News Article

GameStop Sales and Profits Take a Hit Ahead of Vital Shopping Period

Posted by Thomas Whitehead

"The year has played out as expected"

GameStop may have been in the news for the wrong reasons, for some Nintendo gamers at least, with its recent antics in matching eBay prices on sought after second-hand games, yet it's easy to forget that it's a powerful presence on the high street. That's particularly the case in North America, though the retail group operates around the world, and while not always a flavour of the month it plays a vital role in maintaining a games specialist bricks and mortar presence.

Like many retailers GameStop has endured challenging times, especially with physical retail sales dropping in the games industry. The proliferation of download gaming options and the transitions to new hardware have all slowed business down, so much so that in the quarter up to 3rd August the company's sales of $1.38 billion were down 11% on the equivalent period last year. The net profit for the period was just $10.5 million, as opposed to $21 million the year before.

Gains were unsurprisinly found in mobile and download sales, trends common in recent times, but software, second-hand and hardware sales all dropped. CEO Paul Raines reiterated that "consumers continue to wait for the launch of the new consoles later this year", while he also stated that the results weren't surprising.

Through two quarters, the year has played out as expected. During this console transition period, our financial results have been supported by the continued growth of our emerging businesses.

Naturally there's a focus on the PS4 and Xbox One, but hopefully the Wii U and its software lineup will also have a big role to play this Holiday season. It's not just an important period for Nintendo and its rivals, but also retailers that are equally hoping to bounce back.

[via gamesindustry.biz]

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User Comments (23)

Blue-Thunder

#2

Blue-Thunder said:

I don't think downloads are that big of a threat to Gamestop but I do think Amazon is their biggest threat.

Ryno

#3

Ryno said:

"During this console transition period, our financial results have been supported by the continued growth of our emerging businesses."

Does part of the "emerging businesses" include more of those "vintage releases?"

Peach64

#6

Peach64 said:

Bricks and mortar stores seem to be doing better in the US. Here in the UK, online retailers are always cheaper, and if you order anything before release date, you're pretty much guaranteed to get it a day or two early, and you won't have to pay a penny until it's sent. I don't think free delivery is common in the US, nor is such quick delivery (to be fair, even if you only have one distribution center in the middle of the UK you can drive to nearly every part of the country in a few hours, so everything is next day delivery by default), so people still use these places a lot more.

Over here, I don't see any loss if Game went under. New games are way more expensive there, and pre-owned is even worse. Most of their pre-owned stuff is WAY more than you pay for new titles online. A good example is Catherine. Game want £25 for it pre-owned, but on Zavvi you can get it for £15 or pick it up in their 2 for £25 deal, a brand new copy in both cases.

XCWarrior

#7

XCWarrior said:

@Falco Fixed it? You made it worse! It was hilarious. Change it back!

As for the article, I'm happy to see Gamestop taking preorders for PS4 and Xbone, which are going to push digital content. It's like they are the primary diggers of their own grave. $55 for a used game that is $60 new - highway robbery!

Barbiegurl777

#8

Barbiegurl777 said:

@XCWarrior

I know I'm going to regret asking this but what is an Xbone? I've heard of the PS4 & Xbox but not an xbone... Let me guess its upgrade from the xbox 360 lol. :D

Back on topic I personally don't care if GameStop goes under or not. I've taken enough crap from them & there stores to truly not care at this point. I buy all my games either through amazon or directly through the 3ds e-shop via download's. Refuse to buy from GameStop because of several bad exeriences with there stores in the past. :(

Happy Gaming! (^_^)

XCWarrior

#9

XCWarrior said:

@Barbiegurl777 XBone is the only proper nickname one can use to describe the stupid name that is Xbox One. Didn't think WiiU's stupid name could be topped, but I should have had more faith in Microsoft.

And Amen to your thoughts on Gamestop. Though I still buy physical copies of games, I try to avoid them when possible, just steal streetpasses from their kiosk most of the time.

RinCartwright

#10

RinCartwright said:

I'm still sad about their "vintage" games. Seriously, if I want to play through the Metroid Prime games with new Wii controls, I shouldn't have to pay $55 more than buying the games individually would cost. I hope they'll lower the vintage game prices when they realize nobody's buying them.

Captain_Gonru

#11

Captain_Gonru said:

@MrPockets Of course, that would assume that no one is buying at that price. Recent listings on eBay and Amazon would say that Gamestop's pricing is in line with other sources. Look, this is where a store like GameStop will HAVE to go to stay alive as new systems go digital-focused, and eventually digital-only. They have the chance to become an international "retro" game store. I don't like it, perhaps, but I don't have to. That's the free market.

DerpSandwich

#12

DerpSandwich said:

@Peach64 It's not quite as good here in the US, but I'd say it's still pretty much better to get stuff online. Amazon is usually cheaper, and nearly everything has free delivery. And if you're willing to sit around for a little while you can usually find way cheaper copies online. Even a month after release you can easily score a game for ten bucks less, whereas retail always goes with the MSRP, which can take a year to drop. I don't think I've been to a Gamestop in about six years, now that I think of it...

Cohort

#13

Cohort said:

Doesn't sound like that consignment of Xenoblade Chronicles has been a big seller..

R_Champ

#14

R_Champ said:

@Peach64

Totally. Things are getting better for online shoppers here in the US though. Amazon offers a free shipping (slow) option. And other online stores like Newegg have free shipping, day-one potential on shipping, and even special deals sometimes (I got RE:R day 1 for $38 compared to $50). Onilne game shopping is becoming more of a threat in the US, but like you said, with so much space between locations it'll be a while before they can get guaranteed day-1 support.

