GameStop sales driven by four publishers

Retailer's annual report shows Nintendo, Microsoft, Sony, and EA account for 65 percent of new products purchased, while used gaming sales continue to be most profitable segment.

This year is shaping up to be a time of massive consolidation for the gaming industry, but even without the pending Activision-Vivendi merger or Electronic Arts' proposed acquisition of Take-Two Interactive, the gaming pie was largely divided among just a handful of companies.

That was further evidenced today in the annual financial report of specialty retailer GameStop. While the chain announced its fiscal 2007 results (and its record-breaking $7.1 billion in revenues for the year ended January 31) last month, today's report provided investors with a deeper look at where the money was coming from.

For the full year, GameStop reported that 65 percent of its new product purchases were for games and goods of just four companies. Nintendo was the biggest of the big, accounting for 21 percent of GameStop's new product sales, with fellow hardware manufacturers Sony and Microsoft making up 17 percent and 16 percent, respectively. The only other company to account for 10 percent or more of the company's new product purchases was Electronic Arts, which botched 11 percent.

Pulling back a little bit further, the top 10 vendors made up 80 percent of the company's new product sales. All told, GameStop purchases items from roughly 80 manufacturers, publishers, and distributors, meaning the bottom 70 companies account for just 20 percent of new product sales.

GameStop also shed some light on its used game sales, as that segment once again proved to be the retailer's most profitable business. Used games brought in $772.2 million in gross profits for the year, or nearly 43 percent of the company's entire gross profits. The next most profitable segment for the retailer was new software sales, which totaled $581.7 million in profits. That was followed by products that fall under the heading of "Other," which made $351.6 million, and finally, new hardware, which totaled $108.2 million in profits.

102 Comments

  • atrainvii

    Posted Apr 7, 2008 1:45 pm PT

    Autolycus
    --

    I believe that most executives in the gaming industry are greedy bastards because of the overall low quality and copycat games that saturate the industry but explain to me how used games hurt the industry if the publisher makes their money off the original sale to the retailer?

  • puppiemaster

    Posted Apr 6, 2008 6:50 am PT

    We don't have Gamestop in the UK, but we have GAME, they are just as bad, I'd rather buy my games from ASDA, they are £10 cheaper there.

  • dchan01

    Posted Apr 3, 2008 9:42 pm PT

    EA "notched" not "botched."

  • Autolycus

    Posted Apr 3, 2008 3:19 pm PT

    atrainvii
    ---
    actually most retailers purchase the games @ 5 or 10 dollars under consumer cost. THe goal is that the consumer will purchase something with a higher profit margin while in the store. Used games hurt everything that has to do with video games. they cut profits to the developers and put them into the most greedy executives over @ gamestop.

  • NxxDefiant

    Posted Apr 3, 2008 2:48 pm PT

    I can't stand Gamestop. I think most of their employees are a-holes and they don't know very much about games in general. I had an employee tell me about 8 years ago that Nintendo was going out of business and I shouldn't be wasting my time buying their games.
    Also, I've had nothing but problems with the company. I ordered the magazine Game Informer from one of the stores and about 2 months later I still hadn't received the magazine. I called the store to find out where my subscription was and they didn't show any records of my payment. luckily, I used my debit card when I paid for the subscription but showing the proof to the store manager wasn't good enough. He insisted that I contact his corporate office and fax the proof to them. After what felt like weeks running around fixing their mistake the corporate office got back to me with this "we have found your payment and your subscription to the magazine will start in October. I bought the subscription to the magazine in early May. Freaking Bastards pissed me off for the last time. Needless to say I don't waste my time there anymore.

  • Sins-of-Mosin

    Posted Apr 3, 2008 1:44 pm PT

    I bought my PS2 used so $ony wouldn't get any of my money.

  • vashkey

    Posted Apr 3, 2008 12:55 pm PT

    Well of course used games are most profitable. They give little for trade ins and sell used games at prices close to new.

