Pachter: GameStop Has 10 Years Remaining in its Core Business

Digital sales continue to rise, but that doesn’t mean that people still don’t enjoy buying physical copies of their games. Thanks to the removal of a few of Microsoft’s key Xbox One policies, both of the next-generation consoles will continue to support used games. Because of that fact, Wedbush Securities analyst Michael Pachter believes that retail leader GameStop has at least 10 years left before becoming irrelevant.

"We… think that GameStop has at least 10 years of runway left in its core business," Pachter said (via Game Industry International). "In the meantime, the company is leveraging its pre-eminent position in selling used game consoles into a strength in offering used smart phones, tablets and other consumer electronics, and we expect substantial growth from this category over the next several years. GameStop management has consistently returned the company's free cash flow to investors, and we expect them to continue to do so, suggesting to us that EPS growth will continue for much of the next decade."

That doesn’t meant that the business will be vibrant during the entire decade, as Pachter actually sees GameStop as being the last of the brick-and-mortar sellers.

“With the status quo remaining largely in place for used gaming on next gen, the transition of sales from physical to digital should be quite slow," Pachter said. "GameStop's PowerUp Rewards program should enable continued market share gains and position it to be the 'last man standing' for physical sales."

Look for the PlayStation 4 and Xbox One to launch this fall.