GameStop

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GameStop Corporation
Type Public
Traded as NYSEGME
S&P 500 Component
Industry Retail
Founded 1984 as Babbage's
Dallas, Texas, United States
Headquarters Grapevine, Texas, United States
Number of locations 6,627 (2012)[1]
Area served Worldwide
Key people R. Richard Fontaine[2]
(Chairman International)
Daniel DeMatteo[3]
(Executive chairman)
J. Paul Raines[3]
(CEO)
Products Video games
Consoles
Accessories
Revenue Increase US$ 9.078 billion (2009)[1]
Operating income Decrease US$ 637 million (2009)[1]
Net income Decrease US$ 377 million (2009)[1]
Total assets Increase US$ 4.955 billion (2009)[1]
Total equity Increase US$ 2.723 billion (2009)[1]
Employees 17,000 full-time (2009)[1]
Divisions GameStop
EB Games
Babbage's
Micromania
Moviestop
Kongregate
Game Informer
Impulse
Website GameStop.com

The GameStop Corporation (formerly EB Games) is an American video game and entertainment software retailer. The company, whose headquarters is in Grapevine, Texas, United States,[4] operates 6,700 retail stores throughout the United States, Canada, Australia, Austria, Denmark, Finland, France, Germany, Ireland, Italy, New Zealand, Norway, Portugal, Puerto Rico, Spain, Sweden, and Switzerland. Both of the two stores in the United Kingdom failed to compete with existing Game stores, and were closed in 2011. GameStop launched a UK website the same day.[5] GameStop opened around 400 new stores for the 2009 business year.[6]

Operations[edit]

The company operates retail stores under the names GameStop, EB Games, Babbage's, Software ETC, Micromania, MovieStop, Planet X, and Mitochondria. In addition, the company runs three e-commerce websites (GameStop.com, EBgames.com and ImpulseDriven.com), Flash game site Kongregate,[7] Jolt Online Gaming,[8] and Game Informer magazine, GameStop's proprietary video and computer game publication. In addition to video and computer games, GameStop sells magazines, strategy guides, and other related merchandise. In the fiscal year ending May 2010, 48.1% of GameStop's profits came from the sale of used video game products.[9]

History[edit]

Logo of retailer Software, Etc. on a 5.25" floppy disk branded by the company

Babbage's[edit]

GameStop traces its roots to Babbage's, a small software retailer that started in Dallas, Texas in 1984. The movements that made Babbage's into GameStop started in 1994 with a series of mergers between Babbage's and several other software retailers.[10] A merger with FuncoLand stores (who owned Game Informer magazine) followed in 2000, as well as one with Electronics Boutique in 2005. Internationally, there was a merger with the Gamesworld franchise in Ireland and in the United Kingdom in 2008, and a merger with French-based Micromania.[citation needed]

NeoStar Retail[edit]

When Babbage's first merged with Software Etc. in 1994,[10] the combined company was named NeoStar Retail, but the two halves continued to operate as if they were separate entities.

The combined management of the newly formed entity developed a classic case of the right hand not knowing what the left was doing. This ultimately caused NeoStar to go into Chapter 11 reorganization in early fall of 1996. At this point the company had approximately 800 stores in the United States. Several potential buyers of NeoStar's assets emerged.

Barnes & Noble[edit]

On the last day of the manager's conference there was a special guest during the meeting. Leonard Riggio, the head of Barnes & Noble, announced that he and a group of investors were going to put in place the financing to keep the company afloat, and get new merchandise into the stores in time for Christmas (at this point, the company's creditors were owed so much back revenue that they were no longer shipping anything to NeoStar).