  • atrainvii

    Posted Apr 3, 2008 11:56 am PT

    The only thing GameStop is guilty of is good business sense. Selling used games doesn' hurt anyone. Take a second to look at this with some business and common sense. The retailer buys the game form the publisher on average pays 1/3 to 1/2 less than the listed price (MSRP). At this point the publisher makes its profits. The retailer then sells you the game at MSRP. Its at this point the retailer makes a profit. Now we as the customer for whatever reason want to sell the game. They are not going to pay you more than what they originally paid the publisher. Why should they? The game is no longer in its original condition and like when you buy a new car, as soon as you drive it off the lot it looses a lot of its original value. They will pay the fair market price minus the value loss and then sell it based on the games' demand, their profit margin and the price they bought it for. The publisher doesn't lose anything because their profits are based on the initial one-time sale of the game. The retailer makes a profit doing what they've always done, buy and sell games. Try taking the game to a pawn shop. You'll be luck if they offer you the same amount from GameStop. More than likely their offer would be less. If you want the publisher to make money off of used games, try selling yours back to the publisher, see if they'd buy it back. Why should they when they make the game and have guaranteed sales with retailers. It's business 101.

    I buy used games all the time. I would rather wait a few weeks and pay $35 - $55 bucks on a game I was not sure about over paying $60 plus tax on a game I'd want to get rid of a week later. That's too much money to waste.

    What you do with games if retailers like GameStop didn't buy used games? You'd give them away or sell them for even less money to someone else. You'd lose a lot more money that way.

  • Chompy3000

    Posted Apr 3, 2008 11:43 am PT

    When they sell you an open-box new game, that means that it is the last copy and that they are taking the display case and selling you that. You can ask them and if you do, they will give you a return policy if you do not think that it will work.

  • Mindchamber

    Posted Apr 3, 2008 11:04 am PT

    my only problem with gamestop is some stores have the shady practice of selling you an opened box when you wanted one new. its very obvious that they are trying to up their numbers and simply selling used games at full price,..

  • Chompy3000

    Posted Apr 3, 2008 9:47 am PT

    Actually, I used to work at Gamestop. The way used games work are based on supply and demand. For instance, for a long time, Gears of War was still $55 after months of its release. It's all because people wanted it. On the other hand, my store had at least 30 copies of used Crackdowns which sold for about $40 and that was right after the Halo 3 beta was finished. The problem is that people are just looking for the popular, brand new games in the used section 2 days after it came out, and thats why they see $55. We usually only push people to buy used games if they're gonna save like $10-$20. But of course, there are always the brown-nosers that just try and impress their boss and try and sell everything they can.

    Another thing, the Edge card (discount card that gives you the year subscription to GI and discounts on trade ins and purchasing used games) is really meant for people that buy a lot of used games. We're told that we should bring it up to every costumer, but in reality, we get people that come in and trade in tons of games and buy used games and those are the people that we can usually convince to buy it.

  • Dualmask

    Posted Apr 3, 2008 9:35 am PT

    @Slayer420: "They push you to buy used games which basically cuts the original developer out of the profit structure from that point on. So in the end, everytime you buy a used game from Gamestop for $5 less then new, you are only hurting the guys that made the game."

    That's not entirely true. After all, someone had to buy the game new in order for it to become used, and I'd imagine a good percentage of those new games were bought from stores that don't specialize in new game sales like Wal-Mart or Best Buy (otherwise selling games wouldn't be profitable for those stores and they wouldn't bother), and later sold to Gamestop for credit.

    Still, it's true that GS is largely running a scam, but to the average consumer, spending less on a product that works fully as intended beats buying it shrink-wrapped for $5 more.

  • Foleman

    Posted Apr 3, 2008 9:23 am PT

    Remember, this is counting accessories for the systems, and Nintendo is the only one making remotes and nunchucks, and as always they have the best selling games like Smash Bros and soon Marion Kart. But I still worry about the lack of some really great games from 3rd parties. EA is on board, but it just seems like the systems lack of graphic power will end up hurting it in the long run.

  • Slayer420

    Posted Apr 3, 2008 9:22 am PT

    Actually Autolycus doesn't sound too far off. I don't know that I think we will see revolution in 10 years, but we as US Citizens are trading in our rights and freedoms as fast as we can since 9/11. Really pretty sad to see, but we are absolutely not the 'home of the free' as much as we used to be.

    And Da_chub.. spot on. I refuse to purchase from Gamestop because it is a total screw job. Buy a game new for $60 or used for $55. Not a tough decision. They push you to buy used games which basically cuts the original developer out of the profit structure from that point on. So in the end, everytime you buy a used game from Gamestop for $5 less then new, you are only hurting the guys that made the game.

  • henry4th

    Posted Apr 3, 2008 9:17 am PT

    If pirating is morally wrong, why would selling used games morally incorrect also?

    Esentially, what used games sales do is to stop game developers making profit on their hard work.

