GameStopping?

GameStop Corp. (GME - Analyst Report) is scheduled to report 4th quarter results on March 26. The company is expected to report strong results thanks to the continued robust demand for video game systems and titles. Management's outlook for 2009 should be pretty bullish as well.

However, there is a real risk that GameStop's future results could suffer from a new technology. The potential "game-changer" (pardon the pun) is from a small-tech startup OnLive, which announced that it will offer high-end video games on-demand over the Internet -- bypassing game consoles such as the Xbox 360 or PlayStation 3.

Gamers will connect to OnLive servers with their TV, PC, or Mac. The games will run in an OnLive game server. OnLive has been working on this technology for years, but the one of the roadblocks was game-response time. When playing a video game, the game has to respond to gamer actions (pushing buttons, moving left or right) instantaneously. If there is even the slightest delay, gamers will notice and not use the platform. OnLive believes it has overcome this problem and boasts ultra-high-performance gameplay.

In the short term, GameStop's results will not be affected by OnLive, as it won't roll out its external beta testing until the summer 2009 with plans for going live in the winter 2009.

However, this new technology could dramatically alter the video game landscape, especially if OnLive can deliver on its promise of any game, anytime, anywhere. Gamers would be able to play old and new video games without spending hundreds of dollars, and, more importantly to GME shareholders, without making a trip to GameStop.