QUOTE AND NEWS
SeekingAlpha  3 hrs ago  Comment 
By Lutz Muller: Video game retail sales in the U.S. have been in the doldrums ever since they hit a high point back in 2009. However, this was then easily explained. Everybody was waiting for the new consoles to come out in 2012 and 2013 and did...
SeekingAlpha  9 hrs ago  Comment 
By Jeffrey Himelson: Yesterday, Microsoft (NASDAQ:MSFT) and Electronic Arts (NASDAQ:EA) reached a partnership regarding Xbox One that paints a negative outlook for GameStop (NYSE:GME). The partnership, which will run exclusively on Xbox One, will...
Cloud Computing  Jul 30  Comment 
GameStop (NYSE: GME), a family of specialty retail brands that makes consumers' favorite technologies affordable and simple, announced today that its GameStop Technology Institute (GTI) business unit has entered into strategic...
TheStreet.com  Jul 29  Comment 
NEW YORK (TheStreet) -- Shares of GameStop are falling -5.95% to $43.34 on heavy volume on Tuesday afternoon. One possible factor pushing the video game store's stock down is the recent partnership between Microsoft and Electronic Arts ...
Benzinga  Jul 29  Comment 
GameStop (NYSE: GME) shares fell more than seven percent Tuesday after its supplier announced an online subscription service for games using the Xbox One console. Electronic Arts (NASDAQ: EA), which develops and markets game software for...
Benzinga  Jul 24  Comment 
Kongregate, a wholly owned subsidiary of GameStop Corporation, today announced it will release several new free-to-play mobile games in the next few months as they continue to expand their mobile game publishing program. The new games will be...
SeekingAlpha  Jul 23  Comment 
By Jeffrey Himelson: Yesterday, GameStop (NYSE:GME) announced that it will allow customers to convert physical gift cards for e-gift cards. A consumer will just have to fill out their gift card info and once verified, an email receipt will be sent...
Market Intelligence Center  Jul 22  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on GameStop Corp. (GME) today after it closed at $42.85 on Monday. For more conservative investors,...
TheStreet.com  Jul 18  Comment 
NEW YORK (TheStreet) -- GameStop  stock closed at 3.83% to $42.83 today after NPD Group's June 2014 report revealed gamers spent $736.4 million on new physical gaming products at U.S. retailers, up 24% from $593.5 million from the same period...
DailyFinance  Jul 14  Comment 
Filed under: Earnings, Retail, Telecommunications, Upgrades and Downgrades, Investing Tim Boyle/Getty Images Rent-a-Center (RCII) is developing a new product line to get it out of its slump. "We are not satisfied with our second quarter...




 
TOP CONTRIBUTORS

GameStop (NYSE:GME) is the world's largest retailer of video game hardware and software. The company has saturated U.S. mall locations, and is now expanding into strip centers and international locations to drive store growth. In addition to its size, Game Stop differentiates itself from its competitors by carrying one of the largest assortments of used video games. The used business is important to GameStop, as used games are more profitable, with 46.8% margins vs. 21.3% for new games.[1] The company earned $9 billion in net sales and $376 million in net income in 2009.[2]

Like other video game retailers, the company is also dependent on new console releases to drive software and accessory sales. The three main video game consoles in the market are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), which are nearing the end of their cycles. Retailers, like GameStop, will be much more successful in the middle of cycles and will generally fare worse in between cycles.

Company Overview

Gamestop operates 6,450 stores in the United States, Australia, Canada and Europe, primarily under the names GameStop and EB Games. The company also operates electronic commerce Web sites, including www.gamestop.com, and publishes Game Informer, the industry’s largest multi-platform video game magazine in the United States based on circulation, with approximately 4.0 million subscribers.[3]

Products[1]

  • New Video Game Hardware - 19.3% of net sales, 6.5% of gross profit
  • New Video Game Software - 41.1% of net sales, 21.3% of gross profit
  • Used Video Game Products - 13.2% of net sales, 46.8% of gross profit
  • Other - 13.2% of net sales, 33.8% of gross profit (other products include PC entertainment and other software, accessories, and magazines)


Key Trends and Forces

Increasing Popularity of Video Games

The Entertainment Software Association (“ESA”) estimates that 65% of all American households play video or computer games.[4] With the evolution of technology providing a more realistic playing environment and the creation of family friendly game consoles like the Nintendo Wii, video games are more popular than ever. Additionally, video games can also be more than just about the games -- the Wii Fit Plus combines fitness with gaming and is geared to people of all ages. The increasing popularity of these kinds of games means a higher demand for video games, and a better bottom line for Gamestop.

The Video Game Industry is Very Cyclical

Video game producers and retailers are extremely dependent on new video game hardware to drive business. The main video game consoles are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), all of which are nearing the end of their. Hardware sales are usually greatest in the third year of a cycle, and software sales are greatest in the fifth year. Gamestop will look to capitalize on rising software sales rather than hardware sales as these systems mature.

Expanding Target Market

In the late 1970's when video games were first created, the average age of a gamer was ten years old. The average age of a gamer today is 13 years old, according to the Entertainment Software Association. In addition, 25 percent of Americans over the age of 50 play video games on a regular basis. More and more people are spending money on video game hardware and software, which benefits the entire industry. Also, young children are spending more time playing video games, and less time with traditional toys and games. More video game players means more people buying Gamestop's products.[4] dss

Female Video Game Use

Video games have traditionally been a male-dominated market, but the number of female gamers has grown significantly. In 2009 40% of video game users were female. However, most of these female gamers are casual gamers who play card, word, and puzzle games online. These typically older women are not buying video game hardware and software.[4]

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