  • da_chub

    Posted Apr 3, 2008 9:06 am PT

    Great for Nintendo and gamestop. Nintendo is not only the highest % of sales, but at 250 bucks, they are moving way more consoles then anyone else. It is unreal how many people trade in their games now a days, you pay 50 for something, play it for a month, then they give you 20 back for it, then they resell it for 45. Great job gamestop on campitalzing on our stupidity.

  • AdmiralDan

    Posted Apr 3, 2008 9:01 am PT

    Talk about a premature bell ringer, Autolycus sounds like Marx himself. Sheesh.

  • Autolycus

    Posted Apr 3, 2008 8:51 am PT

    The funny part is companies are loosing more and more money because people arent buying things. THe reason they arent buying things is because the price of living is going up drastically and wages arent. Even though this country is now geared and worried for on the BIg Business level, its Big Business as this government that are killing themselves. I give it 10 years before it starts to become a MAJOR problem, revolution, violence, the whole nine. Little history lesson, no democracy has EVER stayed a democracy, ever. The people have ALWAYS revolted and taken down their government. Its not far away here. The bill of rights were written to keep greed out of the loop, but we (u.s. citizens)let our rights get taken away, so only we are to blame.

  • Hvac0120

    Posted Apr 3, 2008 8:50 am PT

    You want a pre-order?
    Okay, well you should really get the game guide for that too.
    Would you like to pay $14.99 to get discounts on used items and a year subscription to GameInformer?

    Now...bend over cause this might hurt. :-)

  • the_real_VIP

    Posted Apr 3, 2008 8:45 am PT

    Why are there so many people buying used games at ~ 90% of the original price? WHY?

  • daveyf03

    Posted Apr 3, 2008 8:45 am PT

    Why do people trade or sell their old games at all? Am I the only one that pulls an old game out from time to time and plays it through again? Seriously its not like they take up that much room, and if they do you can always get a couple of large CD albums.

  • truevar

    Posted Apr 3, 2008 8:29 am PT

    I hate gamestop now days. They barely carry any pc games now. All they carry now days are big tittle games and nothing interesting and different from smaller game developers. They don't even buy pc games back anymore. I really don't like what they have done with the place in the past few years.

  • life4hire

    Posted Apr 3, 2008 8:17 am PT

    I buy all my games at GameStop and have never had any problems. After I finish a game I sell it back to GameStop and put it toward the games I am waiting for. I dont mind getting what people consider to be a rip off for my games because who else are you going to take them too besides selling them to your friends or a pawn shop. GameStop gives the best price in town plus you get the special deal such as buy two get on free (all the time). I like GameStop for the time AND money I save by not driving all over town or scouring the internet to find out where the game I want is going to be in stock and when I can get it in my hand. People complain about GameStop but I have nothing bad to say about them. My local store is small, crowded, has minimum wage employees and mediocre management BUT they help me as best they can and I always leave with a smile. Thats what GameStop is about to me.

  • dobhran

    Posted Apr 3, 2008 8:04 am PT

    One reason most of their sales are from the products of only a few companies is that they barely carry anyone else's products now. They are lucky to get even 1 copy of lower profile games these days. the managers tell me if you want something alternative you better preorder it or they won't even get it in stock.

  • JohnnyNeat

    Posted Apr 3, 2008 7:46 am PT

    Gamestop is a JOKE. I remember when they were a good place to grab a game before any other store. Now you prepay for no good reason & that prepaid reservation won't even guarantee that you'll have a copy on the drop date due to first come, first serve of reservation holders or they fail to get a shipment from their warehouse on time. Hardest Example & what I like to call, "The Call of Duty 4 debacle". No one new squat about it in the Gamestops I visited and in the end I had to get another copy at, GASP, Bestbuy. I sold my reservation to a pal who caredless about a release date saving me the pain of waiting for something I paid months in advance. Anyhow as much as I hate "OVERPRICED Carsalesmen Hangout Bestbuy", I hate "They Don't Know or Have Squat Gamestop" more. All they do is gaming and they suck at that, I mean come on. Bestbuy and or whom ever sales so many more things and they are on the ball? Sounds like Gamestop/EB needs a boycott. P.s. highvolts12 , I'm with you.

  • ThickFreak

    Posted Apr 3, 2008 7:43 am PT

    To everybody complaining: No one ever said you had to use GameStop.

  • KingTuttle

    Posted Apr 3, 2008 7:26 am PT

    @StillWingless. You are absolutely in a fantasy world if you think women cannot get management positions readily or get paid very healthy salaries. I work in business and I know of 2 women that clear deep into 6 figures. Beyond that kind of 1% income I know plenty of very successful women that make plenty more than the scraps that Gamestop is paying its management.

