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GameStop Corp. Message Board

  • crkwader crkwader Feb 3, 2011 9:58 AM Flag

    Digital downloads will kill this stock!

    The writing is on the wall. You can already download numerous games on XBOX live and this is the future of gaming. Never used the PS3 but I have to believe you can do the same there. This may take some time but I see the the caretakers putting the headstone in place for GME.

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    • It doesn't matter how often these guys get this message, they refuse to listen. My impression is that most of them are so young that they think a couple years down the road is the event horizon for investing.

      The reality is that 20 years from now people will laugh at the notion that brick and motar outlets existed for selling software (or anything else digital for that matter). Yes 20 years is a long time, but the pressure on GME's bottom line will come long before shops are completely extinct.

      In the end, you're buying an annuity when you buy GME stock. The trouble is that not only is the term of the annuity unknown ( be it 5, 10 or 15 years), but also the yield is zero! Overall, not a good investment at any price!

      • 3 Replies to spanxds
      • 20 years ago, the World Wide Web was still in its formative stages. Just a few years later, we had the dot-com boom, as everyone sold off traditional brick and mortar retail names in favor of their internet counterparts, which didn't suffer from nearly as much overhead liability and should've ended up obviating the traditional retail model. Larry Ellison, the CEO of Oracle, captured the spirit of the times in the mid 90s:

        "I hate the PC with a passion. Me going down to the store and buying Windows 95, I've got to get into my car drive down to a store buy a cardboard box full of bits you know encoded on a piece of plastic CDROM and you bring it home and read a manual install this thing - you must be kidding you know, put the stuff on the net - it's bits, don't put bits in cardboard, cardboard in trucks, trucks to stores, me go to the store, you know, pick the stuff out, it's insane. OK I love the Internet - I want information you know it flows across the wire."

        In theory, this made sense--in the future, everything will likely be delivered digitally. But when in the future? There have been enormous leaps in bandwidth and application delivery since the dot-com bust, but there have also been exponential increases the size of programs as well as associated security complications. My point is, we look upon digital delivery favorably because we understand all of its benefits, but we don't realize the downside of future complications of such a model yet.

        Also, there isn't a digital model that can adequately replace the used-game business. I guess the American consumer is just going to change fundamentally going forward, and buy all of his software new and at full cost, without a transferable license. Unless you're one of the Larry Ellisons of the world, you can't realistically believe that wet dream is coming to pass anytime soon.

      • "but also the yield is zero!"

        $500 million buyback begs to differ. GME are return free cash to stockholders, so how can you say the yield is zero??

        And the term of the annuity for EVERY stock is unknown. You just think you have greater visibility on GMEs future. Every investor has to make an assumption of the company's future prospects when they value them.

        5 years from now many, many companies will be superceded by competitors or substitutes that you have no visibility of today.

        GME could be a very different company in 20 years from now and still be prosperous.. companies don't stand still, they react to changing market conditions. GME at least is in a cash rich position where they are able to do so.

        Anyway free cash flow 20 years from now is of little consequence if you are discounting future cashflow at their cost of capital. The difference between 20 and 50 years of consistent cashflow is maybe 15%.

      • Go buy NetFlix.

    • "You just made ignore."

      Along with every other intelligent person on yahoo MB I suspect.

    • healman, read your first post regarding the Game Informer and Asia comment. You have good points but the way you make them makes the reader roll his eyes. "GME management is too whatever to think that they have an asset in Game Informer that they are also whatever because they have not considered Asia at some point." Dude, please. These guys are way ahead of you. Just make the point to us and let die the angle that you are smarter than the suits at GME. It's not flying except back in your face.

      Gamestop and devs and pubs have a simbiotic relationship and it is presently the used product margins that allow Gamestop to provide services to that simbiotic relationship that they might no longer provide if the ability to sell used software goes away. Devs and pubs are going to take up the slack? Or is there an opportunity for GME in there regarding a digital future? Some posters keep stating that GME is just a middleman getting in the way. Make sense or be able to handle the questioning of your comments.

    • Aren't you supposed to be working the counter today? You just made ignore.

    • Healerman, try doing your own DD on this stock.

      We can't spoon feed all the answer to you.

    • My goodness... aren't you one of two experts that called me an idiot newbie for pointing out the value of the magazine to gme? Now exactly how does gme promote these games and get them in front of the gaming public and how can they possibly do it without incurring the costs an ad agency would? Please don't tell me the in store promotional nights where gamers come to check out what they are already aware of.

    • Sorry to keep being crass but you guys coming out of the woodwork like a bunch of uninformed insects. Please use your real names so we can slap you upside the head with reality. Games need to be promoted as well as distributed. That will never change, even if games are digitally distributed. The costs are borne by Gamestop other retailers maybe and the pubs and devs benefit from that. Just like how NetFlix saves mucho money by not having to promote movies that the studios already did FOR them. Cut out the middle-man? Then bear the costs yourself. duh. where's mah hair? duh.

    • But you are forgetting that Gamestop does not make the games, they only sell them. The developers can offer downloads at half the current game price, cut out the wholesalers and still make the same amount of profit as they do with a hard more copies because the price is cheaper. When there is more money to be made by the developers, they don't give two S#its about Gamestop.

    • Congratulations on naming several companies in SE Asia.

      If you look at the overall market for gaming console hardware in the middle east, africa and asia COMBINED it is smaller than the market in France and the UK. But obviously it is FAR more fragmented. Software rates are far, far lower due to piracy.

      India? They sell about 3000 Xbox 360's a month by one estimate I saw. Wow, what a massive market.

      In most of the developing countries you mentioned console manufacturers do not even authorise the sale of their products. So what exactly is GME going to sell?

      Do you think GME has free reign to enter a market where console manfactuers and publishers have not evne sanctioned the sale of their products?

      Keep digging yourself a bigger hole. Its fairly evident you have a pretty superficial understanding of how the industry operates.

    • Look, I have a few things to tell you and I have no fear of successful contradiction. First China alone is not Asia and in fact is not even in SE Asia. Second, this financial forum is not your My Space page in spite of your eleven posts on this thread alone. Third, the Philippines has 120 million people (most english speaking) with a population with an average age of under 20, India has more people than you can count with the same demographic...oops did I mention they are game crazy kids packed into pc arcades and overrunning every internet cafe in both countries? Then there's Japan and Korea as you mentioned, Hong Kong, Singapore, Malaysia, Indonesia, Viet Nam, Thailand. As to how to roll it out and develop that market.... get out your checkbook. If the market was already there, it wouldn't be an opportunity, it would be a bloody expensive battle for market share. Apparently the boys in Texas ( are you one of them.. you are awful touchy) aren't the only one's that need to get out more. It doesn't take much research or savvy to plant your behind on a bulletin board and talk down to every new idea you here because it's not yours and continue to discuss whether or not GME is doomed over and over for years... because that's how long people have been doing that here.. way too long. If you are afraid of obsolescence in a super fast world get out. If not, evolve. You have way more time for foolishness than me and I have no desire to get in a battle of wits with an unarmed man, so I'll save my ignorant observations and continue to browse the board from time to time to see if any news of substance surfaces (ever the optimist). Best of luck peddling your angle.

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