1. I’m not so sure we’ll see the end of bricks and mortar. Digital distribution is clearly the way to go, but there are still a lot of people that prefer to browse a shop, and as long as there are high streets then there will be an opportunity for a store front presence to secure passing trade.

    There’s also the argument that digital store fronts are particularly weak at presenting a wide variety of titles. Yes, they do stock an infinite number of titles, but how many of those are *presented* to the user? Normally it’s a matter of a Top 10 list, and if your game isn’t in that then the potential customer must search for it. Think how many box fronts you see in the average GAME branch.

    I dare say we’ll see physical stores stay, but just sell download codes. Or perhaps, even further down the line, systems like PSPgo being sold by the mobile phone model.

  2. I received this email from Leonard Riggio, which shows who read this blog!

    Dear Bruce:

    Seems to me you’ve set up a kangaroo court and used it to support some fairly egregious conclusions. At the top of the list is your claim that I am bailing out of my position, which itself is unsupported by the small reduction of my ownership from 6.9 to 5.5%. Do you mean to imply that any sale by me — now or in the future — must be tainted by your assertions that the company is in decline?

    Gamestop remains the world’s fastest growing retailer in terms of stores opened and sales volume, and is one of a handful which have posted strong earnings increases in spite of the worst retail recession of our lifetime. Our P/L multiple is close to single digits, which is a huge discount to retailers who have far dimmer prospects than you say we do. Our cash flow, too, is enormous, making us more than capable of adapting to whatever future lies ahead. Ours is a culture of growing our business, and remaining a dominant factor in our industry. You do not create self-fulfilling prophecies for us — we do.

    The stock I sold was part of a transaction in which I had to pay a capital gain to acquire it. I decided to sell the stock, in part to pay the tax, and in part to add some cash to my portfolio. Is anything illicit implied with such motives?

    Two other questions:

    1) If my mind worked like yours does, and I thought the company was in trouble, why wouldn’t I have sold more stock?

    2) Isn’t it possible that my mind does not work like yours, and I would never consider selling shares in advance of bad news?

    Finally, I have never sold any shares of stock before any bad news in any company in which I was involved, so I object to your misleading implication. On the contrary, our stock has always traded up after any sales I’ve made, and GME’s price today is no exception.

    Don’t bet against our stock.

    Len Riggio

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