Gamestopped: Videogame Sales Slump Hits Videogame Sales Giant. Who Knew?
by Peter Kafka
Posted on August 20, 2009 at 7:41 AM PT
When videogame sales tank, what happens to sales at the world’s biggest videogame retailer?
The answer shouldn’t be a surprise, but somehow the performance Gamestop reported this morning managed to catch Wall Street off guard anyway.
The company’s revenue of $1.74 billion was in line with estimates, but earnings of 23 cents a share missed consensus by five cents. More worrisome is that the company had to knock down its guidance for the rest of the year and says that comparable store sales will be down between four percent and eight percent through 2009. Now Gamestop (GME) shares are trading down five percent in a flat market.
Did I mention that this shouldn’t be a surprise? Game sales, once thought to be immune to the recession, have been slumping for months. Turns out that a tough economy may indeed prompt more gamers to huddle in the basement in front of their Xboxes, but it won’t prompt them to buy new games (used ones may be a different story).
Gamestop says it’s still optimistic that coming games, like yet another Call of Duty sequel from Activision (ATVI) and yet another version of Halo from Microsoft/Bungie (MSFT), will help perk things up. But I’m interested to note that the company didn’t cite the new Beatles version of Rock Band, from Electronic Arts (ERTS) and Viacom’s (VIA) MTV as a catalyst.
By the way, for fantasists who persist in pretending that the Beatles are coming to iTunes at Apple’s (AAPL) event next month: Stop! It’s not true.
Comments
There are 2 factors which I think should be mentioned here:
1. More companies are switching to digital distribution. Valve, a developer whose games Half-Life and Counter Strike make up a significant portion of video game sales, has recently surpassed its shipped sales by its download distribution via steam. EA and other developers are following suite.
2. A small, but increasing, percentage of people are pirating video games.
The combination of these two factors means that video game consumption is probably constant, or increased, simply, companies like Gamestop are seeing a small share of the pie. This is a trend that is very likely to continue and worsen, regardless of the recession.
Posted by Karl Schneider at September 2nd, 2009 at 6:24 am