GameStop Gets More Digital

Give GameStop (NYSE: GME  ) credit for being aggressive. The video game retailer best known for giving gamers discounts on used titles while upselling them on new releases has opened a Facebook store.

It'd be ironic if it weren't so predictable. E-commerce sales rose 14.8% to $165.4 billion last year, and Facebook, recently valued at $65 billion, has become the Web's largest strip mall, rife with billboards from some of the world's largest and richest advertisers.

GameStop is Facebook's newest tenant, thanks to a management team that sees its digital future. Last week, the retailer purchased streaming technologist Spawn Labs and the company behind the Impulse digital distribution service.

"Our customers are beginning to consume games in a hybrid manner, both physical and digital, so we are becoming a hybrid company to meet their needs," GameStop President Tony Bartel said in an interview with Gamasutra this week.

Opening a Facebook store is just one element of this strategy. GameStop also owns the social gaming site Kongregate, and its Twitter feed publicizes multiple offers daily. The company has nearly 85,000 followers.

In short: All signs point to GameStop acting as a single source for gaming goodness in the physical, digital, and most recently mobile worlds.

Bartel told Gamasutra that GameStop would create a gaming-specific tablet if Apple (Nasdaq: AAPL  ) , Motorola Mobility (NYSE: MMI  ) , and others fail to create a tab that offers a "great gaming experience" and the ability to sync up with a Bluetooth controller.

Sound good? It does to me.

Of course, the danger in all this is that it takes GameStop away from what it has long done best: creating stores that hard-core gamers find irresistible. But as this same crowd answers the siren call of social gaming -- the same siren call that's led Zynga to a $10 billion valuation -- GameStop risks irrelevance if it doesn't embrace its disrupter.

Do you agree? Disagree? Let us know what you think about GameStop's digital strategy, he rise of social gaming, and whether you'd shop at the company's Facebook store using the comments box below.

The Motley Fool recently introduced a free My Watchlist feature that allows users to stay ahead of the curve and receive up to date news on companies like GameStop, or any of its competitors.

Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended members create a bull call spread position in Apple and write GameStop covered calls. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple and GameStop and has written Apple puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy enjoys being digital.


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  • Report this Comment On April 07, 2011, at 5:54 PM, Varchild2008 wrote:

    Gamestop is making all kinds of SHORTS lose lots and lots of money shorting this stock lately.

    I demand Gamestop apologize to those SHORTS out there still SHORTING & HOPING for a big big pullback / crash after 2+ straight weeks of the stock price jumping 5 bucks+.

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