U.K. retailer HMV may be cutting back on games.

JAN. 9, 2012 • For the nine week period ending Dec. 31, retailer GameStop reported that overall sales were flat at $3.02 billion, compared to the same period last year. Game software sales did grow to 10% to $1.47 billion, but game hardware sales dropped 20%. Other growth areas included digital sales (60%), and used games (3.5%). In the U.K., music, video and game retailer HMV saw its total sales for the same nine week period drop 9.8%. While DVD sales remained flat, video game sales dropped 16%. HMV said it is considering the scaling back of floor space devoted to games, in favor of stocking a handful of best-selling new titles. Games currently represent 20% of the retailer’s stock.

Impact: This is clearly the tale of two very different retailers.  Having a 10% increase in software sales for the holiday season is impressive in the current environment.  Specialty game retailers are clearly at an advantage when it comes to maximizing sales.  A more diverse retailer like HMV is in a challenging position.  They compete with the mass merchants on price and at the same time compete with the specialty stores on selection.  In some respects it is a no-win situation.