Q&A: EB Games CEO Jeff Griffiths

Gamers, the press, retailers, and publishers are all wiping their brows after last week's launch of the PSP. Hear one retailer's view of the frenzy...and of the machine's vast potential.

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Last week, the hype and buzz surrounding the PSP launch were palpable. But now, not too far removed from the midnight launch festivities, the industry gets back to work--selling, evangelizing, promoting, and competing as it would on any given day.

GameSpot spoke with retail veteran Jeff Griffiths, Electronics Boutique president and CEO, to see what his reaction was to the launch, the impact the PSP could have long-term, and where Sony could falter.

While he kept a few facts and figures close to the chest (who knows where the competition lurks), he was mostly forthright and clear. One thing looks certain, according to Griffiths: This thing is going to be huge.

GameSpot: And can you talk a little bit about the first week with the PSP on shelves. Has it been a good week in the life of a retailer?

Jeff Griffiths: Oh, yes. It was great. We had great sell-through through this week. We [also] had a very strong attach rate of software and accessories. We are very pleased with the business.

And we've gotten a lot of positive feedback from customers on how much they like the PSP. I think Sony had a very strong advertising campaign. I certainly saw a lot of TV ads over the weekend for it. It's been a great start.

GS: Do your stores still have the unit in stock?

JG: There are some units in stock throughout the chain, but I think that the vast majority of stores just sold through their initial allocations.

GS: How is EB dealing with the concerns over dead pixels?

JG: On the first day, we did get some feedback from the stores about pixels. But it slid down considerably after the first day. I think that there was some explanation on what expectations were, in terms of how the screen operated. We had a similar situation with DS the first day it was out. Once it was explained to people, it seemed to cease to be a problem.

GS: Can you take readers inside those meetings with Sony, where allocation was discussed? Is it always a tense subject? What does Sony look for from its retail partners?

JG: We've had a very long and healthy relationship with Sony. I think we both know each other's strengths, and they've always identified us as a retailer that does very well introducing new technology.

I feel like the allocation we received for launch was fair, based upon the size of the company.

GS: Any reaction to EB sell-through from Sony.

JG: I think Sony was very pleased with our sell-through over the weekend, and I think they're very pleased with our high ratio of software sales. So I think that they'll look at that overall performance, and I think that we should feel pretty confident that we'll continue to get a pretty nice allocation of the follow-up shipments.

I think our relationship with them has always been very professional, and it's been very much centered around how we work together to build the business for both of us. I think if a company like EB didn't exist, it would probably cost them a lot more money in marketing to help introduce their products.

GS: How do you keep your staff focused on other hardware--specifically the DS--during these exciting opening weeks of a new product launch?

JG: You have to qualify every customer that comes through the door, because the reality is that it's a relatively small percentage of the total gaming population that is buying the new technology when it first comes out.

So, you want to identify what the customer's needs are. It's a significant part of our ongoing training program and communication with the stores.

GS: It sounds like you play to your existing strengths rather than overcompensate.

JG: Yes, exactly.

GS: Have you noticed an increase in store traffic, in foot traffic?

JG: There was a significant increase in traffic last week.

GS: All PSP-related?

JG: Well, for a couple of reasons. One, it was the week before the holiday. And because of the launch of the PSP.

GS: Overall, what has foot traffic been like for EB locations during the early months of 2005?

JG: I would say traffic the last few months has been up slightly over last year, which I think is probably consistent with what most retailers have experienced.

GS: Does it have anything to do with there being a shortage of hardware in the channel in the back half of last year? Are customers that may not have spent money then now circling back?

JG: There certainly has been a benefit in the first few months of this year from the shortage of hardware late last year. Particularly, we've been getting a very good flow of PS2s.

GS: And Xboxes?

JG: The flow of Xboxes has been not quite as strong, but it's still adequate enough that our unit sales are up over last year.

So, I think hardware sales have been strong for two reasons. One, I think that there is a bit of a backup in demand from last year. But also I think the $149 price point on the PS2 Slim, well, that's a very attractive price point with a very attractive new system. We have a lot of existing PS2 owners coming in and upgrading to the new Slim version.

GS: What do you think the PSP price point at $249 is telegraphing to consumers?

JG: Well, you're getting quite a bit for $249. There are a lot of good accessories in the pack. For instance, you get a movie.

I think that the first million-plus people who are in the market for that are less price-sensitive, and certainly they are willing to pay for the bundle. My guess is that we'll probably see a core unit at some point in time--in the near future at a lower price point--but we haven't gotten any indication from Sony just yet on what their pricing plans are. It's just an assumption on my part.

GS: Currently, Sony is clear about promoting the PSP as a gaming platform first. But after other functions come online, does EB's relevance as an outlet for the unit diminish?

JG: Well, I think it's first and foremost a gaming machine, and it always will be a gaming machine. I think the fact that it plays music and movies are nice features, but you're not going to buy that. As a consumer, you're not going to go out and say, "I want to buy an iPod," or something like that, and then change your mind and buy a PSP. You're going to buy a PSP because it's a great game machine, and it also plays music.

Our relevance [comes] from the fact that we're a great game retailer, and Sony's a game company, first and foremost. It's going to be, first and foremost, a game machine. I think that our strengths are still tied together very closely.

GS: From your perspective, how revolutionary, if at all, is the PSP?

JG: I think it's very revolutionary. What we're seeing here is a repeat of 1995. Then, when Sony introduced the PlayStation, they introduced it as an entertainment system for all ages. If you go back and look at the video game business prior to that, it was primarily a console-driven business for kids and teens. When you look at the portable business up until now, it's been basically for kids and young teens. [Now], Sony's come out and said their target customer for the PSP is 18- to 34-year-olds. And that's really what they did with the original PlayStation.

That's what grew console business from being a $2 to $3 billion a year business in the US to what it is today. I think we have the same opportunity here with portable.

The PSP is a revolutionary product that is going to greatly expand the portable business, which helps the overall gaming business.

GS: What could derail this potential for Sony and the game industry?

JG: I think it's important for them to follow up with adequate quantities to continue to feed the market. There's a very healthy lineup of software titles for it and a lot of third-party support, which is great. We're also going to start to get some movies next month.

So I think it's all about execution now. If Sony continues to ship units into the market on a regular basis and continues to get new software, I think we'll do very well.

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