You almost have to pity poor GameStop
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
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
If you'd like to see GameStop's presentation, click on the slideshow below.