The Associated Press October 2, 2008, 11:12AM ET

Analyst: Best Buy video-game sales vulnerable

Shares of Best Buy Co. dipped Thursday after an analyst said the electronics retailer risks losing some of its video-game business if consumers embrace Nintendo's newest portable gaming device, and opt to download many of their games instead of purchasing them from stores.

Goldman Sachs analyst Matthew J. Fassler told investors in a research note that Nintendo's newest gaming platform is a "tangible early threat" to physical portable game systems, which rely on cartridge-type slots to load games.

Gamers using Nintendo's latest handheld -- the DSi, which was unveiled Wednesday in Japan -- will be able to purchase games at an online store and download them in about 10 minutes using a broadband connection.

"While content will be limited at first, we believe it will likely ramp very quickly," Fassler wrote of the availability of games at the Nintendo store.

That could spell trouble for Best Buy and other retailers, like Circuit City Stores Inc. and GameStop Corp., which sell video games in their own stores.

Portable games account for about a quarter of new video game software, and nearly two-thirds of that is for Nintendo DS. More than 77 million Nintendo DS handheld devices have been sold worldwide.

Best Buy shares fell $2, or 5.5 percent, to $34.52 in morning trading Thursday.


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