Fun and Games Ahead for GameStop

This column was originally published on RealMoney on Nov. 23 at 2:01 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

It's little wonder that video-game fans stood in line this week to buy the meager shipments of the Xbox 360 from Microsoft(MSFT Quote). Or that they will line up to do it again for Sony's (SNE Quote) PlayStation 3 early next year. These are fantastic pieces of supercomputing hardware, each with components that take players to the edge of the possible.

Both companies sell their consoles at a loss, however, so the big near-term question for traders is which retailers will benefit most from this new wave of interactive entertainment devices. Investors have already made a big bet on video-game chain GameStop (GME Quote), which reports earnings Tuesday, and initial indications suggest they will be rewarded.

Spun off by Barnes & Noble(BKS Quote) in November last year, GameStop has since rapidly grown to 4,200 retail stores after a merger with Electronics Boutique, focusing on strip-mall locations. It sells new and used gaming hardware, software and accessories, and it produces the magazine Game Informer, which reportedly has a circulation of 1 million. The company also operates the online outlet ebgames.com and gamestop.com. On Tuesday, it hosted Xbox debut parties at 1,600 locations. ...