GameStop Corporation (GME), the video game and entertainment software retailer, recently completed the incorporation of GameStop Impulse on its website.
GameStop Impulse, the digital distribution platform, segregated its offerings into three components: Impulse Client, Impulse Reactor and Impulse Publisher.
Impulse Client offers a vast digital distribution platform, thereby facilitating users to access their preferred games instantly with an option of downloading the same through their web-enabled devices.
Impulse Reactor provides content publishers with copy protection tools, along with user friendly digital rights management.
Moreover, Impulse Publisher renders effective instantaneous reporting and management gears, thus facilitating the publishers to administer their game.
The recent technological advancements have made the industry highly aggressive as buyers now have multiple options to obtain video game accessories and softwares for gaming systems and computers.
The gaming industry is experiencing a transition, resulting in a decline in handy and console game sales. However, there is rise in consumer spending on digital download, mobile gaming apps, social network games and used games. In such a scenario, GameStop Impulse will help the company to strengthen its foothold.
Going forward, with the increasing demand for online social gaming, the video game industry will soon see changes in business dynamics. Moreover, the social gaming market is witnessing healthy growth due to its social and interactive environment compared with the conventional platforms.
Currently, the video game industry is poised for strong growth in 2011. According to market research firm Gartner, the video game industry will grow at 10.4% to $74.4 billion from the 2010 level of $67.0 billion.
To be company specific, GameStop, which faces stiff competition from Amazon.com Inc. (AMZN), is well positioned to benefit from the gaming products and PC amusement software market. The company follows a strategy of store extensions in productive regions and offers the largest collection of games.
Furthermore, GameStop is a significant player in the used gaming products market. The company provides a wide array of used video game products for both current and previous generation platforms. In addition, the market for these products has been resilient to the recent economic downturn.
However, weak consumer spending, the decrease in new game releases, deferred discretionary purchases and pricing pressure might dent results for the company.
We prefer to maintain a long-term ‘Neutral’ recommendation on the stock. GameStop also holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
