GameStop Corp. (GME), headquartered in Grapevine, Texas, is the world’s largest multichannel video game retailer. GameStop’s retail network includes 6,627 company-operated stores in 17 countries worldwide and online at GameStop.com . The network also includes: Kongregate.com , a leading browser-based game site; Game Informer® magazine, the leading multi-platform video game publication; Spawn Labs, a streaming technology company; and a digital PC game distribution platform available at www.GameStop.com/PC .
Below are some possible concerns creating headwinds for GME. (Source 10-K)
The electronic game industry is cyclical, which could cause significant fluctuation in earnings. The electronic game industry has been cyclical in nature in response to the introduction and maturation of new technology. Following the introduction of new video game platforms, sales of these platforms and related software and accessories generally increase due to initial demand, while sales of older platforms and related products generally decrease as customers migrate toward the new platforms. New video game platforms have historically been introduced approximately every five years. The current generation of video game consoles were introduced in 2005 and 2006. If video game platform manufacturers fail to develop new hardware platforms, our sales of video game products could decline.
This console cycle is already 2 years longer than the last console cycle so management is in uncharted territory as far as forecasting sales. Near term until there is a refresh it’s not unreasonable to expect weak sales. The longer term opportunity is a new video game cycle that the market appears to be ignoring….