Computer games retailer Game Group seems to divide opinion at the moment, between those who believe it is well placed to cash in and those who believe it faces growing competitive pressure.
The bulls would point to new consoles, new games, as well as the company's buoyant trading performance, and the fact that competitors such as Zavvi and Woolworth have been taken out of the picture.
Bears suggest the growth cannot continue, and technology will ultimately mean games buying their fix online rather than traipsing down to the local shopping centre.
If the latter seems too far away to worry about, then a new launch in the US this week may well change people's minds. In a sell note on the company, analysts at KBC Peel Hunt has drawn the City's attention to a presentation at the Game Developer Conference of a new US start up called Onlive. Analyst John Stevenson said:
"Onlive has been developing the model for the digital distribution of games for seven years in relative secrecy and has announced its intended public beta trials for the summer, ahead of a full US launch at the end of this year. The system is designed to allow players to stream on-demand games of up to HD quality onto any Intel-based Mac or PC running XP or Vista, regardless of how powerful the computer, or to television via a plug-on box.
"What is the threat? Onlive is seeking to host games on its servers rather than requiring users to download the game itself and requires no specific console hardware. In other words, users will be able to play the latest PS3 or Xbox games without needing to own the console itself or buy physical game software in a direct distribution model to rent or purchase the games.
"While there is a huge step between concept, live demo and actual execution, US press previews appear to have been delivered without any hiccups and the business model has enlisted the support of most major games developers.
"Is this credible? Onlive is seeking to launch in the US only towards the end of 2009, albeit this has material implications for the games industry and current distribution channels if the company can successfully execute an online distribution model at real-time speed.
"Our sell stance on Game Group is predicated on our view that the current console cycle has peaked and operating profit will fall away over the next 2-3 years. We had assumed there would be a fourth generation console cycle in the near future, without the immediate threat of online distribution, with the next cycle still driven by the next generation Xbox, Wii and PlayStation.
"However, whether Onlive's initial foray is successful or not, the threat of online distribution has become much more tangible; the genie is now out of the bottle."
Game is down 3.5p to 138p at the moment.
