GameStop’s New Gadget

November 17, 2011 by · Comments Off 

BEYOND THE BUBBLE

By Victoria Ahmadi
vahmadi@smu.edu

GameStop Corporation announced last month that it has selected Google’s Android mobile operating system as its official tablet device.

The corporation has been planning its addition for several months. GameStop is in the midst of transforming its store concept while digital gaming systems are on the rise.

It is striving to meet the demands and needs of the consumer, most of whom are starting to play games on the go. It is important that GameStop stay on trend with innovations in technology in order to stay afloat.

Camp Murphy, district manager for GameStop says that mobile gaming is the only way for consumers to experience new games, as no physical media exists. This sales model impacts the casual gamer and represents a small total amount of game industry sales. GameStop’s primary entrance into mobile gaming is through its Kongregate.com brand on Android devices.

The corporation’s most recent quarterly financial results depict a 3% decrease in revenue from $1.79 billion in 2010 to $1.74 billion in 2011. A primary factor in the decrease is the 12% drop in hardware sales and 10% drop in software sales.

When a significant amount of time passes without the release of new consoles or software, the market stays flat. In 2010 GameStop had sales of $9.47 billion, which had been a steady increase from previous years.

The sales slow down is in part due to the lack of new consoles on the market and the shift from consoles to portable devices (i.e. computers, tablets, mobile phones, iOS devices, etc.). The introduction of a new major video game console is the biggest boost of business for GameStop, even more so than new software. The last console to be released was Nintendo Wii in 2006 and there isn’t any talk of a new release until early 2013.

District manager Murphy of the Washington D.C. area says that the holiday selling season accounts for roughly 60% of business at GameStop. Post-holiday sales are generally very strong as well. The industry is very much tied to the release of new titles. At this stage big releases come throughout the year.

“Traditionally, there are a handful of highly anticipated titles released in early spring, early summer, back-to-school and the biggest titles release is in the October through November holiday shopping season,” Murphy said.

GameStop is a Fortune 500 company headquartered in Grapevine, TX. It is the world’s largest multichannel retailer of physical and digital video game products and PC entertainment software. The company operates more than 6,500 retail stores worldwide and online outlets including GameStop.com and EBgames.com. GameStop also publishes Game Informer magazine, a popular video game publication.

It sells gaming products including new and used software, hardware and a large selection of accessories. Last month GameStop announced that its stores would be taking old iOS devices (iPhones, iPods and iPads) in exchange for cash or store credit.

“GameStop is the only brick and mortar retailer partnering with Microsoft and Sony to deliver DLC directly to gamers,” said Murphy. “Gamers have always had the option to purchase downloadable content (DLC) directly from their Xbox 360 or Play Station 3 console but that purchase model requires a credit card tied to the online account.”

At GameStop, customers can pay for the same DLC offered online via credit card, cash, check or even by trading games.

GameStop’s latest earning press release shows a 69% increase in digital sales in its second quarter. This drastic increase portrays a changing dynamic between digital and analog gaming.

Jose Gutierrez, a 24-year-old video gamer feels that the wave of digital gaming is a huge improvement in the way that people can access games. “I believe it’s an easier way to entertain yourself in one device rather than having different CDs and apparatuses…plus tablets are easy to use,” he said.

“As a consumer it’s way easier to not have to visit a store for games because you have it in the palm of your hands.”

On the other hand, 22-year-old Brian Blair of Plano still likes to go to GameStop stores. He says that he doesn’t see consoles coming off the market anytime soon. “Digital gaming will never be able to compare…consoles allow people to sit back and use their TV’s in the comfort of their home,” he said. “Mobile gaming is pretty awesome but it won’t ever be able to have that at-home feel.”

GameStop’s consumer market is made up of primarily two groups of people. The first is a younger audience mostly composed of children and teens in grade school. The second is an older clientele, which consists of the parents of young gamers and adult gamers. While the cost of games ranges anywhere from $10 to $70, only those with a true gaming passion and who have disposable income can afford to make regular GameStop purchases.

SMU Gets in On the Gaming Scene

December 7, 2010 by · 1 Comment 

By Jonathon Richter
jrichter@smu.edu

SMU senior Brian Allen has been playing video games ever since he was capable of picking up a controller and is proud to say he’s owned every gaming console on the market.

In addition to finishing up his classes for his final year at SMU, he plays games such as Call of Duty: Black Ops, Xbox 360 Kinect and Need for Speed Hot Pursuit 2.

“I play games because it allows me to experience things like killing zombies- things I couldn’t do in real life,” Allen said. “It’s a good way to pass time and most of my friends enjoy doing it.”

According to a 2003 Pew Internet & American Life Project survey, 70 percent of college students reported playing video, computer or online games at least “once in awhile.” One out of five gaming students felt it helped them gain new friends as well as improve current friendships.

The Deputy Director Ron Jenkins of the Guildhall at SMU, a digital game development education program at SMU-in-Plano, stated, “I think people grow up loving to play video games because it allows you to immerse yourself in the story. The user becomes the character and is able to make real world decisions in a safe environment.”

Allen was not aware that he is one of millions of people whose favorite way to pass the time is contributing to a billion-dollar industry that is on the rise. But SMU saw the trend.

SMU responded to this increase in gaming when deciding what to do with the vacant spot Park ‘n’ Pony left in the Hughes-Trigg Student Center. To cater to this popular pastime, The M Lounge was opened in April of 2009.

