1 Big Growth Driver to Save GameStop?


In the following video, Motley Fool analyst Austin Smith discusses the one growth driver that could save GameStop.

Austin looks at a line item on GameStop's income statement that consists of the online division, including downloadable games, power-ups, and rewards from members. We know the company is up against the wall and looks cheap. At first glance, it seems this could be the thing that saves GameStop. Yet there's competition from Gamefly, and other competitors are better placed to deliver the same kind of content.

Rather than making GameStop a middleman, Electronic Arts and Activision Blizzard are more likely to work directly with device manufacturers such as Microsoft and Sony when they come out with newer consoles, allowing users to directly download gaming content rather than buy a physical disc.

Apple, meanwhile, has seen 40 billion downloads from its App Store, and a lot of those downloads have been video games. Combining a lower price point with better access to these games yields a lot of downloads.

GameStop is swimming against the tide, and companies such as Apple, Microsoft, and Google are the true disruptors of the GameStop model.

As Austin mentiones, GameStop may be lagging behind many of its competitors, but its pain could be Zynga's gain. You can learn everything you need to know about Zynga and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.

The article 1 Big Growth Driver to Save GameStop? originally appeared on Fool.com.

Austin Smith has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard and GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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