DICE 09: GameStop's Raines Talks 'Bullish' Retail Forecast

In a notably positive DICE Summit speech, GameStop COO J. Paul Raines claimed that "every indicator points to continued growth in gaming", suggesting of the retail games market in 2009: "We're bullish and optimistic."
"I've been told to be light on my feet, in case any shoes come flying at me," said GameStop chief operating officer J. Paul Raines as he addressed the DICE Summit in Las Vegas. "I'm here to engage you in a conversation," Raines continued, praising the assembled developers for their achievements at the previous night's award ceremony, but also pointing out that the opinions and assumptions of those in the game industry are not always aligned with the opinions of game consumers and their preferences. The COO laid out some statistics, boasting about GameStop's more than 6,200 stores across 17 countries, with 400 additional stores planned for 2009. "Every indicator points to continued growth in gaming," Raines said, despite some current uncertainty. "We're bullish and optimistic." Consumer Demographics When asking consumers where they prefer to shop, GameStop found that 35 percent of "heavy users buying for self" preferred GameStop, far ahead of nearest competitor Best Buy; in the "females buying for others" category, GameStop was still the leader ahead of Best Buy, but only at 26 percent to Best Buy's 22 percent. GameStop's idea of the "heavy user" is a male from age 13-30 who spends more than 20 hours a week on game, and prefers shooters and MMOs. But the "heavy buyer" category is different to "heavy user," Raines said -- that consumer block is 43 percent female, with 47 percent over the age of 30 and 63 percent married. Beyond that, 40 percent of "new gamers" are female, and 47 percent are over the age of 35. In Defense Of Used Games Gamers place a high importance on being able to borrow and lend games, Raines said -- and they place a high value on portability. "Often, gamers borrow a game in a series, to determine if they want to buy the next game when it comes out," he said. Unsurprisingly, the COO extended that to buying and selling used games, which "ranked very high on the list of preferences for consumers." "I know that at this conference, there is some discussion about pricing," Raines noted. "I think this is a very similar discussion, the fact that customers can very inexpensively get into a new genre...and then they can go out and buy new games in those genres." "Do used games hurt sales of new releases?" Raines asked, answering, "No." He explained that only 4 percent of sales of "new releases" are used games. Furthermore, GameStop has seen 7 percent compound growth in new games consistently year-on-year (this figure is, however, lower than GameStop's overall compound growth figures, based on earlier slides shown). Selling New Games Reinforcing his commitment to new game sales, Raines highlighted GameStop's reservation policy, which attempts to secure money from consumers in advance of games' release. He also noted that, in the first week of sales, collector's editions have strong pickup -- "Game players like unique content," he explained. Four games -- Metal Gear Solid 4, Gears of War 2, Fable II, and Mortal Kombat vs. DC Universe -- all had a 21 percent or higher proportion of collector's edition revenue as a factor of total first-week revenue, and Mortal Kombat's collector's edition revenue was a huge 55 percent of total. GameStop also does extensive pre-launch promotion for certain major games. In preparation for Call of Duty: World at War, GameStop held events and did aggressive presales, and saw huge early sales gains over the previous year's Call of Duty 4: Modern Warfare. In fact, Raines said, GameStop alone was responsible for 90 percent of World at War's sales growth from its predecessor. Beyond Hardcore Gaming is "more than just hardcore gaming," said Raines, showing what he describes as the historical progression of gaming, which began with action games, then led to family games, then music games, fitness games, and others. Those alternative genres can serve to "get customers into the habit of video games," he added, which can benefit the industry as a whole. "We think that growth will continue to be in this industry, and it will continue to be in GameStop," Raines said, describing GameStop as an "entrepreneurial company," and, following its acquisition of EB Games, the "only retailer dedicated to video games." "If you compare this industry to other industries, the biggest difference is the level of innovation," he went on. Wrapping up his talk, Raines stressed the importance of having specialty retailers to drive growth for industries, including the benefit of creating representation in countries that traditionally don't have game-only retailers. And, he reminded the audience, even in difficult economic times, GameStop will never lower its emphasis on video games at the expense of other products, like other retailers might do -- "It's the only business we're in. ...We want to be the developer's friend; we want to be the developer's supporter."

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