GameStop to Acquire Online Distributor

GameStop said it agreed to acquire online-games distributorv Fujitsu FPCBP148 Battery Inc. as the retailer seeks to navigate an industry shift to digital delivery of games from physical sales.

GameStop, of Grapevine, Texas, said it is acquiring San Francisco-based Kongregate for undisclosed terms.

The FPCBP160 Battery is part of a broad push to become a bigger participant in digital games, a market that has started to take off in recent years as technologies like Facebook, the iPhone and high-speed Internet connections have given consumers convenient new ways to play games.

GameStop, the biggest physical retailer of videogames, with more than 6,400 stores world-wide, said it has earmarked about $100 million to invest in its digital business this year, including acquisitions.

With those investments, Lifebook A6120 Battery is seeking to avoid the fate that has befallen specialty retailers of music and movies as delivery of those media has shifted to the Internet.

Digital distributors such as Apple Inc.'s iTunes Store and Netflix Inc. have been big beneficiaries of this shift, as store chains like Blockbuster Inc. and Tower Records have lost out on the transition. While GameStop is still growing and profitable, analysts believe the Internet poses a big challenge to the company.

"Their fundamental business model is at risk as physical revenue turns to digital revenue," said Evan Wilson, an analyst at Pacific Crest Fujitsu P1510 Battery. "We've gotten to the point where it's almost undeniable that shift is happening."

One factor in GameStop's favor is that the sheer size of games for consoles like the Xbox 360 and PlayStation 3 makes it difficult to deliver them over the Internet because of limitations on Internet-connection speeds and storage capacity on consoles. In an interview, GameStop battery Paul Raines said those technical hurdles will eventually be overcome, but it isn't certain how soon that will happen. Mr. Raines believes GameStop will be a significant player on the Internet when that transition occurs.

"The technology is becoming clear—it's the chronology that isn't as clear," he said.

Lifebook Q2010 Battery forms of games are already booming on the Internet, though, including "social games" distributed through Facebook like Zynga Inc.'s Farmville, which has nearly 60 million active monthly players on the social-networking site. Apple's iTunes, meanwhile, is becoming a more important online retailer for games as more consumers play them on iPhones and iPads.

At the same time, traditional retail game sales are showing signs of weakness, Lifebook S7110 Battery 6% in June in U.S. stores to $1.1 billion from $1.17 billion during the same month a year earlier, according to NPD Group Inc.

Fujitsu A6110 Battery has an audience of about 10 million monthly players who access games from its library of about 30,000 titles, mainly through Web browsers on computers. The site doesn't make its own games, instead relying on titles created by about 8,500 independent developers of games.

GameStop President Tony Bartel said about half of Kongregate's revenue comes from advertising, with the other half coming from the sale of virtual currency, which can be used within Kongregate games to buy items that allow players to customize their characters or make them more battery .