2012 'challenging' for console gaming, says GameStop

Retailer says past year was tough due to longevity of current console cycle; fourth-quarter, full-year sales down.

GameStop today reported its fourth-quarter and full-year 2012 financial results, calling the year tough, but noting the launch of new consoles and further investment in digital sectors should help turn things around at the retailer.

"While 2012 was a challenging year for console gaming, we focused on factors within our control," GameStop CEO Paul Raines said in a statement. "We expanded our market leadership position, maintained our financial strength, and controlled our spending. Perhaps most importantly, we invested in our mobile and digital businesses to position the company for future success. These channels delivered as planned and significantly contributed to our highest ever gross margin and profitability."

For the fourth quarter ended February 2, GameStop total sales hit $3.56 billion, down from $3.58 billion during the same period last year. Comparable store sales fell 4.6 percent. Meanwhile, GameStop's digital sales jumped 60.3 percent and mobile sales turned in $100 million, helping offset the weakness in the core business.

Adjusted net earnings for the period rose 9.5 percent to $262.3 million, though GameStop said this was primarily due to the positive impact of the 53rd week in 2012. If impairment charges are factored in, net earnings were $261.1 million, up from $174.7 million last year.

For GameStop's fiscal 2012 ended February 2, the retailer reported total global sales of $8.89 billion, down 7 percent from $9.55 billion last year. Comparable store sales fell 8 percent. New and preowned sales fell year-over-year due to the "longevity" of the current console generation, GameStop said.

Adjusted net earnings for the year hit $403 million, compared to adjusted net earnings of $405.1 million this time last year. When restructuring, impairment, and debt retirement expenses are factored in, GameStop actually recorded a net loss of $269.7 million for the year.

Looking ahead, GameStop said it believes the arrival of new consoles from Microsoft and Sony, as well as Grand Theft Auto V, will provide a jolt to the company's bottom line.

"As we look towards the start of the new console cycle, our industry market model indicates a return to growth with the launch of new game systems," Raines said. "GameStop is strong, healthy and ready to lead the industry and its customers into the next phase of gaming."

Though GameStop is optimistic about the outlook for the second half of the year, the first half will be a challenge, the company said.

"Ahead of these events, GameStop expects the first half of the year to be challenging as consumers postpone purchases leading up to the fourth quarter console launch."

In a post-earnings financial call, GameStop revealed that 97 percent of its stores are profitable. In addition, the company said its PlayStation 4 "First-to-Know" list has risen to 900,000, up from 600,000 earlier this month.

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Discussion

86 comments
francpisek
francpisek

What you think will happen with so many users of PS3 (or Xbox360) used games market? How many of us are ready to migrate from this now to new console when knowing the used games market is a no-go and prices are still high (much higher like on Steam)? I say not much Sony (Microsoft), not much in "a 2-3 more years at least" time :=) And that would change dramatically if users would know prices are right or used market is live on new system.

At Sony they know that with used games enabled the sale of PS4 console would be much higher. Now they are between the choice of losing market share or losing money...they know they COULD earn more money with used games ban on their consoles (lower system sales but high extra fee from developers could end in more of total earn).

To me it seems game prices will be lower of course, but within game console world, which can not be compared to PC enviroment and Steam concept, games on PS4 (or new Xbox) will still stay high and there would be less players in case they will ban the used games market.

MatrixGamer78
MatrixGamer78

A time will come when GStop only sell console hardware and its accessories.

Toysoldier34
Toysoldier34

PC gaming has been going strong the past 2 years or so and is only growing.

grimwatch
grimwatch

So many peole complain about the prices Gamestop will pay for used games. Lets do a quick check here - did anyone put a gun to  your head and make you trade your games? No? Then you must have been willing to accept the price you got for them. Your old games are never worth what YOU think they are worth, they are worth what someone is willing to pay for them. If you dont like the price, walk away. Sell your game online if you can, or use your old games to prop a table up or something. Whining because a company (whose goal BTW, is to make money), did not share your (probably overly optimistic) valuation of your game isnt going to change anything. On that note, since anyone selling their games online will be looking to make a profit themselves, and without any of the legal fallbacks given by purchasing from a registered 2nd-hand goods dealer - not really sure where the high-handedness is coming from. 

Sevenizz
Sevenizz

If Gamestop goes out of business, it will be very bad for consumers.  If you can only buy say God of War off a Sony online store - then they can charge whatever they want for it and never discount it.  It's called a monopoly and it's bad for consumers.

