GameStop sales, profits sink by millions

L.A. Noire, Infamous 2, Brink, NCAA Football, and Mortal Kombat compose the chain's five biggest sellers as digital sales surge in downbeat quarter.

GameStop started its fiscal year with a spring in its step, reporting record sales and surging profits for the February-April quarter. The specialty retailer's fortunes have reversed of late, as today GameStop reported second-quarter results showing revenues and net income sliding year-over-year.

The premiere brick-and-mortar destination for downloadable content?

For the three months ended July 30, GameStop posted sales of $1.74 billion, down 3.1 percent year-over-year. Net income was also off nearly 25 percent, with the chain reporting $30.9 million in profits for the quarter, down from $40.3 million in the same period the year prior.

Despite the down numbers, GameStop pointed to some positive trends. First and foremost, it noted that digital revenues are up a considerable 69 percent, with used-game sales jumping 12 percent year-over-year. Given the larger profit margins on both those categories compared to new boxed titles, the company as a whole reported the highest margin rate in five years.

As for those new systems and boxed games, they still made up just over half of GameStop's sales for the quarter. On the games front, the company reported that its five best-selling titles were L.A. Noire, NCAA Football 12, Infamous 2, Brink, and Mortal Kombat.

In a postearnings conference call, GameStop CEO Paul Raines said the growth of downloadable content is driving a new cycle in the pre-owned games business and that he expects regular DLC launches for all major titles in the future. GameStop president Tony Bartel added that GameStop is actually helping push DLC acceptance among consumers. GameStop has found about half the customers who purchase DLC through its retail locations have never tried DLC previously.

The growth of DLC isn't the only source of optimism for GameStop. Bartel said the company expects to have more games with 1 million preorders or more between now and the January end of the company's fiscal year than it has had in its entire history.

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Discussion

227 comments
ultracool374
ultracool374

In a few years, Gamestop will no longer be relevant.

ZeroX91
ZeroX91

I say good, when they first started they were stores ran by gamers now they are just salesmen.

Double_Wide
Double_Wide

You know what I think would really help GameStop? To franchise out their stores to each locations' management, let them establish there own trading policies/prices, and not put a limit on how much vintage gaming merchandise they sell. There is a huge market for vintage items and memorabilia amongst gamers/collectors and I think GameStop is selling themselves and their customers short by not expounding on it. I dunno, I just know I like going to smaller video game store chains not only to by games but to see what collector items they have in stock. GameStop just feels to corporate now and has gotten to big for its own good.

Snaptrap
Snaptrap

I hate Gamstop anyway. Horrible exchange policy, especially for hardware. 10yrs from now game specialty stores like this will be the next Blockbuster.

Gravity_Slave
Gravity_Slave

Perhaps if they stopped making employees rattle out a 5 minute sales pitch they call "offers" and actually let them sell a game...it's awkward and uneceassary for both parties.

DanBoiani
DanBoiani

@CptRexKramer Barbarians. Never watch High Art!

Husko
Husko

The reason I don't shop at GameStop is because you can not buy a new game off the shelves!!! Here in Grand Rapids, MI. All of the Games are opened and the boxes on the shelf. When you check out, they go to the back and put the CD in the already opened new game. I'm serious. And to me, it smells like a scam selling used games for new!

simon1812
simon1812

I never buy DLC for my PS3 games not sure if I ever will, especially after... u know... any who, my history of DLC involves PC games and mostly through the publisher's resources, dont think I ever bought DLC from gamestop's site.

Megleeker
Megleeker

@CptRexKramer Municipal bonds Ted.

