Gaming sales are slowing down at GameStop, but the company is quickly transitioning into a one-stop shop for hardcore enthusiasts who want more than just the games.
GameStop‘s collectibles business rose to $212.4 million last quarter, which is a year-over-year increase of 27.8 percent. The world’s largest gaming-specific retailer credited the ongoing resurgence of the Pokémon brand for driving that growth. While consumers spent less money on games and hardware at GameStop, people still showed up to drop their cash on toys and apparel related to their favorite brands.
While the retailer still has a major hand in digital sales in the form of currency cards and people who want to pay cash for DLC, it’s the company’s ThinkGeek collectibles line that could represent its future in the same way that posters, collectible vinyl releases, and apparel has replaced much of the revenue for the music industry. So even for PC games that primarily sell through digital channels like Steam, GameStop could capture some of the secondary and tertiary revenue related to those products through collectibles that people wouldn’t normally buy through their standard digital-distribution services.
“The video game category was weak, particularly in the back half of 2016, as the console cycle ages,” GameStop chief executive officer Paul Raines said in a statement to investors. “Looking at 2017, technology brands and collectibles are expected to generate another year of strong growth, and new hardware innovation in the video game category looks promising.”
While Pokémon has never truly waned into irrelevance, it is experiencing a resurgence on the back of the Pokémon Go mobile app from last summer. That game was a cultural phenomenon that led to increased sales for the Nintendo games and all kinds of pocket-monster-related products, and GameStop’s purchase of ThinkGeek in June 2015 put it in a strong position to capitalize on that.
GameStop’s diversification over the last couple of years continued last quarter. While the company runs Simply Mac, Spring Mobile AT&T, and Cricket stores, its dedicated ThinkGeek collectibles stores are expanding in terms of the number of locations. GameStop opened 17 ThinkGeek locations around the world in last quarter alone. It now has 24 ThinkGeeks in the U.S. and 86 worldwide.
When you look at GameStop’s earnings for all of fiscal 2016, you can see just how important its ThinkGeek business is.
“The Collectibles business achieved the high-end of its $450 to $500 million revenue target, as sales increased 59.5% to $494.1 million in fiscal 2016,” the company reported in its earnings release.
So if you are buying all of your games digitally — even if you’ve cut GameStop out of that equation completely — the retailer still wants to offer something to you, and ThinkGeek is how it plans to do that.