You almost have to pity poor GameStop (NYSE: GME). Not only does the gaming retailer face the threat of digital distribution disrupting its retail model, it also has Best Buy (NYSE: BBY) contemplating invading its lucrative used gaming segment, and finally it must contend with abysmal game sales figures. Ouch, the dreaded triple threat.

At the Oppenheimer Consumer, Gaming, Lodging, and Leisure Conference, GameStop laid out its plans for addressing these threats. You know things are rough when a company starts out investor presentations with a "perceived threats" section right off the bat. GameStop wasted no time in addressing two of the main areas that have investors sweating:

  • Other retailers entering used games business: GameStop highlighted its 12 years of experience in the used business, its sophisticated pricing algorithms, and strong inventory management system.
  • Digital distribution: GameStop claims full game downloads are not a near-term threat and that it will participate in "other ways that consumers play games."

However, I'm not sold on the company's abilities to defend against these threats.

On the used gaming front, I don't see these advantages being anything that a large retailer like Best Buy couldn't overcome. Best Buy has world-class inventory management systems of its own, and it could easily apply its resources to used gaming if it finds the segment attractive.

When it comes to digital distribution, GameStop highlighted retail distribution of digital downloads and that it's changing its website to a "gaming platform." The problem is that retail distribution only has limited appeal. The companies that control gaming platforms like Sony (NYSE: SNE) and Microsoft (Nasdaq: MSFT) will be able to command the lion's share of digital distribution revenue. Not only that, but as the gaming market segments and high-priced blockbusters compete with a greater variety of lower-priced games on Sony and Microsoft's console marketplaces, GameStop won't be able to effectively compete for the share of gaming spend shifting to lower price offerings.

A rough road also lies ahead for GameStop's plans to use their website as a gaming and digital download platform. Valve's Steam has been the gold standard in distributing games for years and has a huge lead. When Activision Blizzard (Nasdaq: ATVI) launches Starcraft II, gamers will be able to purchase it and play it through the company's own Battle.net site. Simply put, GameStop is late into game, and I don't think it can catch up.

If you'd like to see GameStop's presentation, click on the slideshow below.