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GameStop details a bright (profitable) future with DLC
During today's presentations at the 18th Annual BMO Capital Markets Digital Entertainment Conference, GameStop head chairman Dan DeMatteo (alongside CEO Paul Raines, CFO Robert Lloyd, and investor relations director Matt Hodges) spoke to the future of the top video game retailer in North America. After detailing cannibalistic markets (terrifying!) and market share (isn't business about taking, not sharing?) for 25 minutes, the crew finally got to the Q & A session, where one audience member stood up and asked DeMatteo to clarify GameStop's DLC distribution agreements with Microsoft and Sony. "I won't get into the details of the agreements, but obviously we get paid for selling the digital content. We get paid less than what we would get paid for a typical new game [retail game], because we don't have inventory carrying costs, shipping costs, etc. But needless to say, we believe it will bring operating margins similar to new games," he responded, indicating a perhaps unsurprising low return on in-store DLC sales. Still, DeMatteo sees good reason for continued sales of digital content. "We see it as additive. It's additive for us. It's additive for Sony, for Microsoft, and it's additive to the publisher. The amount of add-on content now being developed for the big games is just phenomenal. You got a new level coming out for Halo: Reach in December, we have new Call of Duty map packs coming after launch, etc. We look at our ability to sell that to the original consumer -- given that we know who bought the original copy -- to be extremely strong," he explained, referring to his company's ability to track individual customer's purchases via the Power Up Rewards card. And in the coming years, GameStop intends on becoming a much larger player in the digital realm. We expect to have market share of DLC much like we have market share of boxed product," he assured attendees.
GameStop appoints new CEO, promotes several executives
Gamestop seems to have decided that all of its executives needed promotions. Former CEO Dan DeMatteo (last seen talking up EA Online Pass) is now "Executive Chairman" of the company, with J. Paul Raines (formerly COO) now stepping up to the CEO position. Executive Vice President Tony Bartel will now occupy the new position of "President," with Robert Lloyd (formerly Senior Vice President and Acting Interim CFO) as CFO. Michael K. Mauler is now EVP, GameStop International. It's like musical chairs, but there's a chair for everyone playing, and it's much softer than the one you're sitting in. DeMatteo suggested that the moves would help GameStop's goals of "expansion into new markets and continued focus on strategic initiatives such as our new loyalty program, downloadable content (DLC) marketing and sales, and the evolution of GameStop.com into a robust digital platform." Which, if all goes correctly, will bring in enough revenue to allow GameStop to create some more executive jobs. [Via IndustryGamers]
EA introduces one-time-use 'Online Pass' for sports games
EA just announced the next step of its "Project Ten Dollar" initiative, one that's likely to affect a lot of people much more deeply than the allure of some extra DLC. Starting with Tiger Woods PGA Tour 11, out June 8, EA Sports games for PS3 and Xbox 360 will include a title-specific "Online Pass" that enables access to "online services, features, and bonus content." If the code has already been redeemed (i.e. if you bought the game used) additional Online Passes will be available for (you guessed it!) ten dollars. Each game will include a seven-day free trial. The online services under the Online Pass vary by game, but an EA rep told us they can include basic online multiplayer, as well as group/league features, roster and playbook updates, downloads of user-created content (like Photo Game Faces) and tournament support. We'd think GameStop would be most upset about this plan, given that it's basically the destination for trade-ins of last year's sports games toward the new model, but CEO Dan DeMatteo offers a cheerful quote in the announcement. "GameStop is excited to partner with such a forward-thinking publisher as Electronic Arts," DeMatteo said. "This relationship allows us to capitalize on our investments to market and sell downloadable content online, as well as through our network of stores worldwide."
GameStop: Used game buyers uninterested in free DLC
We're usually pretty competent parsers of corporate quotes, but we may need some help on this one. Referencing the publisher practice of putting free DLC in new copies of games, GameStop boss Dan DeMatteo said on an investor call today that "we have learned that the second-hand user is a value-oriented consumer ... we don't believe that a $10 add-on piece of DLC is compelling to a used game buyer." So, they care about getting the biggest bang for their buck, but they just don't care about missing out on free things? Here's another one: "Publishers can participate in our used business by offering add-on content for the most popular used titles, creating a win-win situation for publishers, retailers and consumers," he said, according to Gamasutra. Wouldn't the win for publishers and developers be to make money every time someone bought the game they made? It may be that the statements are unclear, but it's also possible that we're just so unfamiliar with GameStop trying to be a team player that our primitive minds can't process it. Hard to say.
GameStop CEO: PS3, Wii could drop price, 'key' Nintendo title coming this year
For once, someone at GameStop wants customers to be able to pay less. Of course, the items CEO Dan DeMatteo thinks are overpriced happen to be consoles, which don't have much of a retail markup -- so dropping the price on them would only give consumers more to spend on stuff with bigger markups.The console most in need of a cut, according to CNBC's interview with DeMatteo? The PlayStation 3. "That price point is clearly an issue in this economy," DeMatteo said of the $399 PS3 price. And DeMatteo would prefer a $100 cut over a $50 cut when it does happen (which CNBC thinks will obviously be this E3). "I don't know that $50 gets you that much," DeMatteo said.The executive also sees the possibility for a Wii price drop as soon as demand drops. "I think [demand for] the Wii could slow down to the extent that Nintendo may want to cut the price," he says. "Nintendo has it within its arsenal to do that. The component costs have come down considerably. They used to break even on the Wii, but now they're making a considerable margin."If DeMatteo's prediction of a "key" Nintendo game out this year is true (and if it turns out to be a Wii game), the demand may stay steady. The CEO told CNBC, "They haven't given us any insight, but they have told us to reserve [shelf] space." Both CNBC and IGN speculate that it could be a new Wii Zelda. What about the Zelda game that we already know is coming out? Nintendo already told us about one. And it's coming out on a console with better sales than the Wii. Doesn't that count? [Image: Penny Arcade]
GameStop: Amazon trade-in program has zero percent chance of working
Thanks to advances in internet technology, inflammatory retorts between industry figures can now be developed and distributed at the speed of light. For instance, when Amazon announced today that it'd begun experimenting with a trade-in program for video games, GameStop CEO Dan DeMatteo formulated his response and fired it off to Edge Magazine in the blink of an eye: "I give the probability of this working at zero," he promptly declared.DeMatteo explained that Electronics Boutique attempted to apply the same mail-in trade offer that Amazon is working with several years ago, reaping unfavorable results. "With consumers, there is an immediacy for currency when they want to buy a new game," he explained. He also stated that -- okay, listen, we'd love to finish this post, but we've got this copy of Ty the Tazmanian Tiger 2: Bush Rescue sitting on our bookshelf, and if we don't trade it in within the next few minutes, we are going to totally freak out.
GameStop CEO: No 'end in sight' for Wii shortages
Speaking with GameDaily, newly-appointed GameStop CEO Dan DeMatteo (who was previously COO for 12 years) gave a rather disheartening prediction about the never-ending shortage of Nintendo Wii's. Said DeMatteo, "I don't see a near-term end in sight for Wii shortages, not unless they really ramp up supply. I think they've ramped it up 20 percent or so, but Nintendo is fairly cautious by nature. They ramped it up 20 and it's still evaporating." Much of the interview is refurbished from late August when he (then as COO) spoke with Gamastura about digital distrubition. Speaking of the used games business, DeMatteo offered a rather interesting argument by noting that gamers have been "conditioned that their video games have residual value, just like a car," later adding, "I think the argument that it competes with the new games is false. Imagine what new car sales would be like if you couldn't trade in your old car."
