Is the World Ready for a Gaming Tablet?

Die-hard gamers chuckling at the mainstream masses playing Angry Birds on their smartphones and iPads may soon have a device of their own.

GameStop (NYSE: GME  ) is eyeing the booming tablet space as a market ripe for gamers.

If last week's move to acquire streaming technology specialist Spawn Labs and the company behind the Impulse digital delivery service didn't signal a shift away from physical retail for the leading video game store chain, how does a GameStop tablet grab you?

It doesn't necessarily have to happen.

In an interview with gaming news site Gamasutra this week, GameStop President Tony Bartel is hoping to work with the retailer's partners and original equipment manufacturers to see if they can crank out a Bluetooth-friendly device that hard-core gamers can rally behind.

"If we can't find one that's great for gaming, then we will create our own," he says.

It's easy to see why GameStop is thinking outside of its small box. Comps may have been positive during its most recent holiday shopping season, but they weren't strong enough to offset the 8.6% dive during the 2009 holiday season.

Retail isn't dead. Microsoft (Nasdaq: MSFT  ) has sold millions of its Kinect motion-based sensors at $150 a pop. Activision Blizzard's (Nasdaq: ATVI  ) Call of Duty: Black Ops set a new initial sales record in November. However, the digital migration is inevitable, and GameStop wants to make sure that it has some skin in this game even as it continues to cash in on the still-attractive retail model economics.

A gaming tablet may not be the answer, though. When folks are buzzing about brisk tablet sales, they're really only talking about Apple's (Nasdaq: AAPL  ) iPad. Name another hot tablet? Samsung's Galaxy Tab and Motorola Mobility's (NYSE: MMI  ) Xoom hit the market with plenty of buzz, but reality has been a chilly place. Research In Motion's (Nasdaq: RIMM  ) PlayBook has a good chance to shake up the market when it arrives in two weeks, but it's not going to be a winner with gamers despite the moniker. RIM's target audience is far more corporate.

GameStop has ambitious digital dreams. It expects the company's digital revenue to grow from $290 million this year to $1.5 billion by 2014. It's made a few digital acquisitions along the way.

However, Bartel is dismayed by the proliferation of $0.99 games that occupy the best-seller lists on Android and Apple iOS tablets. If GameStop follows through with its goal of tablet gaming, it also hopes to arm software developers with beefier prices for digital diversions.

We'll see how well that flies. An unproven tablet with costly apps doesn't seem like a good idea at all.

Would you buy a gamer tablet? Share your thoughts in the comment box below.

Microsoft is a Motley Fool Inside Value pick. Apple and Activision Blizzard are Motley Fool Stock Advisor selections. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. Motley Fool Options has recommended writing covered calls on GameStop. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Activision Blizzard, Apple, GameStop, and Microsoft. Motley Fool Alpha LLC owns shares of Activision Blizzard and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz will admit to still playing video games, though finding time is the rub. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 06, 2011, at 4:55 PM, Varchild2008 wrote:

    No one cares about "unproven tablet" if the technology is already proven. They will gravitate to technology.

    No one looked at Ford Motor Company's MyTouch and shied away from it because "it is unproven."

    Second... If they go the route of beefier prices for digital games, those games themselves would have to be beefier diversions than the typical array of games we have on iPhone / iPad

    Ya know:

    Traffic Rush (for example)

    There's a Paper Ball game where you throw the paper ball into a garbage can and you get about 3 backgrounds to choose from. (woo-hoo!)

    No...Developers would have to crank out titles that have beefier pricing that are seen on

    XBOX LIVE ARCADE

    XBOX LIVE INDEPENDENT games

    Those types of games go for $10 or more.

  • Report this Comment On April 25, 2011, at 8:07 PM, vatd112 wrote:

    They did NOT buy the company behind Impulse, but instead they bought Impulse outright from the company.

    Good research!!

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