GameStop's stock is falling as Wal-Mart cuts prices on video games.
The mega retailer's press release says that it's "declaring 'Game On' as it lowers prices up to 20% on 25 video games. GameStop was already suffering from concerns that video game sales during the first holiday shopping weekend, Wal-Mart's cost cutting move is yet another blow. It also puts pressure on Best Buy, another top game retailer.
But is a price war good or bad for game makers?
John Ricitello, CEO of Electronic Arts was on CNBC today and weighed in on the issue. He said that it's always good for consumers when retailers are competing for market share. And it could be great for EA if low prices get new customers hooked.
But on the down side, it could also lead Wal-Mart and Best Buy to put pressure on Electronic Arts and Activision Blizzard to cut prices. As a retailer you want consumers to have good reason to grab your games off shelves, but you also don't want to see your margins slashed. We'll see how games hold up over the holiday season, there were double digit declines in in game sales in the first half of the year. Can lower prices and special packages be just what it takes to rev up the industry? Or is this a new normal of lower prices?
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