Gamestop – company overview part 1

Well, before I lost my ENTIRE database.. I had begun posting on of my senior papers.  This paper focused on one of the more successful companies in this economic uncertainty… Gamestop.  Below is part one of my paper.

Gamestop – Strategic Outlook 

      Gamestop is currently the largest video game retailer in the world.  Globally, Gamestop operates over 5,100 stores and continues to add new stores constantly (Reuters Financial Website).  This company also operates two online retail websites called Gamestop.com and EBgames.com. It also owns a leading multi-platform gaming publication called Game Informer. GameStop’s primary function is to sell both new and used video game software, hardware, and accessories from the leading game companies including Microsoft, Nintendo, and Sony.  This company also sells PC software, accessories, and other related merchandise including toys, cards, and movies (Reuters Financial Website). This paper explores what Gamestop should do strategically over the next decade; I will argue that the most effective steps for this company to take will be continued national and international expansion, a larger online presence due to increased competition, and a larger focus on the used videogame market. 

      The main goal of Gamestop is to be the leader in both new and used video game and merchandise sales.  The objectives of this company include a “Deeper, Wider, Longer” approach to reach customers (Gamestop – Investor Relations).  This is a proprietary strategy Gamestop has implemented to maximize exposure and profit potential from the company’s products. 

      The Deeper portion of the strategy concentrates on three factors.  First, there are seven viable platforms to generate sales.  These platforms include, Xbox 360, Playstation 3, Playstation 2, Playstation Portable (PSP), Nintendo Wii, Nintendo DS Lite, and the PC (Gamestop – Investor Relations).  The second factor of the deeper approach is the variety of price points available. These price points, which range from $129.99 to $599.99, have been designed to reach a larger number of customers ranging from budget shoppers, to high end customers (Gamestop – Investor Relations). The third portion of the deeper approach is the merging of technologies.  More of the systems are becoming interactive with each other, which is allowing cross platform sales to emerge.  For example, games designed for the Nintendo Wii can now interact with the Nintendo DS Lite and vice versa.  This cross platform interaction opens up further options for increased sales and revenue.

      The Second piece of GameStop’s objectives is the wider approach.  This approach exists to appeal to the ever expanding video game customer.  Over the past decade, there has been a shift in the video game industry from what was once referred to as “hardcore” gamers to include what is not known as “casual” gamers.  Gamestop wants to use a wider approach to appeal to casual gamers and hardcore gamers alike. 

      The Last piece of GameStop’s objectives is the longer approach.  This approach deals with the increasing longevity of console cycles.  Microsoft and Sony are both increasing the length of time in between console releases from the once standard 3-4 years to 6-10 years.  These longer cycles will allow developers to “extract all the power the systems have to offer” over their lifetime, and allow game developers, publishers, and Gamestop to achieve a larger Return on Investment (Gamestop Investment Annual Meeting).

      Although Gamestop is currently the leader in the videogame market, Gamestop must be prepared for constantly increasing competition as this market continues to grow.  GameStop’s direct competitors include Amazon.com, Best Buy, and Toys R’ Us (Yahoo Finance Website).  Gamestop has the advantage of having smaller more centralized stores which can easily be placed in shopping centers throughout neighborhoods, but must compete with the more the popular brand names of Toys R’ Us, and Best Buy.  It must also compete with the price discounts available through the online discounts offered by Amazon.com.  Other popular retail chains including Wal-Mart, Target, Circuit City, and Fry’s Electronics are also attempting to increase their market share in the industry and trying to directly compete with Gamestop by offering competitive pricing and discounts.  Gamestop has used its used videogame sales as a huge advantage against its competitors, by allowing its customers to trade-in their old video games for either a discount on different games or for getting cash back.  Gamestop furthers this advantage over its competitors by reselling the games that have been traded in.  This allows the company to gain a higher profit margin off of used game sales than new game sales, while being able to offer games at a cheaper price than the competition (Next-Gen Website).