Is GameStop Viable?

Steve Anderson : End Game
Steve Anderson
The Video Store Guy
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Is GameStop Viable?

There were two unexpected points that emerged today that got me to thinking. Sometimes the best events are the things that are a synthesis of others, and these two items got me to asking a question: is GameStop as a company viable? And the answer was kind of surprising.

First came reports of the financial kind. It's probably not going to be a surprise that GameStop had a sound fourth quarter. With the Christmas shopping  season in tow and all that that implies, plus of course the shopping seasons associated with Kwanzaa and Hanukkah, a good fourth quarter at any retail operation is commonly expected, and where it fails to materialize, a sign of real disaster.

But the full year's results, meanwhile, were much less encouraging. GameStop recorded a loss of $269.7 million for the year ending February 2, 2013. That compares very, very unfavorably to profits of $339.9 in a year-over-year comparison, but GameStop rapidily pointed out that the adjusted earnings picture was much better overall.

Naturally, GameStop is expecting substantial gains from the likely upcoming new console season, as well as some big new games to follow like Grand Theft Auto V, Saints' Row 4, and so on.

But that's not the only thing that's interesting here: GameStop has been seen diversifying. Not only has it recently picked up some new properties like Kongregate, the online gaming headquarters for plenty of gamers--including myself, actually; I'm quite fond of Kongregate games--but it's also been seen dropping a little investment capital on GameStick, an Android-driven gaming console in the style of Ouya. Pre-orders on the device are already firing up in earnest and selling at $79.99, or right around $20 less than the Ouya. Word is that the GameSticks will actually come with games like Shadowgun and Smash Cops.

What I love about this news is that GameStop is learning some lessons. It's diversifying, and there's seldom anything wrong with diversification, especially when the diversification takes place in related fields where previous lessons can be drawn upon to add to the likely effectiveness of the new measures. While GameStop may not have much to worry about in terms of the loss of the used game market--then again, they may, based on some reports--it's clear that GameStop isn't resting on its laurels and is opening up the field to cover a lot more in the way of possibilities. That's good news; not just good news for GameStop, but also good news for the game buying public who will as a result get more choices in the field.

Only time will tell what GameStop ultimately does with its newfound information and strategies, but it's got a very good idea on its hands, one that just might end up saving the company in the long run.



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