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GameStop: Wii Fit To Be Most Significant Wii Demand Factor

Speaking in an especially hardware-focused conference call with investors following its record Q1 results, GameStop execs said that GTA IV did double hardware sales week to
Speaking in an especially hardware-focused conference call with investors following record Q1 results, GameStop execs said that GTA IV did double hardware sales week to week, and said Wii Fit would be "the most significant addition that will drive hardware sales" of the Wii. In response to an analyst's question who said that the most recent NPD U.S. sales results didn't show as remarkable a jump in hardware sales following the release of GTA, company COO Dan DeMatteo said that in fact, during the five reported days of GTA sales, "we saw a significant increase week to week on both Xbox 360 and PS3 -- somewhere near a doubling week to week." On other opportunities for hardware demand growth, company CEO Dick Fontaine added that "we feel pretty damn strongly that Wii Fit itself going to be the most significant addition that will drive hardware sales." "It's going to drive even more demand for the Wii, while we've been selling out everything that we get," he added, saying that motivating users to get the Wii console was a win/win all the way around, "as long as we can get the supply." Speaking to that point in response to a follow-up question, DeMatteo admitted that they have seen Wii supplies increase as Nintendo has said it increased production numbers by about 15 percent a month ago. But, he added, "supply has not caught up with demand, they can sell through in roughly 2 days" after GameStop receives a shipment. Asked about price cuts for various consoles, DeMatteo said that while Sony recently announced that they would not be cutting the price any time soon, "the truth of the matter is that we have been sufficiently happy with PS3 sales at its current price point," and expected Sony would only respond if sell through at its current point begins to weaken or lose more marketshare. For the Xbox 360, Fontaine said elsewhere in the call that the recent price cut in Europe has "significantly accelerated sales in all the European markets" that GameStop serves, and that "assuming again that they keep up with supply, that may be a harbinger of what they want to do in other markets downstream from Europe." The executives reiterated throughout the call that they expect hardware sales to beat 2007's already record setting levels, setting up "unprecedented demand for games in 2008 and 2009," and noted that while 2005-2006 saw a record 44 million consoles added to the installed base, 2007 alone saw 31 million added, and expected 32 million in 2008. In addition, the execs said they expected console lifecycles to be much longer than in previous years, especially given that in the past month, three of the top 20 best selling games were for PS2 -- a console, they pointed out, now in its eighth year.

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