UPDATE:Best Buy:Used Video Games Strategically 'Interesting'
September 17 2009 - 5:13PM
Dow Jones News
Best Buy Co. (BBY) considers the used-gaming software industry
"strategically very interesting," the company's U.S. chief
financial officer said Thursday.
But officials speaking at an RBC Capital investor conference
would not comment on speculation the consumer electronics retailer
could take a look at acquiring industry leader GameStop Corp
(GME).
Ryan Robinson, who is senior vice president and the chief
financial officer for Best Buy's U.S. unit, said video gaming is "a
strategically important part of our business," and acknowledged
room for improvement in the retailer's operations.
"What I think is something that we've missed in the industry and
is something other participants have been doing is the proportion
of business that is used," he said. "We've not developed the
capability to the extent that other participants have. It's a very
margin-rich portion, so I think there's opportunity in that
business."
Robinson noted Best Buy is testing in some stores automated
kiosks that purchase used games.
Another Best Buy official said the retailer doesn't comment on
deal speculation. Bloggingstocks.com on Tuesday suggested GameStop
would make sense as a takeover target if Best Buy wanted to make
video games the centerpiece of its product offerings.
A representative for GameStop also declined to comment.
Robinson noted that Best Buy's acquisition strategy has
historically focused on buying young companies with strong
managements offering skills or businesses that complement Best
Buy's own and that can be leveraged in its stores. That remains the
company's "strong preference," he said.
"Rather than a big-bang type of acquisition, our preference has
been identifying management teams that have additive capabilities
and think about how they're extendable into the Best Buy business,"
he said.
Issues surrounding digital rights management could cloud the
long-term prospects of the profit model for used video games, he
said. Like the music business, gaming is also affected by a shift
to online content.
"But it's a strategically very interesting business for us," he
said.
Shares of Best Buy ended the regular trading session down 2.5%
at $37.59. Shares of GameStop fell 0.1% to $25.80.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com