PlayStation Now announce punctuated by GameStop stock dip

Tuesday, 7 January 2014 21:52 GMT By Brenna Hillier

US retail chain GameStop took a hit on its share price following the announcement of Sony’s game streaming service PlayStation Now today.

GamesIndustry reports GameStop stock is trading 9% lower than yesterday in the wake of Sony’s announcement.

Many other non-retail companies related to the announcement, such as third parties which release games for Sony platforms, have enjoyed higher trading prices today. This suggests investors think PlayStation Now has legs, on top of enjoying the good news that the PS4 has sold 4.2 million units, but are worried about how it might affect retail performance.

In a note to investors, Wedbush Morgan analyst Michael Pachter dismissed fears streaming games services will affect retail in the short term.

“Sony’s sell-through number helps GameStop much more than the launch of PS Now hurts them, yet GameStop shares getting hammered,” he said. “The sell-off in GameStop shares that followed the PS Now announcement is overdone.”

Pachter pointed out that investors have known about Sony’s streaming plans since it acquired Gaikai in 2012, and that there’s no evidence PlayStation Now will be successful, as services like OnLive had failed to revolutionise the world as promised.

“It is important to note that PS4 has no backwards compatibility with PS3 discs, meaning that the availability of PS3 digitally streamed games will not directly result in lower used sales of PS3 games to PS4 owners,” he argued.

“GameStop’s used gaming sales from PS3 discs on PS3 consoles are most likely to be impacted; however, until we know more about game availability, timing, and pricing, among other factors, we do not see a meaningfully negative impact to GameStop in the near-term.”

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