BiohazardXTREME
BiohazardXTREME

If by challenging, they mean that there weren't very many good console games that came out last year, and that the whole year pretty much relied on HD remakes, then yeah... Real challenging.

CEMETARY_GATESx
CEMETARY_GATESx

Yeah, it's getting harder and harder to rip off gamers for used games.  My favorite is when they have a big +50% on used game trade ins, but then drop the value of the trade in by -40% that day.

With more competition from direct gamer trading sites, it's a wonder GameStop isn't nearly bankrupt.  They will join the ranks of Tower Records and bookstores.  "Power to the Gamers" indeed.

plaintomato
plaintomato

I wonder if the next gen consoles will suffer a slow start due to people defecting to PC because of the 10,000 year console cycle?

Or maybe due to feeling the hit of an unprecedented amount of money spent on console games that are flushed down the toilet with new, non-backwards compatible systems?

Probably not. But something in me kinda wants to see the next console gen suffer for the constant "we hate our consumers because we can" attitudes of MS and Sony.

mr_squibble
mr_squibble

Gamestop put me on the PS4 First-To-Know email list without me asking or signing up, so I can see how those numbers would grow quickly. Free spam must be a perk of their PowerUp Rewards Pro membership.

Gallowhand
Gallowhand

Well, they'll either sink or swim, but I can certainly see them being squeezed out as time goes on and more people switch over to the digital shops on each platform.

Personally I only buy physical copies from online retailers (like Amazon), and digital games from the likes of GOG and Steam.  Haven't bought anything on PS+ yet, but that may change in the future.

lunar1122
lunar1122

well they profit off a legal form of piracy, so i dont think anyone would feel to bad for gamestop if they close down.        However there is a reason piracy exists or selling used games exist, I dont pretend to just sum up everyone as cheap bastards or stealers.  I do think games being so expensive is the reason why companies like gamestop should exist. 


The best solution would be complete abolishment of gamestop like companies and used game sales. Then make all tripple A games cost $30 u.s dollars instead and less money for lesser titles. 

SecularSage
SecularSage

I pre-ordered Bioshock Infinite PC via Amazon for some amazing perks, downloaded the game ahead of time and was playing by midnight. I didn't have to wait in line, listen to upsales pitches for strategy guides or memberships, and I didn't have to listen to how if I didn't pre-order a AAA title I might risk not getting a copy on launch day.

Instead, I sat at home on my couch, launched the game and played. 

Gamestop can't match that experience, and as more backlog titles show up on PSN, XBLA and Steam, their value proposition is only going to get worse. Gamers are tired of being fleeced, and Gamestop has a dying business model. Used games can be just as easily bought and sold online these days, and the demand for them is decreasing in the face of digital sales.

Within the next 5-10 years, Gamesstop is going to go the way of Blockbuster, first closing dozens of stores, then hundreds. And good riddance.

UberGamer44
UberGamer44

these guys are simply saying make a new console every year.....

Kano92
Kano92

Gosh I wish Gamespot would stop posting Gamestop comments. Who cares what they say. Why all the sudden Gamespot cares about Gamestops comments. Gamespot please only comment on news about gamestop, don't cover their comments on gaming news. Avoid gamestop like the plague.

emptycow
emptycow

ps4  is going to sell record high numbers day one

Talok
Talok

Would you like to sign up for the power rewards so you can get a WHOLE 10% more with your trade ins! Were talking literal cents, instead of buying that perfect condition game for 3 dollars, we'll give you a WHOLE THREE DOLLARS AND THIRTY CENTS! BOOYA!

USAPATRIOT21
USAPATRIOT21

Would you like to get a warranty on your new game to protect you from Gamestop buying it back for 3 dollars and selling it for 40?

Cloud_imperium
Cloud_imperium

@Toysoldier34 PC gaming was increased 250% and consoles market fell 28% in 2012 , Every year there is record breaking revenue brought by PC market . 2011 had it's own record , 2012 had it's own and 2013 will have it's own .

trdrstv
trdrstv

@grimwatch "So many peole complain about the prices Gamestop will pay for used games."

Yeah, I don't get it either. They act like we don't have ebay / amazon or craigslist around, it's ridiculously simple to flip a used game anymore and get more than they are offering even subtracting listing & shipping fees. The only reason to flip at Gamestop is if you're lazy or really don't care what you get.

