QUOTE AND NEWS
Market Intelligence Center  Jan 20  Comment 
Friday’s trading in GameStop Corp. (GME) gives options traders an opportunity for a 38.61% return. By selling the Jul. '15 $37.00 call and buying the Jan. '16 call at the $30.00 level for a net debit of $5.05, traders will book a profit as long...
DailyFinance  Jan 19  Comment 
Filed under: Company News, Technology, Consumer Goods, Investing JBLivin/Flickr"Call of Duty: Advanced Warfare" was the world's best-selling video game in 2014. Last week was a good one for owners of some video game stocks. Activision Blizzard...
TheStreet.com  Jan 14  Comment 
NEW YORK (TheStreet) -- Shares of video-game retailer GameStop Corp.  surged today, closing up 10.5% to $36.21, after reaffirming its earnings forecast, as sales of new titles in the holiday period helped counter waning demand for consoles,...
Benzinga  Jan 14  Comment 
As companies continue to report holiday results and analysts weigh in on them, two tech-related retailers, GameStop Corp. (NYSE: GME) and Best Buy Co Inc (NYSE: BBY), come into the spotlight. Related Link: GameStop Up 8% On Holiday Sales...
MarketWatch  Jan 14  Comment 
Short-interest positions against GameStop Corp. are getting hammered on Wednesday after the videogame retailer said holiday sales were better than expected and that the trend should continue into the first quarter.
Forbes  Jan 14  Comment 
In trading on Wednesday, music & electronics stores shares were relative leaders, up on the day by about 1.6%.  Leading the group were shares of Gamestop Corporation (GME), up about 12.7% and shares of Best Buy (BBY) up about 1.5% on the day.




 
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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