WaLzgiStaff

#15

WaLzgi said:

And soon Amazon will have to charge sales tax. It's only a matter of time.

JaxonH

#16

JaxonH said:

@Falco
Spot on. Amazon really IS their biggest threat. I know because I have 18 Wii U pre orders right now through Amazon (and Newegg). The ONLY game I bought through Gamestop recently was Mario & Luigi Dream Team, because my pre order through Frys.com for $10 off was sold out, and I didn't want to wait. I also pre ordered Pokémon Rumble U through Gamestop for the free figure. But that's it.

Amazon is tax-free (for me anyways- I'm in Wisconsin) and has free shipping. And Amazon also usually offers the lowest prices, even on pre orders. I have Batman Arkham Origins Wii U pre ordered for just $39.99, with Windwaker HD and Call of Duty Ghosts Wii U pre ordered for just $49.99. And used games through Amazon Warehouse are super cheap and in mint condition with case and manual. How can Gamestop compete with all of that?

JaxonH

#17

JaxonH said:

@Peach64
In the US, most of us gamers buy through Amazon or Newegg for our online game shopping. As large as the USA is, I actually always get my games in 2 days through Amazon, 3 days through Newegg. And that's through their free shipping options (you can pay for next-day delivery, but that's a waste imo).

Recently a law was passed here that is making Amazon collect sales tax in certain states, even if they don't have a "nexus" there. So I heard Amazon is saying screw it, if we have to collect taxes in these certain states, we might as well build a nexus there and have warehouses all over the country. They're planning on using those warehouses to offer "same-day delivery" anywhere in the US. No online retailer has ever been able to pull that off. It's like the holy grail of online retailers. If Amazon can do it, they'll maintain their dominance here despite the fact their prices will have sales tax added to them (tax-free prices is what makes them so hard to compete with).

WaLzgiStaff

#18

WaLzgi said:

Ironically, I have gotten better deals at Gamestop than Amazon or eBay. The advantage of Gamestop is a better return policy and a guarantee that their games work

QuickSilver88

#19

QuickSilver88 said:

I have mixed feelings about gamestop.....on the one hand in the US they bought up all the brick and mortar gamestorr competition like EB and Babbages so now they are the only corporate option.....so seeing them fail would be sort of sad. They kind of have a starbucks problem in that they are way over saturated in most markets. I live in a city of about 100K people and yet they have 3 stores within about 5 miles of me (I do live in the commercial zone of my city) but still its too much ofthe same thing. Being American I like lots of choices (we tend to be spoiled that way) so internet retail is good, digital download is good, amd so is physical retail.....I think GS biggest competiton is big boxes like Walmart, Target, amd Miejer who all have large game departments and do regular sales and promotions. The best GS has going is also what people curse them formwhich is used buying and selling.....not so much that used is evil crap as most consumers don't care.....more that they give pretty crappy values on used buys and then charge too much on used sells. They need to get more compeditive or they will someday be gone.

Relias

#20

Relias said:

Want new.. Amazon... Want Used... Amazon.. or Ebay... places like Gamestop are going to go down soon... which is sad... it means more jobs lost... but sometimes I wonder of Gamestop... and the like don't do it to themselves.. Maybe they should consider becoming the Red Box of Video Gaming... (Actually that is a good name for such a thing.. Gamestop..)

TheRealThanos

#21

TheRealThanos said:

@XCWarrior Xbox One isn't such a bad name at all, considering what it stands for and how it came to be. If you didn't know yet: it's named that way NOT because it's the first Xbox (truly unbelievable how many people had that stupid reaction to it when it first came out) but because it is an ALL IN ONE system. It consists of three separate operating systems and is a multimedia hub, and THAT is why it is called the Xbox One. Sounds a lot better to me than Xbox All in One or Xbox Three in One... /end off topic rant (and no offence)
As for GameStop:
Those idiots aren't worth another second of my time so I DEFINITELY do not want to reiterate my stance on their great 'vintage' deals, so I'll let ReviewTech USA do the talking:
http://www.youtube.com/watch?v=gcZXN64poyg

XCWarrior

#22

XCWarrior said:

@TheRealThanos I know what Xboner is supposed to stand for, but that's a lie. Does it do my laundry? no. Does it do the dishes? No. Does it watch my kid so I don't have to pay for day care? No. So it's not all in one.

On a more serious note, you know what does everything a Xboner does AND does it better? A PC. But yeah, I know you're not attacking me or anything, it's cool. But There's a reason I go with WiiU/PC/3DS and well I have that PS3 lying around too. I avoid MS at all costs. But to each his own.

TheRealThanos

#23

TheRealThanos said:

@XCWarrior No offence taken, man. Although the 'tone' could have been a bit lighter, I'm no Microsoft fanboy. And the term 'fanboy' is hardly relevant at my age...
Apart from that, the All in One term is used quite often, as you will probably know, for example in printers. I used to work for HP and sold quite a lot of them, because people like machines that can do more than just one simple thing, which is also partly the reason of the popularity of the PS3, because 'everyone' wanted that games console that could play Blu-ray discs...

As for the coming generation, I haven't decided yet, and finances need to go elsewhere, so my priorities do not include new game consoles. The last one I bought is a 3DS XL and it will last me for quite a while. So the Wii U and/or any of the other two will have to wait.

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