The new generation of gaming consoles are selling very well, and retailer GameStop is one company that’s already benefiting from that success.
During a recent summit for its investors, GameStop revealed that its market share for sales of PlayStation 4 and Xbox One hardware and software is up significantly compared to the same point during the lifecycles of the PS3 and Xbox 360. The company, which specializes in selling gaming products, detailed its current performance for investors as well as explaining some of its plans for the future. With the PS4 and Xbox One accounting for more than 10 million consoles sold worldwide since November, and with software sales for these boxes far outpacing games from last gen, GameStop is in an ideal position to maintain its presence as the go-to place for interactive entertainment in the near term. Retail spending on games was $13 billion in the U.S. in 2013, according to market-research firm The NPD Group.
“GameStop made significant market share gain on next gen,” Sterne Agee analyst Arvid Bhatia wrote in a note for investors. “In the first four months since the launch of PS4 and Xbox One, GameStop’s hardware market share is up 38 percent and software market share is up 52 percent compared to PS3 and Xbox 360 over the comparable period in the last cycle.”
GameStop is comparing PS4 back to the November 2006 launch of PS3 and the Xbox One to the November 2005 launch of Xbox 360. Both of those mid-2000s hardware debuts came after GameStop purchased EB Games and consolidated most of the enthusiast-gamer market. This means that its growth this time around isn’t due to mergers. The company is likely just attracting new customers that might have previously got their products from something like Best Buy, Target, or Walmart or an independent gaming outlet.
The company also performed well despite competition from online in the form of Amazon and even from digital sales from Microsoft and Sony. For the first time, every retail game on both boxes is available digital on the relative platform’s store. For now, that doesn’t seem like it’s hurting GameStop.
This performance is an especially good sign for GameStop. The company relies heavily on the performance of its secondhand games, but interest in software for Xbox 360 and PlayStation 3 is waning faster than many people anticipated.
Even publishers such as the giant Electronic Arts noted that they have seen a dramatic dip in sales for their games on last-gen platforms. But EA wasn’t feeling too gloomy because its PS4 and Xbox One games are already starting to make up the difference.
Gamers are scooping up every big game that publishers are slowly dishing out for the new platforms.
In March in the U.S., the PS4-exclusive action release Infamous: Second Son outsold competitors like South Park: The Stick of Truth, which is on Xbox 360 and PS3. This is despite that the U.S. has tens of millions of those older systems and only a few million PS4s. It was the same for Xbox One’s Titanfall. The sci-fi shooter was the top-selling piece of software for the month in the U.S. at retail.
As the market leader for next-gen sales, that’s all great news for GameStop.
It’s not all next-gen consoles for the retailer. It also told investors that it expects it can grow its market from $23 billion annually to $260 billion with its new stores. That includes expansion for its Simply Mac locations that focus on Apple products as well as its wireless retail outlets Spring Mobile and Cricket. In all, the company expects to open up 300 to 400 new stores across its entire portfolio.
GameStop Corp., a Fortune 500 and S&P 500 company headquartered in Grapevine, Texas, is the world's largest multichannel video game retailer. GameStop's retail network and family of brands include 6,544 company-operated stores in 15 co... read more »
Tony D. Bartel is President of GameStop, a role he has held since June 2010. He served as the Executive Vice President of Merchandising and Marketing.
Prior to that, Mr. Bartel was the Senior Vice President of International Finance,... read more »
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