  • Dualmask

    Posted Apr 3, 2008 7:24 am PT

    I don't mind buying used games, because generally they work just as well and cost less, especially when my local GS has a buy-two-get-one-free sale (which happens often). But I used to have the bad habit of selling my old games, sometimes getting as little as $3-5 for a game I may have bought for $25-30. I've broken out of that though. I'd rather pay a little more in the local store than shop online, pay for shipping and wait to get my game...my income is enough that I don't have to concern myself with saving nickels and dimes on my game purchases.

  • highvolts12

    Posted Apr 3, 2008 7:06 am PT

    Gamestop is a terrible company. Do yourself a favor and avoid this place at all costs. I just love the tool shed managers who defend their company when they are making less than a school teacher. All I can do is laugh at you for settling for something less than your best. You got a college degree to work at Gamestop? You can get a managers position in half the time it took you to get a 4 year degree. Thanks Gamestop for making video game shopping a terrible experience.

  • Autolycus

    Posted Apr 3, 2008 6:45 am PT

    and lets not forget, paying fed. minimum wage to everyone starting employee and paying store managers barely 30k.

  • StillWingless

    Posted Apr 3, 2008 6:20 am PT

    The pay might be crap, but I'm a girl with a business major. No one else is going to give me a management position, and if they did, I wouldn't get much better pay.

    This is how the world works. An you have to admit, for the suits, it's an excellent business plan that has worked, rip-offs or not.

  • Darkside7972

    Posted Apr 3, 2008 5:53 am PT

    Gamestop's making this much bank, and they still can't afford to pay their employees more than minimum wage?

    I worked at Gamestop for two years, and like other posts in this thread have stated, it sucks. Employee wages are way too low for the company to be making so much money, corporate management consists of a bunch of soulless, robotic suits, the vast majority of employees know nothing about games, and prices and trade-in values are extremely skewed in favor of Gamestop's own interests. Yes, I realize it's a business, but giving someone $20 for a game that cost them $60, then turning around and selling it for $55? Are you kidding us, Gamestop? The only reason they can even get away with this is because there is no used game competition on a national level (i.e. not including Mom & Pop stores). They're like a retail EA, buying out everyone who poses a threat to their domination of the used games market (R.I.P. Funcoland, Babbage's, Software Etc., EB Games).

    It still amazes me that not only do people look past the scam Gamestop runs, but some people will go as far as to defend the company, happily nibbling the breadcrumbs they get in return for their brand new games. Get with the program, people. There are better places to shop for anything that Gamestop sells... Stop supporting such a garbage company.

  • Yomigaeru

    Posted Apr 3, 2008 5:44 am PT

    I agree the trade-in values of games are low...which is why I have never once sold any of my games...never. As for you guys that buy used, you're better served to go to places like Amazon.com or Half.com if you don't mind internet shopping, since you can get things MUCH cheaper. Much better selection than any store, and save big bucks, no less. Case in point, I just bought a copy of Hellgate: London in excellent condition for less than $20...nice.

  • dryden555

    Posted Apr 3, 2008 5:18 am PT

    buying used games at 25 bucks is better then buying them for 60 bucks. Used games are fine with me.

  • miiiguel

    Posted Apr 3, 2008 4:38 am PT

    "To say that Sony and Nintendo dominant"
    And MS and EA, mind you, which obviously includes PC gaming.

  • Urizen5

    Posted Apr 3, 2008 4:01 am PT

    Yea GS gives terrible price on used, There is a local game place in my town called McVans they give much better deals. bought a used rockband there, traded in GH III for the Wii and Devil May Cry 4 PS3, i only payed $21 for RC. So there are companies that do the trade thing well out there. It's just that Gamestop is too big, too corporate.

  • Humorguy_basic

    Posted Apr 3, 2008 3:58 am PT

    These numbers are being hugely effected by the decline in PC gaming. PC gaming more than any console, by a long long way, always had lots of publishers selling lots of different types of games. As PC gaming has declined and genres have disappeared developers and publishers have disappeared too. Because of the weay these large publishers dominant the retail distribution chain, many new developers/publishers are staying independent and selling directly, over the web, rather than trying to compete in this biased retail system.

    To say that Sony and Nintendo dominant is like saying the sky is blue! I would much rather see figures outside of these giant companies - what are the larger 'smaller' companies? With just a few companies dominating the market, it doesn't take a genius to recognise that innovation is going to continue to decline!

