Shares of GameStop (GME) were trading lower following a report that Amazon (AMZN) is working on a video game streaming service.
WHAT'S NEW: Amazon is joining Microsoft (MSFT) and Google (GOOG) in creating a video game streaming service in a move that reflects the growth of streaming in the game industry, The Information reports, citing two people briefed on the plans. A shift to streaming services could mark major changes in the gaming sector, as having games streamed from powerful computers inside data centers could eliminate the need for players to buy consoles or PCs to run the most elaborate titles, according to The Information. Amazon has started talking to game publishers about distributing their games through its service, which isn't likely to roll out until next year at the earliest, the report added.
MICROSOFT, GOOGLE STREAMING: In early October, Google announced Project Stream, a video game streaming service that would allow players to stream high-powered games through the Chrome browser. At the time, Google said it was testing the service with Ubisoft's (UBSFY) open-world role-playing game "Assassin's Creed Odyssey." About a week later, Microsoft unveiled Project xCloud, its own game streaming service designed to work across consoles, PCs, and even mobile devices. The company said at the time that it would start public trials of the service in 2019.
GAMESTOP: In its last earnings report, video game retailer GameStop said that new video game hardware made up 16.7% of total sales in the third quarter, while new video game software made up 34.6%. Meanwhile, the Wall Street Journal reported last week that private equity firms Sycamore Partners and Apollo Global (APO) are bidding for GameStop and a deal could be announced by mid-February. The Journal noted in its report that the game retailer, which said in 2018 that it was reviewing strategic alternatives, has struggled to reduce its reliance on games sales as the industry has moved to digital and online sales.
OTHERS TO WATCH: Publicly traded companies in the video game space include game publishers Activision Blizzard (ATVI), Electronic Arts (EA), Capcom (CCOEY), Tencent (TCEHY), and Take-Two (TTWO), as well as console makers Microsoft, Nintendo (NTDOY), and Sony (SNE).
PRICE ACTION: In afternoon trading, GameStop shares were 0.7% lower at $15.87.