Last week, about 4200 GameStop store managers from across the United States gathered in Las Vegas for the gaming retail giant's annual eXpo. Game publishers showcased their line-ups. GameStop managers discussed the best way to run their stores. Newsweek's N'Gai Croal snapped lots of photos.
(GameStop's big: the company just exceeded 5,555 stores across 16 countries.)
Just a few days before all that, GameStop vice president of merchandising, Bob McKenzie, talked to MTV Multiplayer about where the gaming retailer stands on some of the most important issues related to the sale of games. Here's an edited transcript of our phone interview, in which McKenzie told me:
- Who GameStop is designing their new stores for
- Why GameStop isn't afraid of digital distribution via consoles
- How the company is -- or isn't -- making space for music games
- Why the sales of used games benefit even the publishers who complain about them
- What the chances are of consumers finding Wiis in stores this Holiday seasons
- Why you should buy games at GameStop and not at the competition
- and more…
Multiplayer: There's a really nice, renovated GameStop on 33rd Street and Broadway in Manhattan. I believe it's the company's flagship store, and, unlike most GameStop's, it bright and spacious. Ideally, what kind of a look and feel should a game store exude?
"Going forward, the store prototype will be more than double what the average square footage of a store is now."
Bob McKenzie, VP of Merchandising, GameStop: The direction we want to go is making sure the female shoppers that come into our stores are not coming into a dark store that they may be intimidated shopping in. [We want them to be entering] an entertainment experience. Therefore stores will be less cluttered… The messaging is: 'come in and find out what the entertainment within the store is all about.'
Multiplayer: The Manhattan store is really spacious. But most GameStops and other gaming stores can feel pretty cluttered. How big an issue is that?
McKenzie: One thing we've done is we will be opening larger stores. That will help eliminate some of the congestion we have in current stores. Going forward, the store prototype will be more than double what the average square footage of a store is now… It does become a challenge in the holiday season, because of the sheer amount of titles coming out. I think I've got over 550 new releases in video games and another 100-plus PC titles [ordered by GameStop.]… It's up over 10%, the sheer number of new releases we have coming in now versus the same time a year ago.
Multiplayer: What about the challenge of making room for all the new music games and instruments? Are you giving the makers of games like "Guitar Hero" and "Rock Band" any feedback about how the instruments affect you guys?
McKenzie: As we get into "Guitar Hero: World Tour" and "Rock Band 2" and some of these peripherals, it becomes very challenging. We're continuing to make sure they don't take up too much space within the stores… The feedback we give [the publishers] is that when they can go to the smaller packaging, it's much better. We're not at the point where we're communicating with any of them to say, "Don't make any more drum sets." … As for the higher-end guitars and drum sets that will be available this fall, we will offer those [for order] when a customer comes into the store. We can order those and will have them delivered directly to the store or to the customer's home.
Multiplayer: And do you take trade-ins for the instruments or does that become a challenge?
"I think I've got over 550 new releases in video games and another 100-plus PC titles [ordered by GameStop.]… It's up over 10%."
McKenzie: The guitars, we take as trade-ins… The drums are a challenge. Currently we do not take back the drums. The current configuration for the drums that are out for "Rock Band," once you put those out for "Rock Band," those are very hard to disassemble.
Multiplayer: Sales of used games are a big part of GameStop's business. What do you say to people who say that selling used games undermines the value of the work done by publishers and developers?
McKenzie: The used games, as reported in our financials, are a very profitable part of our business. The major benefit, not only for us but for the publishers as well, is what we call a "circle of life." The trade-ins we get from used games help to drive and accelerate sales for new games as well. I've got an eight-year-old boy who's very much into gaming on all formats. [The used game trade-in option is] really neat. It's not just teaching him some economic lessons hopefully at a young age but it's really about having a broader assortment of [older] games for my child to enjoy... They allow people to get into different games.
There's some emotion behind it from the publishers, but it's not like the music industry where you had Napster and you could rip the music off the Internet. We're pretty attuned to piracy issues and that's not what this is about. It's about extending the library of choices available to the consumer and making a value-added proposition for them to have a unique currency within our stores.
Multiplayer: Isn't the counter-argument that the sale of a traded-in relatively newly released game for a used-game price undermines the sales of the new game? For example, I could trade in the new "Viva Pinata: Trouble in Paradise" today and it would sell for just few dollars less as a used game. If someone else buys the used copy of "Viva Pinata: Trouble In Paradise," wouldn't that cost Microsoft a sale? And aren't moves like Sony's aggressive offerings of fully downloadable games like "Burnout Paradise" on the PS3's PlayStation Network -- bypassing the need to buy the games in stores -- a clear response to this?
McKenzie: From our perspective, the used games are a benefit for the consumer. For example, if they're coming in and buying "Viva Pinata," that consumer may have never bought "Viva Pinata." But they're saying, 'Hey, I've heard of it… I can save five or ten dollars and I'm going to try it.' You get more into the games…
We tell our publishers we're not afraid to compete with anybody on digital downloads. It's just they can't make it that they have an unfair advantage. There isn't. The customer can come into our stores and buy "Burnout Paradise" at the same time they digitally download it [on the PS3] or they can digitally download it from GameStop.com.
Multiplayer: What would be an "unfair advantage"?
McKenzie: If you could digitally download a game prior to it being available for retail. Or if you could get something unique in the game that you can't get within your retail copy. That's what we would consider an unfair advantage.
Multiplayer: If people are considering GameStop for their Holiday shopping and they're looking for Wiis, what's the best strategy for getting one at GameStop this season?
"Our look from Nintendo, though, is that it will be much, much better than it has been the last two years."
McKenzie: It's been a unique ride for Nintendo to have the Wii going into a third year this November where the consumer may still be searching for it. Our look from Nintendo, though, is that it will be much, much better than it has been the last two years. I can't say we will be in stock every day throughout the holiday season but I can tell you that the current flow we've seen coming from Nintendo on Wii hardware makes us very confident that we will meet the business model that we've got….
Multiplayer: How are you expecting the sales of the Xbox 360 to change now that the price has been cut?
McKenzie: They've got a strategy and a line-up where they've got an offering of $199, $299 and $399 that really positions the system very well going into the holiday season to broaden the customer that will be interested in that. Those are all very good, very natural price points.
Multiplayer: You guys don't mind multiple SKUs (versions) of consoles? That doesn't get confusing? There are, of course, a new PS3 versions. Is this a positive direction or are you hoping that this might be the last holiday season where there are so many versions of consoles out?
"There is definitely room for the two models for the PS3. I would have been happy having one model..."
McKenzie: It does make it more complex, but the reason they're doing it is they're catering to different consumers. On the high-end, they're going after the hardcore that are really into the technology and like pushing the envelope on what the system will do. .. The same as with the multiple SKU strategy of Microsoft: is two the right number? Is three the right number? It really comes back to the question of when we were talking about "Guitar Hero" and "Rock Band" and the amount of space you're taking up in the footprint [of a store]. There is definitely room for the two models for the PS3. I would have been happy having one model because now you have prices on consoles from $199 up to $499… but there have been a lot of games to broaden the PS3 consumer.
Multiplayer: And if someone drives themselves to a mall this Christmas season and sees on one end of the mall a GameStop and on the other a Wal-Mart or Target or any of your competitors, why should they walk into your store and buy the games there?
McKenzie: They're going to have the best experience shopping at GameStop. Our people are passionate about what we do. They're very knowledgeable and they're going to be able to help the customer get into the right gaming experience.