GameStop: Why Is New Game Software Worth Less Than Its Revenue Contribution?
GameStop‘s (NYSE:GME) new game software segment contributes just over 20% to the company’s value as per our estimates, despite accounting for 30% of its revenues. This is because the new game software business is less profitable than the remainder of the company and its revenues are expected to shrink marginally over the next five years, while we estimate slight growth in the other segments’ revenues. This can be attributed to the fact that physical software sales have been declining due to a changing industry landscape, thanks to the advent of smartphone and tablets, that provide access to a number of games, leading to a rise in casual gaming.
Have more questions on GameStop (NYSE: GME)? See the links below:
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