  • Cabal23

    Posted Apr 3, 2008 3:56 am PT

    You can't restrict the sales of use games. That's like saying the sale of used clothes on ebay will one day be illegal. That's stupid. Also welcome to a free market society. They had a great idea and they are profiting. Trust me when I say when things go digital, they will have their fingers in the pie. They are too big and way to smart not to. Used sales drive their company, so for every one person who finds it offensive that they give you $20 for a new game, there are ten more who will gladly sell their games. Personally I find putting the effort into selling them myself is much more profitable.

  • miiiguel

    Posted Apr 3, 2008 3:31 am PT

    I never sell my games, the money they offer is offensive. I keep them, for historical reasons at least. If I ever strugle with space I rather give them to my friends.

  • studnothin

    Posted Apr 3, 2008 3:29 am PT

    we won't have to worry about it too much longer. eventually developers (and publishers alike) will get sick of seeing corporations like Gamestop make exponential profit off of their hard work, while not seeing any of that in return, and will eventually just take matters into their own hands. i forsee a dark future for companies like GS, and digital distribution will most likely be the end of their reign.

  • Trueknight64

    Posted Apr 3, 2008 2:50 am PT

    Well GS never gets my used games (nor does anyone else).

  • Targzissian

    Posted Apr 3, 2008 2:39 am PT

    If used games are so profitable for them, you can bet GameStop will fight any efforts to restrict their right to sell used games.

  • morgonstjarnan

    Posted Apr 3, 2008 1:49 am PT

    It's a little sad that the used games business is making them so much money, since not a dime of that goes to the developers.

  • TacticalElefant

    Posted Apr 3, 2008 1:12 am PT

    It's a business. If they tell you what you're getting for it, it's not a rip off, because you know what you're getting for it and you don't have to sell/trade it in at all. Now I do think the trade in values are lower than they should be and the used game prices a little bit higher than they should for newer games, but like I said it's a business. Either you buy from them, or you take your business else where. Nobody is making you buy videogames, sell or trade videogames, or even shop at Gamestop, so quit acting like you have to. Games are not a necessity like groceries, where high mark ups would be a REAL issue you bunch of spoiled brats. I'm not defending Gamestop, I'm only laying it out before you guys your choices as a consumer, YOU DON'T HAVE TO DO BUSINESS WITH THEM.

  • ShirkDawg

    Posted Apr 3, 2008 12:38 am PT

    therealamel-

    I've had the same experience man. There's only one gamestop in my city and the people used to be cool and know a lot about games back in the day, but the last few years, the people there know nothing about games. I hear them trying to sell crap to people all the time too. When I walk in the store, they sometimes try to sell me a bunch of garbage thinking I know nothing about games, but the joke is on them. I've been a gamer for for over 18 years who plays all types of games and reads a lot about them and not once have they gave me an interview when I've turned in an application.

  • Lumenadducere

    Posted Apr 3, 2008 12:27 am PT

    $772 million in used games? Dang. If only that money was going towards the developers rather than straight into the hands of GameStop.

  • therealamel

    Posted Apr 3, 2008 12:21 am PT

    The one thing I have to say about GameSpot is that most of the employees are seriously lacking any gaming knowledge. Whenever I walk in there I usually know more than any employee in the store, I'm not claiming to know a lot its simply that they kind of know nothing about games.

  • Komalis

    Posted Apr 3, 2008 12:13 am PT

    Well, I'm trying to defend gamestop, but it seems every other post on this topic is some sort of childish self defense from a Gamestop employee. But then I see all of the childish posts and responses from Gamestop customers, and realize that they have a lot of elitist knowitall a-hole kids to deal with. In conclusion...nobody is right.



    And about trading...nobody is forced to trade in their games. No, they won't give you much. Nobody company/shop will if they know what they're doing. If it isn't profitable, it isn't business. I don't hate them for it. I just sell my games on E-bay.

  • UOducks521

    Posted Apr 3, 2008 12:12 am PT

    Emalfe12, i know plenty of stores that will give full refunds. I work at best buy and did customer service for about 6 months before I got moved to sales floor and I know from experience that we will give you a full refund or exchange on any type of gaming peripheral for 30 days. It doesn't matter whether or not its brand new in box or an opened item that we resealed. Gamestop gives horrible deals on trade in's, I would never recommend trading in your games anywhere unless your absolutely desperate and need money quick.

  • sandmanx91169

    Posted Apr 3, 2008 12:12 am PT

    hey sydwynder you kno wha ti woulda done, i woulda bought another controller and returned the one that was broken

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