GameStop digital sales surge 57 percent

[UPDATE] In a postearnings conference call, CEO Paul Raines said next-gen consoles are "unlikely" to block used games; digital business hits $453 million in 2011 on COD: Elite, PC downloads.

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Even as some brick-and-mortar retailers flounder, GameStop's digital business is booming. As part of its fourth-quarter and full-year 2011 financial report today, the specialty retailer today said digital revenues were up 57 percent year-over-year to $453 million.

The digital business was a hotspot for GameStop in 2011.

GameStop specifically called out Call of Duty: Elite, online game portal Kongregate, and PC game downloads as strengths for the company's digital business.

As for the bigger picture, GameStop said that sales for the fourth quarter of 2011 ended January 28 were down 3 percent to $3.58 billion. Profits for the fourth quarter came in at $174.7 million, down from the $237.8 million recorded in the prior year. GameStop attributed this downturn in part to what it called a "slowdown" in Wii sales.

As for the full year 2011, GameStop posted global sales of $9.55 billion, what the company called a "modest increase" over fiscal 2010's $9.47 billion. Net earnings for the year came in at $339.9 million, down from the $408 million recorded during fiscal 2010.

Looking into 2012, GameStop said sales growth will be "primarily driven" by a surge in digital sales, preowned products, and mobile. Also during 2012, GameStop said it plans to open 100 new stores and close 150 outfits.

[UPDATE] In a postearnings conference call, GameStop CEO Paul Raines said the next-generation consoles are "unlikely" to block used games.

"We think it's unlikely that there would be that next-gen console [that blocks used games] because the model simply hasn't been proven that works," Raines said. "Remember that used video games have a residual value. Remember that GameStop generates 1.2 billion of trade credits around the world with our used game model. So consider taking used games out of that, you'd have to find new ways to sell the games."

Previous speculation pointed to the Xbox 360 successor implementing a system that would block gamers from playing used titles. Microsoft has not directly commented on the matter, and gamers aren't likely to learn the company's true intentions anytime soon.

Microsoft confirmed last week that it would not be bringing new Xbox hardware to the 2012 Electronic Entertainment Expo, which runs June 5-7 in Los Angeles. The company said 2012 will be "all about Xbox 360."

Discussion

55 comments
BravoOneActual
BravoOneActual

Somebody is thinking over a Gamestop. Consider them the "anti-Blockbuster".

JimmeyBurrows
JimmeyBurrows

"consider taking used games out of that, you'd have to find new ways to sell the games." Selling them new? okay that's that problem solved then.

YukoAsho
YukoAsho

@ecs33 But digital sales introduce server costs. With disc-based media and related packaging being as cheap as it is, I wonder if there really is a cost effectiveness for publishers, or if they simply want the right to yank games from players at will. In short, gamers shouldn't be so easily duped. @Psycold - So what happens when EA decides to start pulling games from their download service, making them impossible to re-download? You know it's going to happen. I'll take security over convenience any day.

megakick
megakick

A) no physical copy, no production cost. B) resale, trading is made under their regulations if any. C) DRM. Whats happens if Origin Steam or EB closes shop? Digital gives you the right to play and gives you less options.

ecs33
ecs33

@187umKILLAH With digital downloads there are no transportation costs. You have to put that into the equation when calculating how much value you really get after going the physical media route.

ecs33
ecs33

Honestly.. people usually get what it cost in gas to go and trade the game in the first place!

Psycold
Psycold

@ 187umKILLAH - Gamers are not stupid for paying the same amount for digital downloads, for one thing I only play PC games and they are cheaper than console games anyway. You are right about not being able to trade a digital download, that is a negative, but the positives outweigh the negatives for me. This way I never lose my disc, never scratch it, break it, some jerk can't come over and steal my games, and if I need disc space, delete them and download them at any time. How is that not better than a disc?

PixelAddict
PixelAddict

Why do people complain about trade-in values? There are alternatives, you know... Sell on eBay. You will get a LOT more money. Immediate gratification versus more $$.

egger7577
egger7577

I didn't even know Gamestop did digital downloads. It's nice to have another outlet for PC downloads besides Steam and Origin.

cjimrun
cjimrun

As long as there are printed games, there will be used game sales. Where are those games supposed to go otherwise? Garbage? Keep piling-up? Not everyone has the means to hoard all that hardcopy and simply throwing them-out is just wasteful. Inevitably, the industry will one day be purely digital and these concerns will be a thing of the past...but that day won't be next gen.

oskuuu
oskuuu

gotta say that any console that blocks used games will be something that i will very "unlikely" buy...

jonahmaul
jonahmaul

There's no way that the next gen consoles will block second hand sales unless they really do go digital only. There would be absolute outcry and people would refuse to buy the consoles. I'm sure it would contravene laws as well by restricting trade (certainly here in the UK/EU).

