Shares in Game Group have fallen nearly 8% on renewed concerns about increased competition.
The retailer is already having to cope with supermarkets selling cheap computer games, and increased sales of downloads rather than physical products (the HMV syndrome, perhaps.) Its strategy to cope is to close unprofitable stores and increase its online presence.
But now its US peer GameStop - once tipped as a bidder for the UK group - has put its tanks on Game's lawn - its online lawn, at least.
GameStop has launched a UK website, gamestop.co.uk, saying its entry into this market would provide consumers with wider choice and some exclusive content they would not find elsewhere. One such is tied in with the European release of Assassin's Creed Revelations Animus Edition.
Analyst Sanjay Vidyarthi at Espirito Santo looked at the implications of the Gamestop move:
GameStop has long been rumoured as a potential bidder for Game. The launch of a website suggests that this is not imminent, but does not preclude the possibility longer term.
There is no mention of any intention to open stores. Again, short term we think it unlikely that any stores will be opened - it would make more sense to wait for the right time to buy Game.
GameStop's website appears to be focusing on exclusive offers and pre-owned (3 for 2 offer) where it claims to have thousands of lines to choose from - question is, where is it getting the stock from at launch?
As in the Best Buy/Dixons scenario, the immediate threat should not be overplayed. GameStop is unlikely to be a well known brand in the UK and will need to invest heavily in marketing (and promotional activity) to gain traction, particularly since it has no stores.
We need to wait and see how much disturbance this can cause to the UK market - activity at launch is unlikely to be representative of longer term positioning relative to Game and other online players. How much traction can Gamestop gain by Christmas this year?
Picking up on commentary in the trade press, we think that the there has not been any material pick-up in the UK games market since we last heard from Game on 15 June. Game needs both a market pick-up and its outperformance versus the market to improve in order to meet market expectations. We think the pressure on performance over Christmas is increasing.
As a result, he repeated his sell rating on Game. The retailer's shares are currently 2.25p lower at 26.75p.
--
Source: http://www.guardian.co.uk/business/marketforceslive/2011/jul/29/game-group-slumps-on-rival-website
~
Manage subscription | Powered by rssforward.com
0 comments:
Post a Comment