With the digital revolution occurring in electronics today, the video game sector continues to be primary based on hard disk games. Microsoft initiated the possibility of digital sales of console based games in the future, which requires an internet connection for most consumers. It is possible in the next 3 to 4 years this could be a possibility; however, Nintendo releases their next console in June during E3 this year in 2011 to determine if disk based games will still be around for the next few years at least.
Apple has entered the gaming market, which may be more of a challenge to Nintendo than Sony or Microsoft. Sony and Microsoft focus on diverse console based games that are played on their HDTVs. A conversion to purely digital sales of console based games includes a lot of risk, which was currently highlighted by the recent attack on Sony. Security is not up to par for an all digital world.
How does this affect Gamestop, Bestbuy, and other gaming retailers? For one, Amazon competes aggressively with almost every company from Target to Ebay. Gamestop is in its own niche. They allow a customer loyalty program that targets its loyal customers to make purchases on high margin items like accessories and used video games, as well as trading in games for additional discounts. Gamestop management acknowledges the increase threat to digital video games; however, digital video games will not decimate console based games played on hard disks like digital sales are currently doing to CDs and Books. A prime example is movies. Advancing into the digital realm by competing with Valve for digital PC sales, and Tablet digital sales will increase their overall revenue. Additionally, the successful launches of disk based games from Sony, Microsoft, Nintendo, and Sega will keep Gamestop in session for a long time.
Gamestop faces competition from Amazon, Bestbuy, and Walmart; however, customer loyalty and management in the stores are the backbone success of Gamestop. Players of all kinds enjoy the experience and advice they receive from Gamestop employees. The PowerUp Rewards card also gives gamers the best magazine in the business for Video Game news from PCs to your console of your choosing and everything in between. This little success story will carry out with the continued aggressive strategy being developed and deployed by Gamestop's top management team. I encourage everyone to take a better look at the video game market, as itself is not entirely weighed down by Macroeconomics you see in the news. As always, invest in your area of competence and look for value long term.