The video game chain Gamestop is no longer for sale for what the company cited as “lack of available financing on terms that would be commercially acceptable to a prospective acquirer.” Gamestop, who has faced tough times, likely has more ahead of them, as Sony and Microsoft are developing the next generation consoles, and while not confirmed, many think a move away from disc games is possible, which would severely hurt Gamestop’s business model.
Michael Pachter, who is an analyst at Wedbush Securities spoke with Variety about the move by Gamestop, stating the move may indicate the company had found investors, but they were likely unable to secure any lending.
“A new console without a disc drive — unlikely, but possible — could kill their business. And all this talk of Amazon, Apple, and Google streaming (video games) causes some to question whether there will be consoles at all.”
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At some point consoles are bound to go diskless, right? While Pachter doesn’t believe video game streaming will completely replace consoles, he suggested one hurdle for Gamestop may be explaining that to potential investors.
“But try to explain that to a lender.”
What the halt on the sale means for the future of Gamestop isn’t something easily determined. The company needs to adapt or it may find itself going out in similar fashion to how Blockbuster and other video stores did once Netflix really took hold. Back in June of last year the company began doing just that, looking at a “wide range of alternatives to enhance shareholder value,” the company said in yesterday’s statement.
“The Board undertook a comprehensive review process, including discussions with third parties regarding a potential sale of the company.”
More from Gamestop’s statement below.
“The Board continues to evaluate the optimal use of these proceeds, which could include reducing the company’s outstanding debt, funding share repurchases, reinvesting in core video game and collectibles businesses to drive growth, or a combination of these options. Furthermore, the Board is continuing its search process to appoint a highly qualified, permanent CEO and is working with a leading executive search firm.”
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Source: Variety
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