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Online shopping has completely disrupted the retail industry, and it continues to hit specialty shops like brick-and-mortar video game retailers.
GameStop, the country's largest video game retailer, is facing headwinds thanks to its e-commerce competitor: downloadable games. Downloadable games account for roughly 25% to 30% of software unit sales, and in November download sales rose 13% from $6.7B. Most Xbox and Playstation games can be downloaded online, with companies like Electronic Arts and Activision Blizzard charging customers full price to download their games, Barron's reports.
Still, Mizuho analyst San Phan said all is not lost for video game shops like GameStop—two of every five gamers who have tried downloading games go back to purchasing discs.
"We believe physical console game discs will not disappear anytime soon and the digital shift will be a longer runway than widely believed," the analyst wrote in his research coverage of GameStop. The retailer reported Q3 earnings of $0.49 per share on revenue of $1.95B that beat Wall Street estimates in November. [Barron's]
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