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Topic
Top news source/blog that we're missing
Why do you recommend this news source?
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Rapid growth in Europe |
100% agree |
Rapid growth in Europe![]() |
100%
agree
3 votes
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Strong sales |
0% agree |
Strong sales![]() |
0%
agree
0 votes
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Downloadable games may kill revenue |
0% agree |
Downloadable games may kill revenue![]() |
0%
agree
0 votes
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Still at a premium |
50% agree |
Still at a premium![]() |
50%
agree
4 votes
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GameStop is competing with some of the world's largest retailers![]() |
50%
agree
6 votes
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GameStop Corp. (NYSE:GME) is a retail chain selling video game hardware and software. The company has expanded rapidly, growing its store count by 295% over the last 3 years, from 1,514 to 5,123[1]. With the acquisition of Electronics Boutique and its 2,000 stores in 2005[2], the company became the largest video game retailer in the world; The company has saturated U.S. mall locations, and is now expanding into strip centers and international locations to drive store growth. In addition to its size, Game Stop differentiates itself from its competitors by carrying one of the largest assortments of used video games. The used business is important to GameStop, as used games are more profitable, with 49.5% margins in 2006 vs. 21.2% for new games.
Like other video game retailers, the company is also dependent on new console releases to drive software and accessory sales. The end of 2007 marks the middle of a new cycle driven by Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii). Retailers, like GameStop, will be much more successful in the middle of cycles and will generally fare worse in between cycles.
The vast majority of GameStop's revenue comes from the sale of video game hardware, software, and accessories in its stores and on its website. In 2006, about 20 percent of revenue came from the sale of new video game hardware, 38 percent came from new game sales, and 17 percent came from sales of accessories and other items. The remaining 25 percent came from the sale of used games. Over the past five years revenue has grown four-fold, from 1.35 billion in 2002 to 5.32 billion in 2006.[3][4] Operating income has also grown almost four-fold over the same time period from 87.1 million to 333.68 million.[5][6]
In recent years GameStop has sought to expand the company worldwide. After its acquisition of Electronics Boutique in October of 2005, the combined company became the largest video game retailer in the world. GameStop operates in sixteen countries, focused mainly on Australia, Europe and Canada. As of February 2007, GameStop operates 979 stores internationally. [9]
GameStop faces competition from many large retailers, such as Toys R' Us, Target (TGT), Best Buy (BBY), Circuit City Stores (CC), Wal-Mart Stores (WMT), and Amazon.com (AMZN). However, these companies sell a wide range of products, of which video game hardware and software is a small part of their overall business. The large retailers are generally able to offer lower prices than GameStop. GameStop tries to overcome this disadvantage by offering superior service and having a very knowledgeable staff. GameStop also competes with a number of smaller video game retailers, but GameStop is the only publicly traded retailer that specializes in the video game industry. As of August 23, 2007, GameStop's U.S. market share was about 23%. [17]
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