X-RS
X-RS

Great. Now isntead of trading games to stores (instead of players) we'll all just be selfish with online accounts and but**** when the net is down. Yippee! -.-

Sepewrath
Sepewrath

@DAMSOG Interestingly enough, publishers are happy to send people there for those preorder deals, when they know GS is just going to use that to push their used game agenda. So really, its their own fault that they are dealing with used games. I wouldn't chock this up to justice, as the publishers are worst than GS.

mos2000
mos2000

@terrascythe I said: "Just what they #$#%^ get....con artist. Bring back EB Games and GMR!" You Said: "FYI - Gamestop bought Electronics Boutique for over $1.4 billion in 2005." With all due respect, what in the "Cypress Hell" does that have to do with my comment? When EB was taken over, they lost their whole corporate structure and philosophy to that of GS. Main figure heads were gone, stores merged and workers were let go. GameInformer magazine became the choice of the co., therefore GMR was dropped and the contributors went elsewhere. So in essence EB is gone, right - or am I missing something?

holtrocks
holtrocks

O and why is anyone who makes alot of money a monster?

holtrocks
holtrocks

"ooo this is a tuffy why are our sales slumping hmmmmm could it be nah its not that there are no good games out that can't be it sigh this IS a mystery"

MOwens9512
MOwens9512

Maybe I'm just a hater (I am LOL) but I wish it were bigger. I so do not like Gamestop LOL. But I mean hey, they're still doing well, ripping off people with their trade-in values and used game costs. I'm thinking this fall with their pre-order exclusives on a lot of big games they'll recover their ill-gotten gains LOL

phatmatt030
phatmatt030

@DAMSOG dude I seriously thought that was a bug crawling on my screen.

Raven-002
Raven-002

Wow, I've read quite a few of the comments. I never go to GS, but that's sad. They fail to realize that "user experience" is the long term goal to success in business. I'd be there to guide or help consumers, but not get in their way. If managers are forcing their hand in that, what are they supposed to do? I applied to a gamestop store, I have been gaming since 5 years old and very passionate about video games. Never got a call back, lol. Certainly the best person isn't getting jobs at that company.

DAMSOG
DAMSOG

Isn't Gamestop the main reason for developers/publishers charging now for online codes for second hand titles? Now they are losing money, justice is swift.

bluespire1
bluespire1

I stopped buying games from Gamestop I joined Amazon prime free shipping and no sales taxes and sometimes games come with 10 dollar or 20 dollar credits on purchase at amazon.com I've used them to pre-order future games I save on games sometimes...

VivaRevolucion
VivaRevolucion

they need to have more used game sales more often... I'm always waiting for that buy 2 get 1 free, but it just doesn't happen enough. Gamestop people go to buy consoles and console games, and they need to be the equivelant to something like Steam in that sense, which is saling stuff left and right like no ones business. Gamestop always has sales, but a lot of it seems to go with consoles and accessories a whole lot more than games. And lets face it, most of us are set in our ways with our consoles, it's too expensive with the way things are now not ot be.

CptRexKramer
CptRexKramer

@DanBoiani I don't think the person that gave you a thumbs down got the joke. :)

ebookerd1
ebookerd1

I like Gamestop. I buy used game and never sell my games so it saves me a bit on games that were second thoughts.

vallan2
vallan2

Funny thing is the only games that I've run into that aren't $60 new from retailers are the Cabela's games, the last one was only $44.99...and the last Dangerous Hunts was pretty good, considering the guy who wrote the script for it also wrote Resistance: Fall of Man. I think games should be priced more like that.

h12456208
h12456208

Used games are NOT the same everywhere. Go to Amazon. Buy the ones that are LIKE NEW through Amazon. It is like opening up the game outta the shrink wrap. Plus its near half the price of gamestop. CODMW2 is $34.99 at gamestop. I can get both MW1 and MW2 USED LIKE NEW from Amazon for $30. Gamestops used prices SUCK. And their TIV's compared to Amazon suck as well.

Dasim64
Dasim64

The codes being used for online play aren't going to help them any with used game sales. The industry seems to be against them at the moment. Maybe they should have worked out a deal with the industry to kick back some of that used game sales cash. But that's business. I like Gamestop and have their card because I get lots of discounts with it and there's one right by my house. The price of new games is the same no matter where you buy them so Wal-mart has nothing on them there. I've saved a lot of money on used games at Gamestop so my experience with them has been very positive.