In a personal comment during the address, Riggio stated that he "hated" the name NeoStar Retail, and thought that the merged Babbage's/Software Etc. should have been called Babbage's Etc. He said should his buyout bid be successful that the company would be renamed.[citation needed]

From the potential buyers, the judge desired to accept the offer from the one that would keep the most people working, preserve the most competition and consumer choice, and be the most stable. Ultimately, Riggio's offer was accepted on the day before Thanksgiving. Barnes & Noble, through B. Dalton, was the original owner of Software Etc. A new management team largely composed of former Software Etc. executives and longtime associates of Len Riggio was put in place to run Babbage's.[citation needed]

On November 12, 2004, GameStop spun off from Barnes & Noble. At that point the company had approximately 800 stores in the United States. Due to Riggio's involvement, GameStop and Barnes & Noble employees still received employee discounts at each other's stores, despite the companies being completely separate. Both companies chose to terminate this employee discount arrangement on September 1, 2010.[citation needed]

In October 2009 Leonard Riggio, chairman of the board at Barnes & Noble and director at GameStop sold 2.3 million shares of GameStop for $60.2 million.

1996 closures[edit]

On November 29, 1996, approximately 100 Babbage's and Software Etc. stores closed their doors. The remaining merchandise from these stores was shipped to 100 of the remaining stores that would participate in a massive "going out of business" sale throughout December. These 100 stores would close for the last time on Christmas Eve, and all merchandise left would be shipped back to corporate headquarters by New Year's Eve. The company would be pared back to about 600 of its best performing stores.[citation needed]

Mergers and Acquisitions[edit]

EB Games[edit]

On April 18, 2005, GameStop and EB Games announced that they had entered into a "definitive agreement and plan of merger". After shareholders and US regulatory agencies approved the merger, it closed on October 10 of that year with the agreement that the companies would be run separately, but not as they had been in the past. To ease the transition process of the two companies being run as one, it was agreed upon that the two separate entities would not merge operating activities until the new fiscal year which starts February 1; this also included maintaining two separate distribution centers. At the beginning of the following year, operating activities of the two companies was integrated, starting with the realignment of districts and the closure of EB's West Chester, PA corporate office.[citation needed] On April 19, 2005, The GameStop Corporation agreed to buy Electronics Boutique Holdings for $1.44 billion.[11]

Rhino Video Games[edit]

On January 4, 2007, GameStop Corp. officially purchased Rhino Video Games from Blockbuster and the stores were renamed GameStop during a remodel period lasting through late Spring 2007.[citation needed]

Spawn Labs and Impulse[edit]

On March 31, 2011, it was announced that GameStop Corp. acquired the peer-to-peer playing service, Spawn Labs, and the game distribution platform, Impulse from Stardock.[12]

Foreign acquisitions[edit]

Netherlands[edit]

On April 6, 2008, GameStop Corp. officially purchased 51 stores from the Netherlands-based entertainment company Free Record Shop. Throughout the summer of 2008, most of the stores were rebranded to GameStop.[13]

France[edit]

In October 2008, GameStop announced it would purchase France’s leading video-game retailer, Micromania, from the L Capital equity fund for $708 million, including debt.[14] The purchase of Micromania added 332 locations (boosting locations in Europe to 1,077 total) and expanded GameStop into France for the first time. It was announced that Micromania President Directeur General Pierre Cuilleret would keep his current post.[15][dead link] GameStop financed the purchase with cash on hand, credit, and a $150 million loan from Bank of America.[16][dead link]

This acquisition took place in November 2008.[citation needed]

Other brands and concepts[edit]

Game Informer[edit]

Game Informer is a magazine owned by GameStop, Inc. and primarily sold through subscriptions which can be purchased at GameStop locations. Purchasing a subscription to the magazine also gets the subscriber the PowerUp Rewards card, GameStop's customer appreciation card. This increases all store-credit trade values by 10%, discounts all used accessories and games by 10%, gives new PowerUp members a coupon for 'Buy 2 Get 1 Free' on pre-owned games / accessories, enters them twice for the Epic Rewards Giveaway for each purchase, gives the cardholder opportunities to gain points with their purchases and redeem them for rewards and gains them access to special content on the Game Informer website.