megakick
megakick

Just sell GameStop used games don't buy used. Then they will have to lower used game prices or get rid of selling used games. GameStop then might know how it feels to be a publisher. High overhead, less profit for a lot of work. Remember at one time they sold used movies but GameStopped because the used movies weren't moving.

clqtte
clqtte

I never buy the game that I cannot sell it back.Money never been around for you to collect.It's your hard earn and never waste it.

dannyatkinson
dannyatkinson

Why do you people always whine about trade in values. Just don't trade your games. Problem solved. When I am trading games I decide if it is worth it before I leave the store. Impulse buys can be dumb.

ztg360
ztg360

Also for all of you bashing them for not sprinkling down the wealth to their employees..how many of you are one or know one? while I don't work for them all an employer is required to do by law is give whatever the law dictates is minimum wage not an insane amount of benefits and not over pay them for minimalist work. (I have frequently went into gamestop and I can't imagine their job is very difficult, with that being said I do think it is in an employer's best interest to treat their employees fairly to breed loyalty which in turn makes more money for the company

ztg360
ztg360

while I for one don't appreciate their trade in values they are one of the few ones around me that accept it so I either give it to them and they make at least dbbl money of I sell it on ebay for a little bit more than their trade in and pay more for shipping and handling to the point that it evens out. Another thing with them is they do keep a lot of the curbing of used games at bay which is always nice

toddx77
toddx77

Gamestop's trade in value can be a joke at times. They sell arkham asylum for the ps3 for $18 but only gave me $6 for it. The only reason I sold it to them was because I had gotten arkham asylum from steam for only $8 but looking back now I probably should have sold it on ebay instead.

BillyColeman
BillyColeman

all that cash from them riping ppl off take a buy a game for 60$ sell it back to them get 27$ store cre thay re sell it for 54$

Lotus-Edge
Lotus-Edge

Seems GameStop has more sense M$....

Jebril
Jebril

Gamestop is like a double edged sword, on one hand they rip off tons of people for their games and sell em' for 500% percent or something ridiculous. On another hand their huge existence makes it hard for console makers to impose no used selling of our games BS.

SingletreeAve
SingletreeAve

I've been a loyal GameStop customer for years but will never use Impulse again due to their customer support. I got a Flash Friday sale coupon for 50% off MW3 a couple weeks ago, but was unable to use it due to technical problems on their end. They didn't even notify me of the failed transaction until after the coupon expired. Customer support tried to blame it on my credit card (which Steam accepted no problem), and refused to give me a new code. Threats to discontinue business with them fell on deaf ears. Half of their games require the Steam or Origin client anyway. I see no need for another middleman.

Psycold
Psycold

LOL @ people worried about GameStop shutting down after consoles do away with used games.

manciuxl
manciuxl

digital distribution is ok for me for little games like super meat boy,i am alive,limbo etc but when it comes to AAAA games like Modern Warfare 3,Skyrim,Mass effect 3,Gears of war 3 etc i like to hold them in my hands,and smell the "fresh buy" purchase when you open the case it makes you respect the game more

187umKILLAH
187umKILLAH

That just proves how stupid a lot of gamers have become, why pay the same amount of money for a game you can't sell and can't lend to others? Digital games, no thanks.

noodlzethegreat
noodlzethegreat

@pixeladdict umm hello uncharted allready offers an "elite" type of fad u are right it aint going no where.. and ill bet another benjamin that COD elite doesnt give away free elites to the founders who had to wait.. umm how long for clan operations to go online and half the time they arent up.. we wont be reimbursed garunteed and if we arent whos gonna have the balls to go after COD for a civil suit.. and garun-effin-teed a video game company doesnt have a recall.. but walmart can recall barbie dolls with too much lead int he paint.. all bs and its bad for ya folks.. just stupid stuff till fill your head full of useless space until ur dead.. bunch of nerds doing blow in puerto rico forgetting how to make a quality product.. greed is the root of all evil and now our precious video games are starting to sufffer.. we're the mayans right hahaha

noodlzethegreat
noodlzethegreat

thats awesome good for them.. 100 bucks though says they dont take care of their employees and none of them get a raise.. effin vulture capitalists.. stop blaming game industries we're the ones lining their pockets.. if its such profitable wheres the benefits.. its all in the walmart theory..

juiceair
juiceair

@ PixelAddict Sad thing is you're probably right. I was thinking the same thing when I first heard of the "elite" service before MW3 release.

bones701
bones701

im confused with gamestop and gamespot

PixelAddict
PixelAddict

People keep saying "COD Elite won't last! It's a fad!" Are you people paying attention to what EA is talking about? I'll bet my copies of BF3 and MW3 that the next Battlefield will have an "Elite"-type pay service. This "fad" ain't going anywhere.

