GameStop shares tumble after announcement of ‘EA Access’

GameStop shares tumble after announcement of ‘EA Access’

While some investors see the beginning of the end, the gaming retailer has weathered this storm before.

Following the announcement by Electronic Arts about beta tests of its new online game streaming service, called EA Access, GameStop shares fell today by more than five percent. This sudden drop in stock value is not strange as it might seem for the gaming retailer. In January, Sony announced a similar online program, PlayStation Now, and GameStop shares also tumbled, but then later rebounded.

EA Access has been immediately compared to Netflix, where users pay a fee ($5/month or $30/year) for unlimited access to a library of platform-compatible games. The membership also includes discounts on new digital content and the ability to play upcoming games five days before anyone else. Current beta content includes Battlefield 4, Madden NFL 25, FIFA 14, and Peggle 2.

Some investors feel that EA Access could have negative implications for the retailer’s business, since the new service offers incentives for more digital spending. However, GameStop will be selling EA Access subscription cards in its stores. As with Sony Playstation Now, the retailer has already proven that increases in digital gaming are not the problem some make it out to be.

Colin Sebastian, a market analyst with the firm of Robert A Baird, stated to his investors that programs like EA Access are not likely to damage GameStop’s business in the long term. “While new subscription programs have the potential to disrupt/disintermediate the retail channel, there is little evidence to date to support that similar programs have taken the retailer’s market share.” Meanwhile, Sterne Agee analyst Arvind Bhatia says it is too early to tell if EA Access will be troublesome to GameStop. “In the current form, we don’t think it’s that disruptive to GameStop,” Bhatia said.

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