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GameStop blames profit dip on crowded videogame market

Videogame consumers are buckling under the pressure of keeping up with the latest releases on shrinking budgets, says GameStop. Reporting lower-than-anticipated revenues in its latest fiscal quarter, the retail giant told Gamasutra it believes the industry has suffered from a case of too many options and too little cash.

"The quarter presented some challenges in topline, due to a cash-strapped consumer that could not afford all of the good titles released during the quarter," said GameStop CEO Paul Raines in an earnings call.

Not that GameStop has suffered too much. Analyzing its fiscal numbers from the quarter ending October 29, 2011, it reported revenues of $1.95 billion (up 2.5% year-over-year); and only a 1.5% dip in profits of $53.9 million. Key earners for the company included Batman: Arkham City, Gears of War 3, Battlefield 3, Dead Island, and Madden NFL 12.

GameStop president Tony Bartel explained the slight drop in profits, noting: “We had expectations for strong sales due to the great title lineup and record reservations. But we found that consumers were unable to fund the products that they wanted, as these strong titles rolled out week after week."

GameStop's analysis makes sense. This year has been one of the busiest for AAA titles, and the recent release of Uncharted 3: Drake's Deception, The Elder Scrolls V: Skyrim, Assassin's Creed: Revelations, Modern Warfare 3, Saints Row: The Third – not to mention the impending arrival of The Legend of Zelda: Skyward Sword, Star Wars: The Old Republic, Just Dance 3, and a whack of other games – is making it hard for the average, non-billionaire to keep up. But then, cluttered release schedules tend to boost the sale of pre-owned copies, so we're sure GameStop will do just fine.

15 comments

  • DeathstrikeS12 - November 19, 2011 11:30 p.m.

    I was never a fan of Game Stop. I mostly follow the step by step instructions from this blog I found to get my video games free from Amazon. http://amazongiftsource.blogspot.com/
  • aaron-pan - November 18, 2011 5:03 p.m.

    Always had a problem with Gamestop..they screwed over my pre-order, and they said that the game wasn't out until the next day despite the internet telling everyone it was out already. Not to mention the way they treat New games. By taking out the wrap, and the game and then putting in a sticker that upon removal, can screw up the box. Terrible. Its cheaper to buy Used Games on Ebay(example: $18 for Castlevania Dawn of Sorrow in Gamestop no box/manual. $5 or less with Like New condition Box/Manual on Ebay). Other than that its also cheaper to buy New games on Amazon, or Steam which some of the games are literally rock bottom prices (Oblivion with all DLCs/everything was just $6.25 a couple days ago on Steam. $20 on Gamestop). Buying consoles imo has been better in Department Stores cuz if anything legal needs to be done, its easier to go after them rather than a small time game store (compared to Wal Mart anyway). In every department, Gamestop loses. Its always better to shop elsewhere. The only reason i would even go is just to browse whats hot or hang with my friends. I would never buy anything there anymore after the terrible service which includes lying to me, and high prices for what they offer.
  • GrandmaSlayer - November 18, 2011 3:23 p.m.

    The price of games is too damn high!
  • TurkeyOnRye - November 18, 2011 1:55 p.m.

    I think it's really the game industry's online code initiative. You know, where multiplayer focused games (and other games like Arkham City) are rewarding players for buying new. Gamestop can't get away with undermining the developers by buying cheap from gamers and offering a newer release for $5 cheaper than new when developers are charging $10 for online unless you buy new. Kudos to the industry for putting that leech on a diet. I understand the need for Gamestop, they just need to quit biting the hand that feeds them.
  • profile0000 - November 18, 2011 1:17 p.m.

    Gamestop has an interesting analysis, but I think you need to compare their sales with the entire industry's sales last fiscal quarter to conclude that. Perhaps more people just went to Walmart or bought via Amazon during that time period instead of going to Gamestop. If the industry's sales show a similar pattern as Gamestop, then that analysis is golden.
  • Pruman - November 18, 2011 11:50 a.m.

