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.
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."

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