Mobile devices are changing the gaming industry. Portable gaming platforms such as Sony's
The Apple of GameStop's eye
The company's plans to begin selling iPhones, iPods, and iPads are part of its digital strategy to adapt to the shift toward mobile and online gaming. Apple's devices enable on-the-go downloading of tens of thousands of games through the App Store -- a far cry from GameStop's business model. GameStop's livelihood once depended on the buying and selling of video-game cartridges for non-mobile console platforms like Microsoft's Xbox. However, recent acquisitions tell a different story.
Gaming with the times
GameStop is making meaningful strategic improvements to work with game publishers on downloadable content -- like joining forces with Activision Blizzard
The mobile-gaming market should reach $18 billion by 2014, according to a study by Pyramid Research. GameStop sees the writing on the wall. It acquired Spawn Labs, a company that specializes in streaming games online, and Impulse, a digital-distribution company. Spawn's service, in particular, provides the tools GameStop needs to get its cloud gaming service up and running. By remotely hosting games in the cloud and streaming to your iPad or iPhone, storage space on users' devices is no longer wasted on downloadable content. GameStop's Spawn service is scheduled to fully launch by mid-2012 -- giving gamers plenty of time to ante up with iOS trade-ins before gaming on the cloud.
All bets are on
Smartphones with access to cloud services over the Internet are driving the demand for mobile gaming. In 2008, mobile-gaming revenue tallied $6.9 billion, showing stable growth alongside expanded mobile access. To cope with the rise of smartphones, GameStop is stepping outside its box of physical game cartridges and into the choppy waters of mobile gaming. True, the stakes are high for GameStop -- its used-games segment accounts for 36% of sales. However, the company's 69% year-over-year increase in digital sales should see an even greater upside as acquisitions become fully integrated. Remember: The higher the risk, the higher the return. I invite you to share your thoughts with me in the comments section below. Game on.
Fool contributor Tamara Rutter owns shares of Apple. You can connect with her on Twitter, where she goes by @TamaraRutter. The Motley Fool owns shares of Activision Blizzard, Microsoft, Activision Blizzard, Apple, and GameStop and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Activision Blizzard, creating a synthetic long position in Activision Blizzard, writing covered calls in GameStop, and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.