GamerzUltd
GamerzUltd

@Sevenizz www.gamerzultd.com.  GameStop is not the only game in town.   It's all about preference. 

Toysoldier34
Toysoldier34

@Sevenizz Gamestop isn't the only retailer of video games. They just monopolized the used game market while putting hundreds of shops out of business and ruining the market.

Toysoldier34
Toysoldier34

@CEMETARY_GATESx Selling games anywhere but Gamestop will net you more money. I used to sell games on craigslist all the time. Often at $5 less than Gamestops price. The buyer saves money and make double what Gamestop would have pitched to me.

blackace
blackace

@lunar1122 

$30 a game?!? What have you been smoking? It reminds me of the MetLife commercial with Charlie Brown  Lucy telling the MetLife rep that insurance should be a nickle. lol!! Come back to the real world now. The "AAA" games like Bioshock Infinite will never launch for $30 or less. Not even in the digital form. Publishers and Developers who lose millions. If used games go away, so will 35-40% of the gamers who buy games. There will be even more millions companies will lose. Gamestop loss money because the economy is still very poor and there are still millions of people out of work. It's not because the next-gen didn't start sooner, like they believe. People just don't have to money to buy the games, hardware and accessories like they used to some 8-10 years ago.

Hurvl
Hurvl

@lunar1122 I remember when movies cost half of what they do now, though I'm no longer under 15, so I can't get that kind of teenage discount anymore. At that time, games at retail cost the same as they do nowadays. The difference is that today we also have digital distribution sites like Steam/Amazon/Green man Gaming where you can get games at ridiculously low prizes. Games haven't increased in price like everything else has, quite the contrary if you know where to look and/or patience to wait for a sale/special offer.

dmdavenport
dmdavenport

@SecularSage No, used games cannot "be just as easily bought and sold online." If it wasn't for being able to sell my used games at Gamestop (and get points while I'm at it) I wouldn't buy as many new games as I do.  

SmashBrawlerBoy
SmashBrawlerBoy

@SecularSage Contrastingly, I bought a laptop for $1200 a few years ago, recently downloaded fallout 3, and found out I can't play it. Bought a PS3 nearly 7 years ago, and at least I can play every game that comes out for it without "upgrading" every 2 days. 

CrimsonCarnage
CrimsonCarnage

@SecularSage What a negative Nancy you are!  Go ahead and stay home on your couch, as it sounds like your introverted personality wouldn't do well in a crowd anyway.  I will keep going to GameStop and have fun talking shop with the other gamers and employees.  And when they pitch me a reserve on an upcoming game I will listen politely(as they are only doing their job!) and either accept or decline based on my interest in that particular game. 

Oh yes, I reserve my games since it costs me nothing extra, often get me a few extra in game perks, and is completely refundable or transferable if I change my mind.  And guess what, if there is a problem with my game, I can be right back at my store for an exchange within a few minutes versus waiting for a customer service response email or having to mail my defective product back.

Plus, I enjoy browsing stores and looking at real physical product.  Digital is nice, but nothing beats a hard copy I can hold in my hand and resell later if I so desire.

Sevenizz
Sevenizz

@SecularSage Problem with digital is the price.  Even catalog prices are ridiculous.  Games I see in bargain bins for 4.99 are 19.99 on XBL.  And why is streaming priced the same as owning a physical copy?  Downloading means I skipped about 4 channels in the distribution/packaging/marketing chain and yet it's not reflected in the price.

jameson425
jameson425

@emptycow I bet you a dollar it sells less than the PS3 did when it launched....

SteveQ_basic
SteveQ_basic

@emptycow lol, i dont think it will out perform the wii-u.  It will probably come in last for units sold.

starcrafthenry
starcrafthenry

@jcnba28 I can't stand that. If I buy a new game, I want it wrapped in plastic still. So far as I'm concerned, as soon as that plastic wrap is removed and the disc is pulled out, it's no longer new. I don't know what they've done with the game since it was taken out of the case. For all I know, the gamestop employees played it and then sold me a used game.

Needless to say, I haven't purchased a "new" game from them in years. They're only good for old used games in the $5 bin.

