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Analyst: GameStop's 2009 Sales To Reach $2 Billion?
Analyst: GameStop's 2009 Sales To Reach $2 Billion?
March 18, 2009 | By Leigh Alexander

March 18, 2009 | By Leigh Alexander
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More: Console/PC

A shift in favor of the used game market could mean $2 billion in revenues for retailer GameStop in 2009, says Lazard Capital Markets analyst Colin Sebastian.

And although cyclical, overall industry sales are seeing an upswing, Sebastian maintains, and GameStop is balancing the benefit of more game sales with its thriving second-hand business. Pre-owned hardware, software and accessory sales could comprise a quarter of the company's revenue.

Sebastian also joins EEDAR analyst Jesse Divnich in stating that online retailer Amazon's new trade-in program is unlikely to pull customers away from GameStop, and that investors' unfounded fears are more likely to ding GameStop stock than the actual impact on the company's business.

"While Amazonís recent entry into the trade-in market remains an overhang on shares, we believe there will be limited impact on GameStopís business," he says.

EEDAR's recent analysis found that not only does GameStop offer slightly higher trade-in values -- significantly higher when consumers take advantage of the retailer's in-store promotions -- 80 percent of its customers are "core" gamers likely to remain loyal.

"In contrast, Amazonís offering is likely to have more appeal to 'non-core gamers,' or those consumers more likely to trade games in exchange for credit toward purchases in any product category," Sebastian says, agreeing with EEDAR's analysis.

"Longer-term, we believe the bigger risk to pre-owned software sales are rights management from the video game publishers and console manufacturers, which this year will include further tests of registration codes and content downloads," Sebastian notes.

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