GameStop Kiosks Will Tie Into Reservation Service, COO Says

But Raines didn’t specify what markets now feature the kiosks or how many stores. Nor did he specify how quickly the chain plans to expand the kiosks to additional markets. Raines didn’t field questions from attendees and GameStop didn’t immediately respond to a request to elaborate on the initiative.

Reservations help drive the sales of new games, in part because GameStop has such a large market share on new releases, Raines told the Summit. He said GameStop had a 49 percent share on sales of the Xbox 360 version of the game Skate 2 from Electronic Arts, a 66 percent share on sales of Take-Two Interactive’s MLB Front Office Manager for the 360, a 72 percent share on sales of Konami’s Elebits: The Adventure of Kai and Zero for the Nintendo DS, and 70 percent of sales of Namco Bandai’s Afro Samurai for the 360 in January.

Raines was also the second GameStop executive in two weeks to defend the retailer’s used game/trading business. The ability to buy and sell used games is important to GameStop customers and even helps drive the sale of new games, he said. “Consumers tell us that they value the ability to buy used games” because, for one thing, it enables them to inexpensively try new games, Raines said. Fourteen percent of new game sales at GameStop “are funded by trade” credit in the first 60 days of a title’s availability, and “70 percent of trade credits are applied to the purchase of a new game,” he said. Furthermore, “only 4 percent of GameStop’s used sales are current titles,” he said.

The comments elaborated on a claim made by Mike Mauler, GameStop senior vice president of supply chain and refurbishment, in a keynote at the Entertainment Merchants Association’s first GameSupply conference in Burbank, Calif., one week earlier (CED Feb 13 p7). Cannibalization of new- game sales by those of used product “really doesn’t happen,” Mauler said. Most major game publishers haven’t publicly criticized GameStop, one of their largest customers, over used games. But some smaller game makers have been more vocal, claiming used game sales do cut into sales of new games. It’s believed that game makers don’t get a percentage of the sales from titles traded into GameStop stores.

“Another opportunity” for GameStop sales growth is in sales of collector’s editions of games that are sold at a higher price than standard versions, Raines said. Thirty-six percent of GameStop’s sales for the Konami game Metal Gear Solid IV were the collector’s version its first week out, while 55 percent of sales for the Midway game Mortal Kombat vs. DC Universe was the collector’s edition in week one of that game’s release, he said.

D.I.C.E. Summit Notebook

About 58 percent of the U.S. population over 13 years old now play videogames, an increase of three points since March 2008, NPD analyst Anita Frazier said Friday. Moms are becoming an increasingly important segment of the game audience and women control about 50 percent of industry spending on videogames now, she said. The videogame industry isn’t recession-proof, but she said after seeing basically flat results from 2002-2005, total industry sales rebounded and have been on the rise ever since -- including 2008, when sales rose 17 percent “despite all the economic turmoil,” she said. Nintendo’s Wii “shepherded in mainstream acceptance” of videogames, she said. Agreeing with comments made by Electronic Arts CEO John Riccitiello at the Summit one day earlier (CED Feb 20 p4), she said not every company “made the right bets” entering the current console cycle and that’s why we're seeing lots of game delays and job cuts of late. The economic downturn is making game companies “prioritize” what’s most important to them, and that’s a good thing, she said. Frazier also agreed with Riccitiello that PC game sales aren’t struggling as much as many believe, saying most sales data doesn’t factor in subscriptions, downloads, micro transactions and ad-supported revenue models. PC game sales are likely twice as large as retail sales would indicate, she said.

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The economy is a “challenge” for the videogame industry now and there seems to be no room for “multi-million dollar experiments” when it comes to new games, Tom Prata, senior director of project development at Nintendo of America, said Friday. But he warned there’s risk in the absence of game industry innovation. Some of the innovation around Nintendo’s Wii console now is with WiiWare downloadable game development, he said, noting there are now about 70 WiiWare titles available for download to the Wii console. “Ninety percent of the games made for WiiWare” are from third parties, he said, adding that only two of the top 20 games have been made by Nintendo. There are challenges in digital game distribution as well, he said, noting digital distribution doesn’t necessarily translate into quality games. “Quality matters,” he said. Storage is “a challenge” also on the Wii, Prata conceded. But he said “we have not been deaf to the complaints” about the lack of internal Wii storage that’s forced many console owners to delete games they've already downloaded to make room for new games and other content. The company “is working on a solution” that includes SD cards, he said, without elaborating. Prata also showed video footage of a new Nintendo animation/memo software program, Moving Memo Book, that will be made available for the DSi as a downloadable DSiWare offering.

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The secrets to Capcom’s current success in making games for a global audience include keeping staff turnover under 10 percent per year, Creative Director Jun Takeuchi said. Also key, he said: Maintaining the ability and cash reserves to increase staffing by 10 percent each year, keeping development cost fluctuation within 10 percent, keeping investment in new IP within 20 percent of the total development budget, and not setting set un-achievable targets. Capcom’s recently imposed goal was to expand North American and European sales to 70 percent of its total sales, he said. That decision was made because Japan only represents about 6 percent of the total global videogame software market, he said.