GameStop PC Downloads[edit]

GameStop PC Downloads, formerly called Impulse, is a digital distribution service run and operated by GameStop. Originally known as Impulse when owned by Stardock, it was sold to GameStop in 2011 and rebranded as GameStop PC Downloads, with the Impulse client renamed as the GameStop App. Under the ownership of GameStop the service has had a redesign, and sells games that use other platforms such as Steam while also selling games that use its own proprietary DRM solution Impulse:Reactor. Also the service is one of the only other digital service that sells Valve's games (other than Steam and GameFly) for PC and currently is one of the most popular place to buy most EA games that use Origin.[citation needed] The purchase of Impulse has allowed GameStop to sell more PC games to customers since previously it didn't focus on PC.[citation needed]

Trade-ins[edit]

GameStop sells used games that are traded in by customers for store credit or currency (20% less than credit ).[17] This practice has recently come under fire from game publishers and developers as they make no money from the transaction.[18]

GameStop TV[edit]

GameStop TV is the in-store television network run by GameStop in partnership with CBS Outdoor.[19] GameStop TV features programming designed to speak to the consumers shopping in GameStop stores. Each month brings content segments about upcoming video game releases, interviews, tips and tricks as well as lifestyle content provided by CBS.

Pre-order bonuses[edit]

Game Publishers have begun to obtain more pre-orders by including exclusive in-game bonuses, available only if the player pre-ordered the game. Bonuses typically include extras such as exclusive characters, weapons and maps. For example, GameStop included an additional avatar costume for Call of Duty: Black Ops when it was released in November 2010, and a pictorial Art-Folio for Metroid: Other M. Soundtracks, artbooks, plushies, figurines, posters, and t-shirts have also been special bonuses.

GameStop Kids[edit]

A new store concept, GameStop Kids is a separate store aimed at a younger audience. The store only sells E rated titles through T-rated titles, accessories and toys. The first store opened in October 2012 at Grapevine Mills, Dallas Texas; one of the stores is also in the Great Mall of the Bay Area in Milpitas, California.[20]

Criticism[edit]

Opened copies of game titles[edit]

The company has a policy where some copies of new games upon release are "gutted."[21] This means that while sealed copies of the new release are kept behind the counter, one copy is opened and put on display to be advertised, with the game filed behind the counter. Consumers may reach for the opened copy and purchase at the counter, whereupon the consumer will receive a factory-sealed copy from behind the counter. If the opened copy is the last copy of the new game, it is sold at regular price.

GameStop's check out policy allows employees "to check out one item of store merchandise for personal use for up to four days", with the intent being to allow the employee to evaluate the game and learn about its content. This check out policy applies to used games only, having changed from allowing the use of both new and used games. However, the Federal Trade Commission may be in the process of investigating the selling of gutted games as new to determine if any laws were broken.[22][23]

GameStop came under fire from critics when customers discovered that content had been removed from the original packaging of Deus Ex: Human Revolution.[24][25][26] Gamestop had instructed employees to remove coupons for a free copy of Deus Ex: Human Revolution on OnLive, a cloud gaming service, valued at $50. Gamestop stated that the coupon promoted a competitor of one of its subsidiaries, Spawn Labs and Impulse, which it had recently acquired in April 2011.[24] Later, GameStop entirely removed the PC version of Deus Ex: Human Revolution from its stores.[27]

Used games market[edit]

GameStop has frequently been criticized by game developers and publishers for the retailing of used game titles.[28] By reselling used copies at a small discount on the same shelf space as new copies of the game, it is argued that GameStop is taking profits directly from organizations such as developers and publishers which are solely dependent on their intellectual property for revenue. In effect, this means that companies such as GameStop can resell used copies of a game within days of the title's release and keep all of the profit, thereby cutting directly into the critical initial sales which would otherwise go to publishers and developers. It has been suggested by industry insiders that this directly results in increases to the retail cost of new games.[29]

As a contrast, digital distribution methods such as Valve Software's Steam, Electronic Arts' Origin, GamersGate, Microsoft's Games for Windows – Live and OnLive allow users to download and use an instance (copy) of a game title that is unique to that particular user without the physical media that can be resold. Based on factors such as purchase time frame and the user's geographical location, games purchased through digital distribution methods may or may not be less expensive than physical copies purchased at brick and mortar retail stores.

