GameStop CEO: 'They Can't All Be Streaming Netflix, Right?'

23 Nov, 2015 By: Erik Gruenwedel

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New EA release ‘Star Wars: Battlefront’ fails to meet lowered sales expectations at nation’s largest video game retailer

Disney’s Star Wars: The Force Awakens may have reportedly sold $50 million in tickets less than a month before its Dec. 18 theatrical debut, but that anticipation hasn’t translated to sales for the franchise’s new video game.

Electronic Arts’ Star Wars: Battlefront launched at retail Nov. 17 across all gaming platforms to largely indifferent consumer reaction, according to GameStop, the nation’s largest video game retailer.

Without divulging actual unit sales, GameStop said the title failed to meet already lowered sales expectations — unlike Activision's Call of Duty: Black Ops III and Bethesda's Fallout 4.

“We had high expectations that diminished somewhat as [Battlefield] got closer [to launch], and then it failed to hit those lowered expectations,” COO Tony Bartel said on Nov. 23 fiscal call.

The anticipation over Battlefront was tempered somewhat by tepid reviews, with many gamers praising the graphics but criticizing limited gameplay modes and the expectation of expensive downloadable add-ons on top of an SRP around $50.

Bartel said that given the buzz around the "Star Wars" movie, he anticipates the game will pick up steam. The title is prominently displayed in GameStop’s Black Friday (Nov. 27) ads at a significant discount.

“We've got a lot of exclusive content. Loot (GameStop’s trend business) gives us a whole new way to bring in new customers. So we're excited about the holiday season,” he said.

Indeed, the Loot business is on track to reach $300 million this year via 22 Loot and four ThinkGeek branded stores. The unit’s global sales increased 384% versus the prior year. Loot also drove an increase in store traffic, customer basket size and gross margin rate.

Digital revenue grew 13.8% and is projected to top $1 billion. The top-selling digital title was Destiny: The Taken King. Revenue from non-physical gaming comprised 17% of sales and 26% of gross profit, up from 23% last quarter.

That’s putting a positive spin on third-quarter (ended Oct. 31) that also saw comparable store sales decrease 1.1%, due primarily to underperforming hardware sales.

Hardware, which includes PlayStation 4 and Xbox One, declined 20.4%, while new software sales decreased 9.3%, due to tough year-over-year comparisons with Destiny and Super Smash Bros. Sales of previously-owned game titles grew 4.9% year-over-year.

Net income dipped slightly at $55.9 million on revenue of $2 billion, which was down less than 4% from $2.09 billion.

The declines prompted CEO Paul Gaines to speculate that new-gen consoles still invite gameplay rather than operating primarily as expensive streaming media players.

“You've got believe there are going to be people chasing software for that [new-generation hardware] install base. I mean they can't all be streaming Netflix, right? There's got to be some people playing video games on all those consoles. So that gives us a little bit of optimism,” he said.

 

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