Gamespot buys out EB games Industry watchers call merger a good thing for investors, customers; Wall Street rewards dealmakers by bidding up shares. Financial analysts tracking the fortunes of specialty game retailers GameStop and Electronics Boutique offered their views on the merger of the two retailers. The two companies announced this morning that they would be merging, though, technically, GameStop is taking over EB. Despite the consolidation of the two largest specialty game retailers, analysts remain optimistic that the deal will be approved by antitrust regulators. "[These two companies] combined control only 21 to 22 percent of the total US video game market," said Gary Cooper, analyst at Banc America Securities, "[That] is about the same as Wal-Mart, the current market share leader." Other analysts echoed this sentiment and called out the potential threat the new entity will someday likely pose to Wal-Mart. "We estimate that a combined retail presence will have market share in the low 20 percent range, which would make it the number two video game retailer behind Wal-Mart," writes Michael Wallace, analyst with investment firm UBS. "Strategically, we think this is a great deal." While shares of both companies rose as news of the merger hit the markets (EB shares were up $14.09 to $55.21, while GameStop charted a $2.10 climb to $23.71), most analysts see Electronics Boutique shareholders as the ones with the most to gain from the deal. "It's a great deal for ELBO shareholders," says C.L. King and Associates analyst William Armstrong. "They get a huge premium after the stock already had a huge run last year." P.J. McNealy, an analyst with American Technology Research, says that publishers will also benefit from the merger. "Looking further out into the next-generation of consoles, having a unified, solid video game specialty retailer," says McNealy, "could benefit the video game software publishers simply because they will be able to tailor to the early adopter, hardcore crowd." Harris Nesbitt analyst Edward Williams agrees. He writes that "the new, larger company should have a significantly stronger position in the video game retail marketplace, especially as the new console hardware systems launch later this year." Michael Pachter and Edward Woo of Wedbush Morgan Securities see a potential for enormous savings in the new company. "We expect the combined entity to rationalize its assets and to eliminate a significant amount of overhead," wrote the Wedbush analysts in a research note to investors today. "We expect that the combined operations could generate pretax savings of $30–40 million per year, based on $20 million reduction of general overhead and $10–20 million in store rationalization (100 stores at $100,000–200,000 per store net savings) or around an additional .25–.33 cents per share after-tax annually. Thus, we expect the merger to be significantly accretive once completed." Anthony Gikas and Stephanie Wissink, analysts with Piper Jaffray, see this new retailer as a great investment opportunity in the next few years. They project that video game software sales will increase nearly 10 percent during 2006 and between 15 to 25 percent during 2007. "We think the new GameStop will be very well positioned to take advantage of strong growth during this period." By Staff -- GameSpot POSTED: 04/18/05 04:50 PM PST http://www.gamespot.com/news/2005/04/18/news_6122456.html
those geek dudes at the GameStop on Fry and I-10 (next to HEB) really know their games, memorabilia, comics, and accessories... ... they don't know, however, that I could have bought GT4 for 37 buckOs at Wally Martinez instead of 49 at GameStop! !!!
They will all come crashing down as soon as we find a way to stop them reselling our games. They make more money reselling used games than on the new products...we need to find a way to get a piece of that action. DD
That's just silly... to think that CAR COMPANIES could get anything from selling used video games... absolutely nonsense, I'd say...
I don't mean we get a piece, what I mean is that we put protections on the games to where they can only be sold once. Kind of like Valve is doing with HL 2. DD
Just jack up the prices of your games when you sell them to the retailers that resell games. They can't afford to raise the prices of the new games, because the customers will just buy a pre-owned game or go somewhere else...or is that illegal?
Drop the prices of your games faster. I buy used games only for most games, however, for a 19.99 new game or a $15 use game, I sometimes buy the new one. But that's just me.
For some reason this seems wrong to me. I keep most of my games, but why should I lose the right to sell/give/lend a game to a friend/stranger when I'm done with it? Also, how would this effect the rental sales for console games? I let others borrow my DVD movies, and sometimes I'd just rather not have it anymore. B
Amen. I'm no economics major, but I can't see anything good coming out of eliminating the secondhand market. Seems like it would alienate a significant section of the consumer base and would cause console sales to take a hit. Also, games could stagnate if nobody wants to take risks anymore with a much more discriminating game-buying public.
lets just stop playing games altogether o and i just started half life 2, about 2 hours into it... so far so good!
Once I own the game, I will have the rights to sell them, you can't take that rights away, it's against the law.
then the price of used games will go up. somehow the extra cost is always passed onto the consumer...
BS - you have a license to use the game. The same way you have a license to use Windows - you don't own it. That said, this is all BS. Even with Half-Life 2, all you do is delete the game & Steam from your comp, then give it to your friend along with your Steam account info. This kind of one use only thing for console games would never work though.
Preventing pirating is one thing, but eliminating the 2nd hand market? I can't think of a single industry that would try something that weak. Games are too expensive as it is, and they get moreso every time the next gen systems come out.
I agree. Didn't video games make more money than the movie industry this past year? I guess it's because you spend less money on a ticket + a rental + a DVD purchase + a payperview of a movie than one copy of a game.