Blueresident87
Blueresident87

I'm not a fan of Gamestop but I don't think it is evil or anything like that. They could do a much better job choosing the people they hire, because I can remember more than one time talking with a sales associate who knew far less than they should have about the games/hardware in the store. It is very poor business for the associates to constantly pressure their customers to get their "Game Rewards Card" or whatever, and I can't count the number of times I've seen people have to tell them no several times to get them to shut up. I don't think it's a bad store though, but there are a large number of things (more than I'd list here) that make it a poor place to do business at. I get games there all the time for free by trading properly and taking advantage of the many deals they offer from time to time.

mdchapel9
mdchapel9

Is it just me, or do all Hipsters work at game stop?...

blackjoker86
blackjoker86

well people are struggling and our entertainment is struggling with us i would expect Gamestop to struggle like us when people are going to walmart, target, bestbuy, etc etc to buy there games and now bestbuy has a trade-in reward like gamestop so gamestop just might dye

fantasyfacade
fantasyfacade

@Reyveign: My best friend is a manager for Gamestop Ireland and he's told me it's happened to a couple of management (only) in stores that have missed their targets by over 50% consistently. I don't know if the same is happening in other countries that Gamestop is in, but here my friend is in fear it's going to happen to him. Unfortunately the reason they are missing targets is due to our crumbling economy.

metaltorn
metaltorn

even with all the pre-order $#!%, games are too expensive now-a-days

StarCarlton
StarCarlton

Games cost $60 - unless the game is really decent - there is no reason to pay that kind of money. If the game is ok - then just wait for it to be cheaper on ebay.

sco-fisticated
sco-fisticated

@jamyskis: And yeah. That's a risk with physical retail. It all depends on what kind of person is hired and which person you meet at the register. It's the same everywhere else in life, but I believe it's worth the risk. otherwise.. where else will gamers physically gather that isn't a convention? And yeah, the store has its problems, like any store would. It has things it needs to work on. But I don't think it's quite heartless yet. And I never like when a clerk or associate anywhere dolls out the seller's script. But I believe a clerk should be brave and deviate some from the script. Makes the place seem more human.

jamyskis
jamyskis

@sco-fisticated: That actually holds very true for me too when I think about it. I do often buy games via Amazon, but I'm often more willing to take a risk on a game when I can chat to a real salesperson who knows what they're talking about with a game. The problem is, I don't get that feeling with GameStop. I don't get the feeling that they know what they are talking about, only that they have their specific selling directives and established expressions that they have to say. I've been into three different GameStop stores and they always say - word-for-word - precisely the same things to me.

deathdoc
deathdoc

GameStop, Steam etc. etc. Just a bunch of money grubbers. Would never use em. Hope they go broke and into the garbage where they belong.

chrisatjccc
chrisatjccc

I think the REAL story here is that NEW game sales are down. Yes DLC is up but that's b/c game developers are doing MORE and MORE DLC and forcing it down our throats (think COD:Black Ops). This number in the article does not mean that its ONLY new-game sales. I'd be willing to bet that its add-ons make up the vast majority of this number. What about the fact that USED sales are also up? Yes that number is only 12% compared to DLC 69% but the two numbers cannot be compared against each other easily as a result of what game developers are doing. Bad economy = more used games. Greedy Developers = more DLC required of consumers to play games they love. I think that if game developers are stupid, they will continue to push new-game by Download and if so, they will eventually hurt their bottom line. Consumers will continue to have less and less money to burn on entertainment in this crap economy, and then not have game trade-in credit to offset the cash-flow problem. Go for it EA and Ubisoft...prove me wrong.

sco-fisticated
sco-fisticated

Hold true Gamestop. Not everyone has to want this, but I want my physical copy. I want a physical store to walk into with people who know about games. Instead of miss middle age lady in Walmart who was at front check-out last week and only knows about Mario. I want the actual person there who I could chit-chat with. I don't want -all- my game buying done with a series of menues on a screen. And if someone doesn't like all that, more power to them. I believe the game industry can be diverse, yet co-habitate.

