"The problem with Gamestop is you need to be able to have both good hardware and software sales. Not until later next year do I expect Grand Theft Auto. We had Rock Band, Guitar Hero. Those are all played out. I can't get behind GameStop not because they're not a great company but because they don't have enough good stuff to sell." — CNBC's Mad Money 11/17/2009

The quote above is a bearish recommendation on GameStop (GME) from Jim Cramer in Tuesday night's Lightening Round, but we think he has missed a great opportunity.  Cramer refers to his lack of faith in both video game hardware (consoles) and software (games) sales this holiday season.  There is no doubt that the conventional wisdom of video games being resilient to recessionary spending trends has proven to be less true than most believed.

We find it a bit strange that Cramer would single out video games as the segment of retail he sees struggling this holiday season.  In the same show, he reiterated his stance that the market continues to be too pessimistic about retailers (retailers are "en fuego") coming into the holidays and recommended buying Guess (GES), J. Crew (JCG), and The Home Depot (HD).  He may be correct that clothing retailers could start to get some traction this holiday season, as clothing is always a common gift.  But can he really think more families will buy a new appliance or flooring for the holidays? 

I know I am selling Home Depot short because there are plenty of gifts sold at The Home Depot each year, but GameStop is the quintessential gift shopping destination.  Look at the seasonality of these companies; current estimates have GameStop making 62% of profit and 40% of sales in the upcoming quarter, whereas Home Depot claims only 10% of profit and 21% of revenue.  Clearly, this time of year is the bread and butter for the gaming industry which makes logical sense.