    Maybe GameStop is losing money because every time I go to one of their stores, I feel like they're trying to punish me for wanting to buy something there: 1) They're generally tiny and usually crowded, such that you feel like you're at a party in someone's studio apartment, and they've put all the furniture in the middle of the room and invited half the neighborhood. 2) So, let's say you have no choice but to deal with this because your fiancee has seen videos of PokePark Wii nine months after it came out, and now wants it badly (I won't deny I loved name-dropping all the Pokemon on the box and the in-game Pokes as she found them). After shoving a bunch of loud kids and clueless parents out of the way, then finding the extremely tiny "new" section, you grab the case and bring it up to the register. Time to pay and go home, right? WRONG. These guys rival Windows Vista with the amount of questions they'll ask you before letting you complete such a simple transaction, and the amount of stuff they try to upsell you on dredges up memories of bad encounters with used car salesmen. I've listed these questions and their translations below: GS: Do you want to buy that used? T: Do you want to reward us, instead of the people who made the game? GS: Do you want to pre-order anything? T: Do you hate driving to more than one place if you can't find a game? Also, do you want us to earn interest on your $5 while we hope you forget you ever paid us, so that we can get your money for nothing and the chicks for free? GS: Do you want to buy a strategy guide/subscribe to our magazine? T: Have you ever heard of the Internet? No? Perfect! GS: Do you want to join our discount/rewards program? T: Do you want to pay for the privilege of making money for us (since the discounts mostly apply to used games), as well as let us track your purchase history so we can turn you into our marketing slave? I just want to buy my game and play dammit, LEAVE ME ALONE! (before the GameStop employees jump in: I know you guys have to do this because employees live and die by these numbers. It's your company that sucks, not you). 3) Also, if you buy the last "new" game they have, they'll pull a disc out of a drawer and put a sticker on the case you bring to the counter. I like to keep my game collection display-quality, so this practice, where I'm given a case that's been manhandled God knows how many times by customers, along with a big honking price sticker on the front and and another sticker on the side that'll leave gooey adhesive residue all over my heavily-fingerprinted case, really makes me mad. Bottom line: I avoid GameStop like the plague. The ONLY time I'll go there is for an old last-gen game, and even then I'll try to patronize any other local game store first.
  • R-ape - November 18, 2011 11:39 a.m.

    In my own opinion, it's actually the online market that's putting these guys in the attic (Steam, Amazon, etc.), but I digress from my overplayed Gamestop hatred. Also I agree with Crabhand there - too many good games -is- a good thing, no?
  • FoxdenRacing - November 18, 2011 11:13 a.m.

    The cynic in my can't help but point out the idea of Occam's Razor...the concept that the simplest explanation is typically the correct one: "Gamer's pockets are not infinitely deep. If they only have $250 to spend, then they only have $250 to spend...regardless of whether 1 good game or 100 launch that month, and regardless of whether each good game costs $30 or $150."
  • rxb - November 18, 2011 11:53 a.m.

    I kinda of agree except if you have just spent $60 on Batman then spending another $60 the next week doesn't seem so clever. Plus we all expect games to depreciate after xmas.
  • codystovall - November 18, 2011 10:50 a.m.

    I blame gamestop for rippin people off.
  • Crabhand - November 18, 2011 10:37 a.m.

    I think too many quality games is a good problem to have.
  • hiawg - November 18, 2011 10:33 a.m.

    I got an email from GameStop informing me that I could buy Gears of War 3 used for $55. I checked and Amazon has it new for $50. This might be why they are hurting.
  • Elc - November 18, 2011 10:19 a.m.

    games or not the reason why gamestop is declining...its the fact people are starting to release that they dont care about and rip off their customers. I mean with all the bullshit they pulled over the past 2 years and poor services are we really surprised?
  • CrashmanX - November 18, 2011 10:26 a.m.

    I'm pretty sure this just comes down to a local thing. I've got a GameStop near myself and I've had no issues with them, I've gotten great trade-in values and have never had an issue with them. I've heard many cases like yours and more of them I hear the more like my own I hear.
  • closer2192 - November 18, 2011 10:41 a.m.

    I've never really had a problem with Gamestop, except for their ridiculous trade in values (they offered me $12 for Assassin's Creed and Mercenaries 2, when they were both semi-new), but overall I think they do a good job. A retailer like GameStop is a lot better than buying from Wal-Mart or Target, or another retailer that isn't specifically devoted to gaming.

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