Physical retail may not be doing as poorly as feared

Analysts from market analytics firm Sterne Agee say they are tentatively optimistic for video game retail giant GameStop, saying recent releases on core titles may be enough to prop up the retail chain through the current financial quarter. "We think the company's [used games] business next year could be stronger than most people currently believe," stated Sterne Agee analysts Arvind Bhatia and Brett Strauser following an analyst meeting with GameStop. "Previously, management's model assumed the video game industry would shrink 15 percent or so in the next-gen compared to the last cycle. With additional information on hardware, software and consumer demand, we think management is beginning to see the potential for industry sales to be at least flat cycle over cycle." The analysts also noted that GameStop's better-than-projected performance for Grand Theft Auto V and strong launches for Battlefield 4 and Assassin's Creed IV: Black Flag -- as well as the upcoming next-generation hardware launches -- will serve as a boon to the company, heading into the end of the year. "Our sense is management is incrementally bullish on the upcoming console cycle compared to their views three to six months ago."