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The Company is a retailer of video game products and PC entertainment software.
I see this going the way of Blockbuster for much the same reason.
Niche brick and mortar is doomed.
The gaming industry is starting to move in the direction of the digital era as streaming and downloading games becomes more and more commonplace. Sorry GameStop, but with the ability to rent older video games coming from the likes of Sony you just don't have a place anymore. Not only are gamers generally dissatisfied with the money they get from turning in games, but developers are going to look for ways to make higher margins on what they're producing as well. As GameStop tries to sell things outside of video games such as used cell phones, I can't help but feel like it's declining core business sounds a bit similar to another outdated retailer by the name of Radioshack. The cherry on top here is increased competition from the likes of Walmart and Amazon.
Core business will be in significant decline as consoles push more to digital downloads. Also alternate casual gaming options taking attention away from consoles as well as PC gamers like League of Legends.
Video games are moving towards digitization. Game developers can earn much larger margins cutting out the middle man (i.e. Gamestop). Gamestop is the top dog in a dying business. Also, consols moving towards elimination of used game resells (i.e. requiring unique passcodes in order to play the game on a device)....
Players' ability to download games directly to newer consoles will eradicate a majority of the need for video game retailers.
Consoles are gradually losing share to free-to-play games which thrive on microtransactions, and mobile, and that's not even counting Steam and their mythical Steambox. The headwind will continue - I had a PS1, PS2, and PS3, and will not be purchasing a PS4, partly because I haven't seen a game I really wanted to play in a while, but also because my iPad has scratched part of the gaming itch. As go the consoles, so goes Gamestop.
Better home internet will soon eradicate the need for Game purchasing at a retailer.... no brainer.
this stock is undervalued
The sun is setting on their operating model.
They can hold on a little longer, but there is a strong push toward digital delivery from many major industry players--it won't be too long before no one goes to a brick & mortar store to get games. This plus the fact that their CEO has only a 40% approval rating on Glassdoor makes them a long-term underperform.
Terrible market to be in right now. Can you say Blockbuster?
I wish II got in before today's drop, but it reconfirm my thesis. There are more competitors now (walmart). Game providers want to restrict resale. And most importantly, all other entertainment is moving to digital content (music - iTunes, movies - Netflix, TV - Disney/Dish). Gaming will follow.
Taking advantage of a momentary pullback on fears of WMT's getting into the used game buying biz. Amazon's entry didn't hurt GameStop. Nor did Best Buy's. Why would WMT be any different?
The age of digital disc gaming is over!!! R.I.P.
Very little reason to go retail with the world moving to DLC.
Unless they rapidly change they are in the same category as other "brick and mortar" retailers.
RetailConsignment inventory is a two edged sword - both sides cut you.. Low cost sellers like amz ,cost have a huge competitive edge.
The new Blockbuster.
Positive: - They have no bright future but they don't look like suffering a sudden death, e.g. they have no debt and positive YoY sales growth -> current price undervalues this - Pessimists have been wrong on this stock for years and the businesses has almost always performed better than expected - They move towards more online sales and extend their business of selling used games and controllers - Lots of cash, will buyback 10% of all outstanding shares Negative: - Aggressive online competition, especially from Amazon -> they might not be able to compete effectively Category: ICIn
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