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GameStop Looks To Boost Digital Activity, Make Possible Acquisitions
by Chris Remo
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October 21, 2009
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Brick-and-mortar retailer GameStop is looking to increase its investment in the digital distribution space, potentially acquiring existing digital aggregators to strengthen its foothold in that fast-growing market.
The company indicated its digital intentions in a analyst meeting attended by Lazard Capital's Colin Sebastian this week, not long after the company's stock took a 9 percent hit on the back of flat year-over-year industry revenues in September.
In addition to its plans for some kind of acquisition or significant investment in an external online distribution service, GameStop plans to bolster its in-store sales of digital point cards for console download services, as well as to continue to expand its own currently-operational PC download offerings on its store's website.
As a hint to its longer-term plans, earlier this year, GameStop added to its core PC download offerings with a new dedicated casual download portal.
Of course, with the retailer still overwhelmingly focused on retail, it said it plans to continue opening new brick-and-mortar stores, believing they offer a quick and proven profitability strategy.
And despite the stock price drop and lower-than-expected industry earnings, GameStop did not revise its own financial projections, saying it feels confident in its existing immediate strategy.
Analyst group Lazard Capital Markets seems to agree, maintaining its "buy" rating on the company's stock, contrasting with Janney Montgomery Scott's downgrade to "hold."
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I'm surprised they haven't taken major steps to secure online distribution of some type already. It's kind of like watching a train hurtling toward a "bridge out" sign. You gotta wonder if they will realize that things may be great now, but some changes are needed sooner rather than later.