UPDATE 1-GameStop to sell digital game downloads

* GameStop to sell digital downloads from retail stores

* Sees strong 2010 for video-game market

* Large market for full game downloads "not imminent"

NEW YORK, Nov 12 (Reuters) - Customers who visit GameStop Corp (GME.N) stores will soon be able to purchase digital upgrades to their favorite video games, as the retailer eyes a shift toward digital distribution of games.

The new program, which GameStop will start testing early next year, will work in conjunction with online services offered by leading console makers, such as Microsoft Corp's (MSFT.O) Xbox Live and Sony Corp's (6758.T) PlayStation Network.

Under the program, a GameStop shopper who learns about a new level available for, say, a war or sports game could immediately purchase that upgrade. When the shopper arrives home, the add-on will be available to download and play.

"A large market for full game downloads is not imminent, (but) the add-on downloadable market will grow," GameStop Chief Operating Officer Paul Raines said at the BMO Capital Management Digital Entertainment conference.

These additional payments may be a key driver of revenue for publishers and retailers in the video-game industry, which has seen slow overall growth amid the tough economy. The idea is that consumers are more likely to pay to enhance beloved games than they are to experiment with unknown new games.

So far, GameStop has been able to preserve growth despite the economic downturn, as healthy demand for video game consoles by Nintendo Co Ltd (7974.OS), Sony and Microsoft has driven consumers into GameStop stores to buy software for the systems.

Raines' comments come a few days after GameStop affirmed its outlook for the quarter ending in October, saying it expects its earnings per share to be between 27 cents and 33 cents, excluding debt retirement costs. It also sees sales at stores open more than one year to be down 6 percent to 11 percent.

At the event, GameStop Chief Executive Dan DeMatteo said looking ahead to next year, business is "expected to be strong, given known titles." (Reporting by Franklin Paul, editing by Maureen Bavdek) (franklin.paul@thomsonreuters.com; +1 646 223 6195; Reuters Messaging: franklin.paul.reuters.com@reuters.net))