GameStop shares fall as Wal-Mart cuts prices

SAN FRANCISCO (Reuters) - Shares of video game retailer GameStop Corp (GME.N) fell nearly 10 percent on Wednesday after Wal-Mart Stores Inc (WMT.N) announced price cuts on a number of the top game titles.

Walmart, the world's largest retailer, is lowering prices on popular video games by $10 each and offering a $50 gift card with the purchase of a Nintendo (7974.OS) Wii video game console.

Last month, GameStop reaffirmed its fourth-quarter profit forecast and said sales in the holiday shopping season were off to a strong start.

But Janney Montgomery Scott analyst Tony Wible called the Walmart announcement "clearly a negative for GME which generates the bulk of its sales during the holiday season and may be forced to reduce prices to stay competitive."

Walmart said it will sell "Rock Band: Beatles" for the Wii for $40, down from $50, and it will offer "Left 4 Dead 2" for Microsoft's (MSFT.O) Xbox 360 for $50, compared with its previous price of $60.

In a note to clients, Wible noted that many GameStop outlets are located near Walmart stores, as the video game vendor has tried to capitalize on foot traffic driven by the retailing giant.

The Thanksgiving holiday weekend just passed marks the start of the most critical time of the year for the video game industry.

Sales in 2009 have flagged -- down 13 percent in the United States, according to research group NPD -- as more casual game fans have pulled back on spending amid the economic downturn.

Price cuts on all three major home consoles have so far done little to spur sales of either game hardware or software.

Shares of Grapevine, Texas-based GameStop were down $2.32 to $21.52 in late morning trade on the New York Stock Exchange.

(Reporting by Gabriel Madway; Editing by Tim Dobbyn)