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Varchild2008 (85.21)

Motley Fool All Stars asleep at the wheel

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October 07, 2011 – Comments (6)

GME remains my only investment and it grows on a regular basis...as I keep accumulating more and more of it.

As far as I can tell this Holiday Season will showcase the Sony VITA along with perhaps the best top quality release schedule ever.

Gears of War 3 sells triple platinum in its 1st week.

Madden 2012 sold approx. 1.4 million copies in its 1st week

according to either an article on Gamespot or another article I tracked down just surfing the internet.
Obviously we will find out how both games have done in September next week Thursday after the closing bell when NPD report releases.

So where are the Motley Fool All Stars ???    Battlefield 3 releases October 25th!!

So where are the GREEN THUMBS from the Motley Fool All Stars???? where???

The stock remains at 2 stars despite the Winter Holiday Season looking bullish as all get out.

Just today analyst Baird came out with an Outperform rating on Gamestop.

But....The Motley Fool All Stars remain asleep at the wheel on my stock.

6 Comments – Post Your Own

#1) On October 07, 2011 at 10:44 AM, SultanOfSwing (96.92) wrote:

Zzzzzzzzzzzzzzzzzzzz.....  wha?

I have done no dd on GME, but I'm wondering if they will be vulnerable (like Blockbuster, like Tower Records) once someone figures out an efficient way to distribute premium games via the Internet

Your only investment?  Wow.

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#2) On October 07, 2011 at 11:13 AM, Varchild2008 (85.21) wrote:

Gamestop already is figuring out efficient distribution methods for video games.

*Yawn*

I'll be in my 60s and Gamestop will be alive and well but All Star Motley Fool investors will still be talking about,

Gamestop = Tower Records
Gamestop = Blockbuster

*Yawn*

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#3) On October 07, 2011 at 11:17 AM, Varchild2008 (85.21) wrote:

I tried the 5+ stock investment portfolio for 2+ years and it sometimes did well sometimes did not.

I don't like seeing something in my portfolio doing poorly while I have 2 or 3 stocks doing extremely well.

So...I started lopping off stocks...I don't have the time, energy, or resources to analyze and investigate and do all the homework for 5 companies.  That was a nightmare to do!

I understand the logic behind a diversified portfolio.  But, I can't do it.  It is no longer for me.

There's lots of logic behind investing in 1 or 2 companies max in ones portfolio at any given time.   I can litterally know more about this company than thousands of average investors out there...

And I do know more.  I know TONS about (GME) since it is the only investment.

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#4) On October 07, 2011 at 12:03 PM, chk999 (99.97) wrote:

Challenge accepted.

GME has a reasonable balance sheet (although a lot of stockholder's equity is goodwill and hence valueless) and is making money. It might even have a hellacious bounce if the large short interest is forced to cover.

But it looks vulnerable on two fronts. On the cheap side. network bandwith is going up and costs are coming down. So digital download of content will get more prevalent, not less. And that is a business where the game publishers will want to go direct and not share the profits with GME.

On the expensive side, Amazon has to have a lower cost structure than GME. So they will be able to sell the game (and stuff) for a little less than GME and still make a larger profit. Competiting with Amazon is not something someone should do lightly.

So I think that GME gets squeezed bwtween these two trends. The only way that GME can maintain pricing power is to either have a lot of unique stuff for sale that isn't available at Amazon, or have such a good in-store experiece that people will pay a premium to shop there.

The first requires cutting special deals with game publishers and that is a notoriously unstable group of companies. The latter requires it to be the Starbucks of game distribution and that will take a little doing.

I have no position either way on GME, but would be more likely to go bearish than bullish. 

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#5) On October 07, 2011 at 12:55 PM, Varchild2008 (85.21) wrote:

"And that is a business where the game publishers will want to go direct and not share the profits with GME."

That is absolutely false.  The Publishers need retail companies like GME in order to market their products and sell more copies of their games.

Take for example, Star Wars Knights of the Old.

Essentially you have Electronic Arts boasting 4 million customers or so for their Digital Origin distribution model.....and of course Star Wars is exclusively only available on Origin.

Problem in your logic is that Electronic Arts isn't abandoning the Bricks and Mortor stores like Best Buy and Gamestop, Costco, and Walmart....Target...etc.

Bricks stores have Star Wars Knights of the Old and Gamestop's website has had that title as one of their best sellers for many weeks.

Ultimately, Publishers like Electronic Arts aren't planning to abandon Gamestop or Best Buy or so on.  They know that would eat into their profits as Customers like ME simply do not always want a Digital Copy.

I have lots of reasons depending on the video game title where I need a physical copy.  For example, Console to Console system data transfer is painfully slow.  Last time I did it... the only major title I had digitially downloaded on my Console was Mass Effect.

Just by having that 7 GB Mass Effect and a slightly slower Internet Speed than I current have today it took 24 hours to finish the data transfer.

Should my console system get corrupted  or I wish to upgrade to the next Console System....or even with PC Computers....
it can be extremely helpful to have that physical copy.

It just depends.... As C.E.O. of Gamestop has mentioned perhaps multiple times, he finds that Shoppers that Shop for games Digitally tend to also buy Physical games...

Customers are DUAL shoppers today.  Sure, there are exceptions where a customer only buys physical or digital...

But....I do not see the Physical Retail Industry for Gaming going away... You have too much opportunity to advertise/market your video game in Bricks Stores....  You have too much opportunity.

What Publisher would pass up on that is a publisher that won't last long.

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#6) On October 07, 2011 at 1:03 PM, Varchild2008 (85.21) wrote:

"pricing power is to either have a lot of unique stuff for sale that isn't available at Amazon, or have such a good in-store experiece that people will pay a premium to shop there."

People are paying a premium to shop at Gamestop.  Gamestop's pricing power has time and again beaten Amazon....

They can either beat on pricing or they can beat by bundling DLCs with the purchase of games in pre-order.

Amazon won't have a lower cost structure than GME once they have to start collecting sales taxes like everyone else (September 2012 in California).

They are probably more impacted by the Eurozone than Gamestop is right now as well....

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