People have been talking about the demise of GameStop for a while now, thinking that the quickly growing digital games market will make retail game releases obsolete in the near future. That "near future" could be a lot farther away than we think, however. In advance of GameStop's Q3 earnings report this Thursday, Wedbush Morgan analyst Michael Pachter noted that GameStop can keep growing its business for at least 10 more years.
One of the keys to continued success for GameStop will be its bread and butter: used games and trade-ins.
"While we don’t expect investors to abandon the view that a migration of software sales to digital downloads is inevitable, we think that GameStop is likely to continue to gain market share over the next several years, as its core customer values the option of trading in physical goods for store credit. We think that this customer will be among the last to embrace digital downloads, and think that the company has anywhere from 10 to 20 years of healthy earnings and cash flow generation ahead of it," Pachter stated.
In the meantime, GameStop has not been standing still. The company has made its intentions clear with moves like the purchase of Kongregate and the retailer's recent decision to sell DLC in its stores. Colin Sebastian of Lazard Capital Markets said that GameStop is likely to make around $200 million on digital sales this year.