See also[edit]

References[edit]

  1. ^ a b c d e f g "2009 Form 10-K, GameStop Corporation". United States Securities and Exchange Commission. 
  2. ^ "GameStop Management". GameStop Corporation. Retrieved 2010-06-11. 
  3. ^ a b "GameStop Announces Key Executive Promotions" (Press release). GameStop. June 2, 2010. Retrieved 2010-06-03. 
  4. ^ ♙"Contact Us." GameStop. Retrieved on December 8, 2009.
  5. ^ "GameStop gets serious". MCV.com. 2011-07-29. 
  6. ^ "GameStop Plans 400 New Stores". Retailer Daily. 2010-03-18. Retrieved 2012-03-28. 
  7. ^ "GameStop Announces Agreement to Acquire Kongregate Inc". Marketwatch.com. Retrieved 2012-03-28. 
  8. ^ Tom Ivan (2009-11-20). "GameStop Acquires Jolt Online Gaming - Edge Magazine". Next-gen.biz. Retrieved 2012-03-28. 
  9. ^ "MarketWatch.com". MarketWatch.com. Retrieved 2012-03-28. 
  10. ^ a b Jones, Kathryn (August 26, 1994). "COMPANY NEWS; Two Software Peers Combine Their Specialties". The New York Times. Retrieved May 3, 2010. 
  11. ^ "GameStop to Acquire Rival Video Game Retailer". 
  12. ^ "GameStop Acquires Game Streaming Startup Spawn Labs And Distribution Platform Impulse". TechCrunch. 2011-03-31. Retrieved 2012-03-28. 
  13. ^ "GameStop Buys Norway’s Free Record Shop". Kotaku.com. 2008-03-31. Retrieved 2012-03-28. 
  14. ^ "France: Gamestop Acquires Chain". The New York Times. October 2, 2008. Retrieved May 3, 2010. 
  15. ^ http://www.forbes.com/feeds/ap/2008/10/01/ap5493728.html.  Missing or empty |title= (help)[dead link]
  16. ^ [1][dead link]
  17. ^ Henry. "GameStopping". 3xGamer. Retrieved 2009-10-25. 
  18. ^ Reisinger, Don (November 16, 2010). "Dev: Used games sales are 'destructive' to the industry". cnet. Retrieved February 26, 2011. 
  19. ^ "GameStop TV". 
  20. ^ Thompson, Steven R. (2012-10-25). "GameStop to debut new GameStop Kids stores". Dallas Business Journal. Retrieved 2012-11-02. 
  21. ^ "Joystiq - Gamestop shenanigans sell open games as 'new'". AOL Inc. Retrieved 2011-09-01. 
  22. ^ "Kotaku - GameStop Sells Played Games As New, Sources Say, Practice Could Be Illegal". Kotaku. Retrieved 2011-09-01. 
  23. ^ "Joystiq - GameStop's employee checkout policy may be illegal". AOL Inc. Retrieved 2011-09-01. 
  24. ^ a b Hachman, Mark (2011-08-24). "Gamestop Confirms Removing OnLive Coupons from 'Deus Ex'". Pcmag.com. Retrieved 2012-03-28. 
  25. ^ Mitchell, Richard (2011-08-24). "GameStop intentionally removing Deus Ex OnLive coupons from retail PC copies". Joystiq.com. Retrieved 2012-03-28. 
  26. ^ Kuchera, Ben (2011-08-24). "GameStop opening Deus Ex boxes, removing free game code". Arstechnica.com. Retrieved 2012-03-28. 
  27. ^ "GameStop responds to Deus Ex controversy by pulling it from shelves". Ars Technica. 
  28. ^ "Developers Respond to GameStop's Used Games Market Comments". Gamepolitics.com. Retrieved 2012-03-28. 
  29. ^ "Pre-owned increases cost of games, cannibalizes industry, says Dyack". Gamesindustry.biz. Retrieved 2012-03-28. 

External links[edit]