The next few days will be ripe with video game industry headlines. The annual E3 powwow kicks off tomorrow, displaying the latest advances in hardware, software -- and new, market-shifting ways to get games to players.
If you're sensing that your local GameStop
"Wait a minute," bulls will argue. "You're talking about PC games. GameStop's bread-and-butter is the sale -- and especially the resale -- of console games."
I hear you. Unfortunately, so does Activision Blizzard
As the maker of World of Warcraft, Activision Blizzard is no stranger to snaring repeat customers with premium gaming hubs. The Call of Duty games' free multiplayer action has helped Activision amass 30 million online gamers through that combat franchise alone.
Add it up, GameStop longs. As EA cuts out the middleman, Activision Blizzard extends the playable life of its hottest franchise (and profits in the process). In the end, gamers buy fewer physical titles, and thus make fewer trade-ins and used game sales -- the transactions in which GameStop scores its chunkiest profit margins.
Gamers still rally around "tentpole" releases. Take-Two's
GameStop has held up surprisingly well through all of this. Sales, comps, and earnings inched slightly higher in its latest quarter. The retailer hit a fresh 52-week high two weeks ago. It survived the success of online game distributor Steam and the initial hype of "virtual game console" OnLive, a subscription service that lets you remotely play a vast library of games through a terminal connected to your TV.
GameStop has also been making cautious acquisitions in digital delivery, hoping to escape the same fate that squashed CDs and is now demolishing DVDs, Blu-rays, and even books. All the same, you don't necessarily want to buy GameStop near its highs.
The next few days will show how publishers and console makers aim to make direct connections with hard-core gamers. Even if GameStop can steer through these challenges, it probably won't be as relevant in the future as it has been in the past.
Your move, GameStop.
Would you buy or sell GameStop at present? Share your thoughts in the comment box below.