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Live Blog: DICE 2009 - J. Paul Raines, GameStop COO

bleahy
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Posted February 20, 2009 - By bleahy

The final day of DICE kicks off with a presentation from the COO of GameStop, J. Paul Raines. They probably slotted him as the first session after the awards and after-party because a conference full of game developers probably isn't going to show up in droves to hear Mr. Raines speak. Or maybe they will... if only to give him the evil eye.

GameStop, of course, has made an incredibly lucrative business for itself by accepting trade-ins and selling used games. Publishers and developers make no money off of used game sales. While most gaming executives won't blame GameStop for finding a way to make more money, they don't appreciate the method.

I can't wait to hear what Mr. Raines has to say for himself! We should be getting started in 10 minutes.

9:26 PM - Still waiting for this to get going. The crowd is pretty light, but they don't look terribly angry. Yet.

9:34 PM - Joseph Olin has announced that the AIAS partnership with GameStop has been expanded and that the winners will be promoted at GameStop stores starting this Spring. DICE 2010 will take place on February 17 - 20th, 2010.

9:36 PM - Here is Mr. Raines. People clapped for those that were wondering. He's been told to be light on his feet in case any shoes come flying! He wants to congratulate the developers in attendance for the innovation they have shown. Start it off smooth, Raines.

'Your ability to think outside of the box to create IPs that you might not want to play, but that consumers want to play, is very important.'

Stats time:

  • US Store Locations: 4,331
  • European Store Locations: 1,201
  • Canadian Store Locations: 325
  • Australian Store Locations: 350

In 2008, they opened 315 stores in the US and 673 stores internationally. In 2009, they expect to add 400 stores worldwide.

Over 10 years, they have grown year-over-year and expect a projected growth in 2009 of 10-12%

GameStop is a "category specialist" that drives sales in this industry. In countries with companies like GameStop, video game consumption goes up. Really?! You mean, like, they have some place to buy them?

35% of core users prefer GameStop over Best Buy (17%) & Wal-Mart (11%). Out of mothers buying for kids, 26% prefer GameStop over Best Buy (22%) and Wal-Mart (16%).

Who is the heavy game buyer? Traditionally, this has been a male, 13-20 years old, playing 20+ hours a week and they play shooters and MMOs. Now, looking at who's buying video games, we see that:

  • 43% female
  • 47% > age 30
  • 60% play < 15 hours/week
  • 63% married
  • Plays across all genres of games
  • 2 in 5 new gamers are female
  • Nearly half of new gamers are 35+ years old

In 2008, 26% of Americans over the age of 50 played video games (at least once, I guess. It was probably one round of Wii Sports Tennis at Thanksgiving).

9:47 AM - What gamers are telling GameStop

  • Many borrow from friends so they can try it out first before buying
  • Gamers player importance on portability and taking their games with them. This could also be taking games to a friend's house, not just the DS and PSP.
  • The ability to trade games is important. Customers value the ability to sell/trade games for credit towards new games.
  • Gamers value the ability to buy used games. Used games are cheaper and allow them to inexpensively to try new genres. (He refers to the discussion of pricing to drive sales as presented by Gabe Newell. He sees used games as a similar practice.)

Trades as currency:

  • 14% of new game sales are funded by trade in credit during the first 60 days of a game's release date.
  • 60% of trade-in credit is put toward new games.

Here we go. Do used games hurt sales of new releases? NO! Only 4% of GameStop's used sales are of current titles. Over 6 years, the percent of new games in the marketplace has gone up by 7%.

New titles sell well at stores because of GameStop's reservation process and trade-in credit. Paul believes that the reservation process helps market games and drive sales.

9:53 AM - Game players like unique content and have been buying large amounts of collector's editions. During the first week of sales for the following games, they sold the following percent in collectors:

  • Metal Gear Solid 4 - 36%
  • Gears of War 2 - 26%
  • Fable II - 21%
  • Mortal Kombat vs. DC Universe - 55%

With the launch of Call of Duty 5, it increased reservations by 75% over CoD4. It would like to attribute this to its partnership with Activision and special deals like bonus weapons. I put it closer to Call of Duty 4's performance and franchise power.

There's new technology coming to GameStop. It is experimenting with kiosks that customers can interact with. They will be able to see trailers, read previews, reviews, and link it to its reserve service. These kiosks should launch into stores over the next couple of years.

9:57 AM - GameStop believes that the market is incorporating more genres. Games aren't only for the hardcore anymore. I'm sorry... did the Wii come out? Basically, GameStop would love for developers to make casual and family games because they are selling very well right now.

Conclusions: GameStop believes that it will grow with the industry, not against the industry. If you compare this industry to other industries, you find so much more innovation in the gaming industry.

"GameStop is the only retailer dedicated to video games." It has stores everywhere and want to get to new international territories.

"Our [sales] associates are the secret weapon of GameStop." Paul believes that his associates are the most knowledgeable in the industry.

GameStop's assortment of games is the strongest in the industry. Where'd all the PC games go, Paul?!

10:05 AM - "We want to be the developer's friend. We want to be the developer's supporter. We'd like to support you in any way we can. We want to acknowledge your creativity and find a way to grow with you."

He didn't take any questions and walked right off the stage. I know everyone had questions. He promised a dialogue and didn't take questions.

Live Blog: DICE 2009 - J. Paul Raines, GameStop COO
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