GameStop “at least 10 years of runway left”

Whilst being a US based store, many have for a long time attempted to second guess the fall of video game retailers such as GameStop, GameStation, Cex etc.

The NPD group shows a never ending downward spiral in retail sales and due to this many have simply concluded that digital distribution will overtake places such as GameStop and GAME in an inevitable move. Yet Wedbush Securities analyst Michael Pachter thinks there is some time to go before this happens. 

Pachter believes, “that GameStop has at least 10 years of runway left in its core business.” which he attributes to the companies selling of used devices.  “In the meantime, the company is leveraging its pre-eminent position in selling used game consoles into a strength in offering used smart phones, tablets and other consumer electronics…we expect substantial growth from this category over the next several years.”

Whilst again this applies to the American retail branch, a lot of this information can also be applied to GAME and GameStation. Internationally Microsoft’s scrapping of the always-online and used game policies for the Xbox One, help to plug up the holes in retailers pre-owned business.

Pachter supports this claim, “with the status quo remaining largely in place for used gaming on next gen, the transition of sales from physical to digital should be quite slow” retailers, “rewards program should enable continued market share gains and position it to be the ‘last man standing’ for physical sales.”

If retail stores such as GameStop and GAME are to eventually collapse or transition slowly into something different is yet to be seen. However, whilst Pachter gives an extended lease of life to retail business, it is clear to everyone that change will have to come eventually.

What do you make of GameStop and GAME’s situation? 

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