EA's Bad News for GameStop
February 03 2021 - 10:25AM
Dow Jones News
By Dan Gallagher
Once the Reddit-fueled frenzy on GameStop shares has faded,
investors will have to come back to reckoning with a tough business
made worse by the pandemic.
A hint of how much worse can be seen in the latest earnings
report from Electronic Arts.
The game publishing giant reported late Tuesday a 19% jump in
net bookings for the December quarter, driven by digital sales and
its live services. The company noted that 62% of its new game sales
for the quarter were digital, compared to 49% in last year's
holiday period.
Digital game sales create two problems for GameStop. One, they
generally don't move through GameStop stores, with the exception of
those driven by cards that the retailer sells.
They also don't generate used sales down the road --hurting what
has typically been GameStop's largest source of profits.
The shift to digital sales has been going on for a while, which
is why GameStop's current management is pursuing an "omni-channel"
strategy to build up its online business.
As EA's results show, it's a race against time.
This item is part of a Wall Street Journal live coverage event.
The full stream can be found by searching P/WSJL (WSJ Live
Coverage).
(END) Dow Jones Newswires
February 03, 2021 10:10 ET (15:10 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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