There are murmurs of surprise that videogame retailer GameStop has made its way onto the S&P 500 index. More than a decade ago, it was bankrupt. Now it's eaten not just its competitors' lunch, but its entire competition, consuming Babbage's, Software Etc, NeoStar and Electronics Boutique. It's one of those great adversity-toppling stories business writers love.
One analyst remarks, "Everyone argued that games would be distributed online ... but these guys stuck to their game plan." That's true, but GameStop's success is mostly due to the nascent state of digital distribution. Broadband is still too slow, and console hard drives are still too small. Those limitations hinder the sale of full-length, multiple-gigabyte games. GameStop's success has been a matter of luck as much as timing. Playing videogames has grown as a mainstream obsession even faster than the broadband pipes that were supposed to make GameStop's business model obsolete. That, and it's still really hard to download a Wii. (Photo by maulleigh)