Video game rental specialist GameFly is flexing its wings. The company is acquiring Shacknews, a popular provider of video game news and reviews.
The buyout is a shrewd move. In the past, new and old media companies have been the most typical purchasers of their fellow content sites. News Corp.
Call me a contrarian, but I think content sites look even better on the arm of service providers and merchants. I believe that Amazon.com's
We don't write much about GameFly around here, because it's privately held. The only real shock to me is that the niche leader in giving the Netflix
I'm not talking about an IPO. I don't know GameFly's finances, and this is a lousy climate in which to wade into the chilly IPO waters. I'm just surprised that a larger company hasn't snapped it up already.
I can think of at least three companies -- Netflix, Amazon.com, and GameStop
Netflix and Blockbuster already have the distribution centers in place, and Blockbuster rents video games at its stores. Specialty retailer GameStop would love to have regular contact with diehard gamers. Wal-Mart has a spotty history when it comes to media rentals, but it's too big a juggernaut to dismiss. Amazon once had dreams of taking Netflix on in DVD rentals, settling for a short-lived venture abroad instead. Thus, it's only natural for Amazon to want to beat Netflix on the video game front.
Netflix is the suitor that makes the most sense. However, when I asked him in the past, CEO Reed Hastings dismissed the notion of entering the video-game market.
Fair enough. Video games cost more than DVDs, new releases age quickly (especially sporting titles), and gamers aren't always gentle when it comes to scratching discs. However, GameFly wouldn't still be in business if it weren't doing something right. Any of the five potential buyers I singled out would be able to grow the GameFly subscriber base quickly.
Who will it be, if any at all?
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Longtime Fool contributor Rick Munarriz loves playing video games, but he doesn't own shares in any of the companies mentioned in this story, save for Netflix. 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.