Just a few weeks after speculation that Best Buy Co. (NYSE: BBY) may be on the lookout for buying up video game retailer Gamestop Corp. (NYSE: GME), the CFO of the largest consumer electronics company in the U.S. is now saying that the used video game industry is "strategically very interesting." This is sly-speak for "we're on the prowl for the acquisition in the space that makes the best sense."Best Buy has to expand in other areas besides the decades-old categories is currently serves up if it wants to become larger. Its push into the red-hot mobile space with Best Buy Mobile is a great example. But, it will take more than that. Entertainment is a hotter slice of retail pie than hardware, and the company knows it. It still has to keep customers coming into stores, and since video games are not now moving to an internet-only distribution like music has, there's an opportunity to expand.
Best Buy needs a way to automate video game bartering in its stores, and an automated kiosk system for used video games may be just what it needs. But used video games aren't the only deal -- new ones are as well. New video games are quite expensive amid the financial pinch occupying U.S. wallets and purses -- but it won't always be that way.
Gamestop may make an admirable purchase for the retailer, and buying younger companies that can be folded into its way of doing business is Best Buy's preferred M&A strategy. But still, with all kinds of entertainment moving to an online distribution method, should Best Buy get in now? It should; that is, if it wants to remain relevant in a space that won't do anything but grow.
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Tiffany's serves up solid quarterly earnings
Reader Comments (Page 1 of 1)
9-29-2009 @ 10:22AM
Carney said...
"[S]ince video games are not now moving to an internet-only distribution like music has [...]"
Really? Heard of XBoxLive Arcade, the PlayStation Network, or WiiWare? Not to mention Apple's App Store?
And GameTap, Windows Marketplace, and Mac Games Arcade?
The PSPGo is the handwriting on the wall for hardware distribution of video game content. The industry hates GameStop and used sellers, understandably, and is working hard to lock them out. I would not be surprised if all consoles in the next generation were online / digital only.
Best Buy would be jumping into this market right as it begins to decline.