nate1222
nate1222

Though I'm not a big fan of Gamestop, I do appreciate the more affordable downloadable PC games they offer. I like Steam and I love GOG and Amazon game downloads, but I don't want only one option available for my PC goodies. It's bad enough that we (gamers) have to tolerate mega-publisher monopolies. The last thing we need are freaking digital distribution monopolies on top of that.

downloadthefile
downloadthefile

And yeah I agree with @ziproy anyone downloading PC games should use Steam, it's by far the best service.

ziproy
ziproy

If you're going to download PC games why on Earth would you use Gamestop?!

downloadthefile
downloadthefile

@unreal_master People are paid based on skill required to do a job and the number of people available to fill vacancies, not how well the business is doing. There are a huge number of people available and able to work at Gamestop.

unreal_master
unreal_master

But the employs still get $7 something an hour with 4-10cent raise every year. Yay?

MarcJL31
MarcJL31

Dear Developers and Publishers, you're tactics of going after the consumers are not working. Maybe you could change strategies and reward people who buy new rather than punish those who buy used and inconvenience those who do buy new. Also may what to rethink whatever deal you set up with Gamestop in giving them exclusive items and advertisement. Seems like they are doing very well from all of it.

cstv
cstv

that's a sad bit of news...hehe

James00715
James00715

@harold317 I surprising amount of people still don't have broadband. Some don't have access to it. Others just don't have the money. I would guess 30% of Americans only have dial-up. Not all people with broadband like to download everything, many still prefer to buy in a store. Retail will stick around for a while until everyone switches over.

deth420
deth420

[This message was deleted at the request of the original poster]

JimmyJimJim
JimmyJimJim

Soooo... reminds me of blockbuster, went into digital sales and mailing service to compete with netflix only to be hit with a new wall... why even go to the stores.

ducusss
ducusss

Well that sure is some good money that they don't even remotely deserve.

vivalatour
vivalatour

I got 4 GameStop's within 1 mile of my house the place is like a haunting magnet on me ... even though people complain about prices and such , you just gotta' love the GameStop Gang !

harold317
harold317

Also, this Call of Duty fad that they cite as being very profitable for them won't last forever (in fact I think we are at the very end of it), which further proves that they have no real plan for the future.

harold317
harold317

I wonder how much longer will they be able to avoid becoming the next "Blockbuster Video" by supplying the same thing I can download from very own console...I think they are capitalizing on users who are still not familiar with buying digital goods, but once the common gamer becomes educated enough, they'll learn that you can bypass gamestop as the "supplier" pretty easily. In the long run they'll have to dedicate to just selling consoles or computer parts for gaming, because companies won't need stores to sell their games in the near future.

Rottenwood
Rottenwood

Looking forward to seeing what turns up in their 'used code' bin.

kkxtrouble
kkxtrouble

@RealFabioSooner Of course creating the content is what is the most expensive, actually not always, sometimes it's the advertising. We meant what makes the games more expensive in relation to the retail ones. The 60$ price is actually arbitrary, i don't know who made these crazy prices, i really don't, it's like a movie ticket, they all cost the same but the budget is absurdly different.What would make games cheaper is you paying a price that makes sense. They spent 60mil on that game, ok 60$ it is. They spent 6mil, ok, i'm not paying 60$ for that. That's hy i'm loving this kickstart thing, since you buy the game before it starts production you're not paying for the advertising. What Cod spends on adds could pay for the production of many games.

sleepnsurf
sleepnsurf

You can get dlc for some games cheaper through gamestop than through xbox or psn or whatever it is called. Not condoning gamestop bu it is true.

GriffinBalls
GriffinBalls

Game missed a trick with this one. They could have lasted, we'll never know

CCGR_Pheonix
CCGR_Pheonix

Buy from Amazon people. They're new downloadable game service is great. Plus, you can download it to any computer, and play it without any account logged in. (Outside of in-game accounts of course)

RealFabioSooner
RealFabioSooner

@kkxtrouble @Triton No to both. Actually, the bulk of the cost lies in - Creating the content in the first place - Paying all the middlemen between production and consumer, be it in physical or digital form. Burning a disc comes at US$ 0.70 per disc at most. Packaging costs a lot more than that, but it still doesn't comprise the bulk of the costs - and with all those physical games ditching printed manuals for digital versions altogether, the overall package is only getting cheaper. The only way to make games significantly cheaper these days is bypassing Sony/MS/Nintendo and keeping them games simple one way or another. You want an Uncharted-like game, there's no escaping paying at least US$ 50 for it, even in digital form. You want a full-fledged, decent game for US$ 30 or less, the only option is Steam and forgoing tessellation, high-end graphics and sh*t like that.