Michael Pachter: Gamestation purchased by Game Group, GameStop missed out?

Posted May 2, 2007 at 7:11AM EST by QJ Staff

Listed in: Wii, PS3, Nintendo DS, Xbox 360, PC Gaming Tags: GameStop, Michael Pachter, Monopoly, UK, Wal-Mart

Michael Pachter discusses missed opportunities and monopolies - Image 1

In the world of gaming industry trading, the latest word is that analyst Michael Pachter believes that GameStop should have purchased the retail chain Gamestation when it had a chance. He believes that GameStop missed an opportunity by not buying the chain, as consequently, it was purchased by the Game Group for Â£74 million.

The reason for this is quite simple, and Pachter gave a very good explanation why he feels that GameStop lost an opportunity.

They should be in the UK market, and instead of purchasing Gamestation and immediately being one-third the size of Game Group, they allowed Game Group to get bigger. If GameStop were to open 200 stores now, they would be a quarter the size of GAME. They could have been two-thirds the size of GAME by buying these stores and opening 200 more.

Now the increase in The Game Group's market share has certain individuals worried who believe that The Game Group may use their latest acquisition as additional leverage against game publishers. Pachter was quick to put down this rumor, stating that while the company has grown quite a bit, they still don't have enough of the UK market to make demands.

He discussed a worst case scenario where GAME will attempt to exert pressure on the game publishers, and as he explains it, publishers will simply sign exclusives to Wal-Mart or Dixon's. Now, Pachter mentions that the majority of Game's market is composed of hardcore gamers. If they run out of these titles, then gamers will turn to the likes of Dixon's. He also pointed out that mass-market titles are not really the strong suit of the said company. His conclusion is simply that "If enough publishers shift supply away from them, GAME will learn to play ball in a hurry."

For now, it seems that a gaming distribution monopoly will not be happening in UK. However, the threat of that happening is always there.

Via games industry.biz

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Michael Pachter: Gamestation purchased by Game Group, GameStop missed out?

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