DanBoiani
DanBoiani

@CptRexKramer Striker, Striker, Striker, STRIKE HER!

hunter8man
hunter8man

@kmarrelly Yes, but why be bothered with it when I can walk into any other retailer and not be hassled by it? Maybe your experience with them has been different than mine, but I was asked no less than three times to preorder something everytime I used to go in. I know it's their job, but no the first time means no everytime after as well. As for their new game cases, I bought a "new" copy of Persona 3 that I paid full price for and was given an opened case with a disc that came out of their paper disc holder. It happened a few more times since then. That's uncalled for. As for the "gifts", it's not just exclusive to Gamestop but as a whole it's a giant ripoff for gamers who all end up paying the same $60 game price.

Acejenderd
Acejenderd

How many of you have enough money to buy DLC and new games? I bet you have to choose if you don't want to trash all your saving on games. This why I think that DLC is going to hurt many companies in the long run. If it's in the game I don't want to pay again to unlock it. It's ludicrous.

mellow09
mellow09

$30.9 million in profits for the quarter, down from $40.3 million . . . oh no, they only made $31 million! Why does the whole tone of this article seem to suggest the company lost a net?

Chaos_Dante_456
Chaos_Dante_456

I only buy and sell at Play N Trade when i can they have alot better deal for gamers and the staff seems better, not to mention they let u try ur games instore b4 u purchase them, and'll clean ur disc if it isn't working properly on purchase....and they fix consoles.

Cortana101
Cortana101

Please stop with the DLC. All downloadable content is just parts of the game they want to charge you twice for. I mean how else do you explain the small download? I pay $100 AU for Black Ops and almost the same for the darn DLC.

CptRexKramer
CptRexKramer

Gamestop is like any other store on the planet; some are ran competently with a friendly and somewhat knowledgeable staff, and some are ran by morons with a staff of in-bread potatoeheads . But I agree with the comments of Zidan4000..... well stated sir.

jamyskis
jamyskis

It was clear as crystal that all the digital download fanboys would crop up here. The fact is that boxed retail games are alive and well - including on the PC. I seriously don't know why GameStop is used as a reference point for the viability of the brick-and-mortar market. I'm pretty sure that I'm not alone when I say that GameStop is perhaps the single worst place to buy games from. In Luebeck we have two GameStop stores, but there are 16 supermarkets, 3 electronics stores, four bookstores, two department stores, an independent games retailer and Amazon that all offer better deals.

charlieboomboom
charlieboomboom

Funny how gamestop is the biggest treat to the gaming industry today..pirates has become small-fry

Scouten9
Scouten9

gtfo Gamestop you are overpriced and have lousy customer service @FoxbatAlpha **** that drives me up the wall and i let them know its either that or the **** 1 year disk scratch warranty thing sorry i dont store my games out of there cases under the lawnmower

FoxbatAlpha
FoxbatAlpha

Gamestop is clinging on to hope. With more sites coming out like Steam, Gamestop is yesterdays news. It will be nice to think of the employees not hounding me anymore with that stupid line "Are you sure there is nothing you want to pre order??"

zidan4000
zidan4000

to whoever hopes that this or any other company should go under , think about this , a company isn't all about a fat CEO with a big Cigar in his lips , a company has honest working people who put food on the table for their family , and if they lose that job there is no guarantee that they will ever get any other job in this hard economy , think about what you say before you say it.

somberfox
somberfox

I can't even remember the last time I bought anything from GS, I've been boycotting them for a long time All my game buying has been done on Amazon for probably 2-3 years now.