BoromiRwcgeorge
BoromiRwcgeorge

@blackace@lunar1122 you are wrong on many things and on many levels.

for example, price for any game on steam is directly connected to the economy of country you are from. it calculates GDI and other economic values and gives you the price for your country. I have never bought game on steam higher than +30$. most of the AAA titles cost exactly 29.99$ on day 1. with 75% sale ... well, do the math. here to prove : http://img339.imageshack.us/img339/7502/captureaqfh.png 

Toysoldier34
Toysoldier34

@Zork_Wesker @lunar1122 Developers don't receive money from the game sales similar to piracy.

He is on the right track, he just derailed the train trying to explain it.

Toysoldier34
Toysoldier34

@SmashBrawlerBoy @SecularSage You paid too much for a laptop is why there are issues.

PC gaming is pretty cheap if you don't get ripped of buying it.

You can put a GTX460 in any computer and game just fine. I was able to play Max Payne 3 maxed settings at 1080p while keeping 60FPS for most the game and dropping to maybe 40-50 on occasion. My PC has a 460 with an old quad core cpu and 4GB of DDR2 RAM. Far from a gaming rig aside from my GPU which you can buy for $100 these days and I have had it for a few years now. 

I plan to buy a new computer in the next month or so and not because I need to, because I choose to as an enthusiast. 

Hurvl
Hurvl

@SmashBrawlerBoy I bought a laptop because I needed a computer that was easy to take with me when moving to a different city, but I checked its specs against my backlog before purchasing and I can play all of those games on it. I can't play The Witcher 2, which is irritating since I loved the first Witcher, but I hadn't expected to play games from 2011 anyway. My backlog is mainly comprised of games from 2000-2006.

Toysoldier34
Toysoldier34

@Sevenizz @SecularSage Console digital games have poor pricing. I have pre-ordered every big title of the past 2 years or so and haven't paid $60 for any of them. I just got Tomb Raider for $35 when I pre-ordered in October for PC.

I was also able to begin playing at 9pm with it downloaded and installed days before release.

trdrstv
trdrstv

@jameson425 @emptycow Even I doubt that. the PS3 (at least in the US) had a "paper launch" of ~ 160,000 units. Sony simply wasn't ready to produce large volumes yet (think the Bluray laser was the hold up), but they couldn't wait any longer because MS was already eating their lunch and announced Gears of WAR for that Christmas.

kik4444
kik4444

@jameson425 @emptycow Prepare to lose a dollar, cause this time Sony is going to make a perfect launch and not like the PS3 launch that was 1 year late and too expensive in the beginning, but even though the disasterous launch, it managed to outsell the 360 since the launch all the way to the end of 2012 if you've seen that article in the beginning of 2013

jameson425
jameson425

@starcrafthenry @jcnba28 Every new game I have purchased from Gamestop in the last 2 years have all been in plastic wrap.. Where do you guys live that they pull that crap? I'm in Ohio and would punch someone in the face if they gave me a new game without really being "new", after paying 64 bucks...

DWalker131
DWalker131

@kik4444 @jameson425 @emptycow bit off the topic here but i do have to but i have to comment about the launch price PS3 and PS4 i don't know where your from but launch PS3 in australia was $699 for 40gb (i don't know if they have one without a hard drive so its abit hard to compare)

PS4 launch pricetag is $899 i'm not sure if thats the 500gb or or the 1tb, the price is yet to be confirmed but that seems to be the 'pre order' price for alot of stores

again, theres no ps3/ps4 to my knowlege that doesn't come without a hard drive, since the price of the hard drive is debatable, it is hard to compare the price of the console alone

just my 2cents, but the price is still fairly steep, and the pricetag on the games at the moment is $118 a game at jb hifi, this console better be region free coz no way am i buying my games here

jameson425
jameson425

@kik4444 @jameson425 @emptycow Keep thinking that, the majority of Xbox's were sold in they're first year before the PS3 and Wii hit the streets, so I could care less that it took Sony 5 or 6 years to catch up.. It's about time they caught up I'd say...  And I wouldn't count on Sony to have a perfect launch that's just my opinion after seeing how they're first 3 launches went... Don't get me wrong Sony has always had a good product but I would not say perfect for either they're product or how they launch it...

starcrafthenry
starcrafthenry

@jameson425 @starcrafthenry @jcnba28 I live in Arizona. Constantly go between Tucson and Phoenix metropolitan, and in both areas, all the gamestops I've been too remove the plastic wrap, and put their upc stickers on the case. That bugs me too. lol