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Electronics Boutique Filing Reveals Pre-Owned, PSP Trends

An SEC-filed quarterly financial report for Electronics Boutique Holding Corp, parent company of EB Games, has revealed a wealth of financial information for the company,...
An SEC-filed quarterly financial report for Electronics Boutique Holding Corp, parent company of EB Games, has revealed a wealth of financial information for the company, which has nearly completed its proposed merger with GameStop Corp. Particularly interesting revelations in the lengthy statement were solid figures on how much of EB's business derives from sales of pre-owned games. The profit from pre-owned titles accounted for 46.1% of EB's business in the second quarter of 2005, an increase from the 45.6% in the second quarter of 2004. The profit was even more impressive considering how disproportionate it was to the volume of used-game sales, which made up only 28.7% of total sales for the second quarter. Other interesting information came out on game hardware sales trends, which are decreasing in margin due to new systems being introduced. Profit as a result of hardware sales decreased slightly from 5.7% in Q2 2004 to 5.2% in Q2 2005; EB cites the launch of the PSP as a reason, saying that although Sony's new handheld has been a popular seller, margins are smaller early in a system's life compared to later. As the coming new generation of systems all launch within a year of each other, the hardware margins may become even lower, though high sales of the non-saturated hardware should help to compensate. Finally, the report cites particular hardware and software drivers for the holiday season, mentioning some already-released and some forthcoming games, commenting: "We anticipate the release of the new Xbox 360 and related software titles during this year's holiday season. Among new software titles expected to be released during the third and fourth quarters are Madden 2006 for multiple platforms, Nintendogs for the Nintendo DS, Need for Speed and NBA Live for multiple platforms and Socom III for the PS2."

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