: Oh yeah, my main point: GME has enough cash on hand to acquire Steam. If management thinks it's essential they will buy it. Enough said?

    • Jester: Live and Steam are sales outlets, dude. They sell digital versions of games for the games developers. This is retail in that it is an abstraction from the games developers themselves. Sales is retail. Retail is not just a physical store. If you want to say that Steam is a competitor to GME's model, yes that's true. But the games don't sell themselves, dude. That's why there is a distribution (yes retail's a general term for this) layer between the games providers and the end users. This will never go away. Games cost alot of money to distribute. GME just needs to compete in it. They can and will attempt to, with all the cash they are generating. Alot of people around here are stating the the EA's of the world are going to have DLC themselves and the distribution layer goes away. Won't happen. And I admit that I didn't get how Barnes and Noble stays in business, its model works well.

    • There isn't a single truthful thing in that entire post of yours.

      Big AAA games can already be downloaded, right now, not "years away".

      Nobody (but you) can figure out if digital distribution will take at all. It's a clearly growing trend with no signs of slowing down, unlike packaged goods.

      Of course Iwata will downplay that side of the business, since Nintendo is always behind the curve when it comes to technology. They were talking crap about online for years and look where MS is today with Live compared to where Nintendo is at with their online services.

      You say "value investment". In other words, value trap.

      GME will be "cheap" indefinitely. There is no investing here. There is no long term. There is only trading, long side and short side.

      • 1 Reply to jesterbunk
      • Jester: EA is betting their future on DLC. You say it's evident now that DLC has created no future for GME.

        Take for example Barnes and Noble. They have not been blindsided by DLC'd books. They haven't even been blindsided by Amazon who sells DLC'd books and hard cased books and has no brick and mortar. You can't sit in an Amazon warehouse and read the books while there are hot girls all around you like you can in B&N. Major Point: Neither Amazon nor B&N actually write books. I have not heard of book publishers or writers saying that they will forgo retailers (Amazon or B&N) to market and sell the books themselves. This is what EA is trying to do.

        How is this different then games to GME? EA is stating that they want to market and sell their own games? How can they possibly afford this except that they are getting free game buzz from the likes of Gamestop as they co-exist? It's just a threat and will fail miserably if the gamers have the option to buy and sell hard disc games also and try the new games out in a GME store. DLC and discs could co-exist and DLC could be a revenue drain to brick and mortar, unless GME participates in all arenas. They have the cash and opportunity to do so. And they will.

        GME is the market leader in video game retail. They are more like Barnes & Noble than Blockbuster or whomever. They have ample opportunity to change direction or whatever they need to do. Management needs to execute, period. At this time, more stores is probably still the best bet. But I am not an insider so we wait for word. Hope its good.

    • Specifically ebay is a great source for used games and takes business away from gamestop. Walmart sells new games at good price and is everywhere gamestop is. Microcenter is a better shopping experience and wants to compete with GameStop The only edge GamesStop has is they are everywhere and they focus/are knowledgable of games

      • 1 Reply to macnaughtonr
      • I think there are obvious issues with Ebay. Are there costs associated with selling your used games? What if you are unhappy with your simple is it to receive a full refund?

        The WalMart argment again? They dropped the used game business so GME would come out ahead in that respect. Regarding new games, I would think that most would find the shopping experience in GME superior to the WalMart, etc and really don't see them as a threat. Have you ever seen younger gamers flocking to a WalMart?

        I'm not familiar with Microcenter so I can't comment but obviously they do business in fewer locations.

    • "So far I don't own any Gamestop shares.."

      THAT says it all.

    • sell sell sell

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