Pachter: Yes, disc based games and consoles have a long future ahead

Retail can continue to happily sell disc-based physical video games for at least another 20 years, according to one leading analyst.

GameStop CEO Paul Raines said earlier that he believes physical games retail will never go away, although the comments were dismissed as delusional, self-serving load of tosh” by former PlayStation and Xbox man Phil Harrison.

Wedbush Morgan’s Michael Pachter, however, thinks Raines’ assessment is closer to the truth.

Music CD sales are down 80 per cent from their peak, but the salient point is that 18 years after Napster, Kazaa and Grokster almost destroyed physical media, the record labels are STILL MAKING CDs,” he told MCV.

DVD sales are down around 50 per cent from the peak, but again, the figure is misleading, as the peak reflected the debut of virtually every film ever made on DVD. The masses bought Blu-ray players and bought catalogue titles in 2010, and catalogue has faded far more rapidly than new release DVD sales. Again, the salient point is that the movie studios are still making DVDs.

I think the console death will take decades. That means that GameStop has at least another 20 years to sell DVDs. I think that the decline in physical game sales hurts GameStop the least, as Amazon and Best Buy customers are far more inclined to buy online than GameStop customers, due to the latter’s predominant position in the used games business.”

Pachter also contests comments by SuperData’s Joost van Dreunen, likening GameStop’s perceived plight to that of the failed Blockbuster or RadioShack.

RadioShack was put out of business by crushing debt (GameStop has none) and very slowly declining sales due to their irrelevancy,” he added. Blockbuster was put out of business not by digital downloads or streaming video, but by lower-priced Redbox, whose sole business is renting physical DVDs. There is no analogy for GameStop.”

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