The M Lounge is like a free arcade, fully equipped with Wii consoles, Playstations and Xboxes. Students can choose from 36 games provided by GameStop.

“Students did voice that they needed to reclaim some lounge space and with the partnership of the SMU Guildhall and GameStop we were able to fill the void,” said David Hayden, assistant director of Hughes-Trigg. “We probably have 250 to 300 students that go through the lounge daily.”

Avid SMU gamer Liza Walling commented that The M Lounge provided the perfect rest stop.

“The M Lounge is a good place on campus that people can go to in between classes and video games provide a great way to relax in between studying,” Walling said.

According to the Pew survey, gaming is not just entertainment- it’s a tool for procrastination. The survey reports that close to half of college student gamers revealed that playing video games keeps them from studying “some” or “a lot” of the time. Additionally, one in ten students admits, their main motivation for playing games is to avoid studying.

Allen admits that most of the time he picks up a controller to put off his studies, but thinks it’s more productive than watching T.V.

“It’s a really interactive form of entertainment where you can make decisions and still be able to follow a storyline- you are actively participating when you play video games,” Allen said.

But some SMU students decided to take their love of video games further- by developing the software themselves. The SMU Guildhall provides students with three areas of study emphasis: art creation, software development and level design. The two-year program awards graduate students with a Master’s degree in interactive game technology and a professional certificate.

Recently completing her second module at the Guildhall, Adriana Clonts entered the gaming world, allowing her to “marry her two loves, art and software development.”

Students in Clonts’ class were recently gathered at the Hughes-Trigg Rotunda to “playtest” video games that they created over a seven-week period.

“There hasn’t been a good form of training to enter the gaming industry and the Guildhall offers hands-on development to prepare them for a future in the industry,” Clonts said.

Training provided by the Guildhall has produced successful video game developers such as Hunter Woodlee, a 2005 SMU Graduate. Woodlee is now the founder/studio director of Controlled Chaos Media that has produced iPhone applications such as “Texting of the Bread.”

“Our application ‘Texting of the Bread’ is up for game of the year and is second to Angry Birds,” said Woodlee. “I went into Guildhall with little experience, but after I graduated I had a great understanding of level development I was able to use.”

The M Lounge is open and available for everyone to use during the operating hours of Hughes Trigg and is located on the first floor. For more information about the SMU Guildhall and the graduate programs offered please visit http://guildhall.smu.edu/

GameStop Q-4 Analysis

April 29, 2009 by · Comments Off 

By Katherine Helms
khelms@smu.edu

In a time when most companies are feeling the heat of the deep recession, GameStop Corporation is one of the few to benefit from the downturn. The company is reporting sharply higher sales and earnings for its fiscal fourth quarter, which ended on Jan. 31.

GameStop, the world’s largest video game and entertainment software retailer is thriving as penny-pinching consumers see staying at home and playing video games as a cheaper alternative to going out.

Headquartered in Grapevine, Texas, the company has 6,207 retail stores worldwide. GameStop sells both new and used game software, as well as video game equipment and accessories from Nintendo, Microsoft and Sony. With the coming of new games such as Rock Band Beatles, company executives believe sales in the next quarters could see similar improvements.

GameStop’s sales increased 21.9 percent to $3.5 billion compared to $2.9 billion in the fiscal fourth quarter of 2007. The company’s net earnings jumped 22.4 percent to $232.3 million this quarter

“”We are seeing a very, very strong demand in our pre-sale reservations for both the Guitar Hero Metallica and the Rock Band Beatles. So, there is still a lot of new exciting things coming out in the music genres this year,” said David Carlson, the company’s chief financial officer, in an earnings conference call.

New hardware sales grew 13 percent, which the company attributes to Nintendo’s Wii and Microsoft’s Xbox 360. The new software sales grew 23 percent thanks to new games like World at War and Wii Fit.

GameStop stores can be found across the United States and in Australia, Austria, Canada, Denmark, Finland, Germany, Ireland, Italy, New Zealand, Norway Spain and Sweden. By the end of 2008, GameStop opened or acquired 1,002 new stores, and according to Daniel DeMatteo, GameStop’s chief executive officer, stores will continue to open in the United States and abroad this year.

The company’s top competitors include Amazon.com, Toys “R” Us, and Best Buy. While those competitors are much bigger than GameStop, they sell many other products; Gamestop focuses entirely on video games.

Although many industries have felt substantial hits during this economic downturn, GameStop has continued to flourish. Games serve as a cheap form of entertainment compared to movie tickets, which sell for around $10 each; games are slightly more expensive, but can be used over and over again. For example, Mario Power Tennis sells for $29.99, so instead of spending $40.00 to take your kids to the movie, games may seem like a more reasonable solution.

“In spite of the recession games are viewed as cheap entertainment and we see software sales growing 5% to 10% in the US as they already grew about 10% in both January and February,” said DeMatteo in the earnings conference call.

The company had a good quarter, but Bob Dudley, managing director and broker for Morgan Keegan and Company in Little Rock, Arkansas, says he would be wary of buying GameStop stock and keeping it long term. He explains that from an investment standpoint there are too many long-term hurdles that the company will face. For instance, Dudley raises the question of how many people actually go to the mall with the intention of going to GameStop. The company has multiple stores located in malls, and Dudley questions whether the high rent is worth the traffic and the long-term effect this will have on GameStop.

“There are so many other solid long term opportunities in this market, I would have nothing to do with this company,” said Dudley.