TexanGamer: BIG on Gaming

By VICTOR GODINEZ / The Dallas Morning News

LAS VEGAS – GameStop Corp. hopes that what happens in Vegas definitely doesn’t stay in Vegas.

The Grapevine-based video game retailer camped out in the desert for the past week to train and motivate about 5,000 store managers in advance of the critical holiday shopping season.  The annual event has become a milestone for the retailer, both to get employees pumped up and share its plans with the media. Game publishers and hardware makers such as Sony, Nintendo and Microsoft pitch their products to the managers, hoping they will get excited enough to pitch the game to front-line GameStop store workers and, ultimately, customers.

But the managers – often dedicated gamers themselves – formed their own impressions when they got hands-on with the upcoming games Tuesday in a giant convention hall at the Mandalay Bay. Long lines formed at Guitar Hero: World Tour, Call of Duty: World at War, Street Fighter IV and Resident Evil 5. GameStop is also eager to talk about its growing popularity with more casual customers, such as moms looking for gifts for their kids (or themselves). In the past, those shoppers might have browsed a mainstream retailer such as Wal-Mart or Target, but they are now starting to make GameStop their first choice, said Tony Bartel, GameStop’s executive vice president of merchandise and marketing.

But the growth of the casual gaming market is also putting a strain on GameStop. Much of that new market was spawned by Nintendo with its motion-controlled Wii console. But the Wii has been in short supply ever since it was introduced in late 2006 – particularly during Christmas shopping periods – and Dan DeMatteo, GameStop’s recently promoted chief executive, foresees another lean holiday season this year.

“Clearly there will be more Wiis,” he said. “I do know the number is significantly higher than last year at Christmas.”

“Will that satisfy demand? I can’t answer that. I think it will be closer.”

GameStop is the largest video game seller in the world, but even that title doesn’t carry enough clout to convince Nintendo to boost its production capacity.

“They’re a conservative company,” Mr. DeMatteo said with a shrug.

While GameStop executives won’t comment officially, there’s clearly some frustration with Nintendo. But Mr. DeMatteo has backed off some of his criticisms of the company. In March 2007, he said Nintendo was deliberately making fewer Wiis than it could have.

“I think they intentionally dried up supply because they made their numbers for the year,” Mr. DeMatteo said then.

Nintendo denied the accusation. But either way, Mr. DeMatteo said this week that he thinks Nintendo has stopped manipulating Wii production.

“I don’t believe that’s true anymore,” Mr. DeMatteo said Tuesday.

Still, even with the likely Wii shortage, GameStop executives said they’re thrilled with the lineup of new games coming out for this holiday season. And that’s even without a standout title like Halo 3, which took in about $300 million in its first week on sale last fall.

“We sort of like it broader than deeper,” Mr. DeMatteo said, pointing at a range of highly anticipated titles in a variety of genres including music-based games such as Rock Band 2, shooters such as Gears of War 2 and adventure games such as LittleBigPlanet. GameStop expects its customers to be equally enthusiastic, so the company is hiring a substantial number of seasonal workers.Those ambitious hiring goals might seem out of place in a slow economy. Manpower Inc. recently reported that retail hiring plans for the fourth quarter are the lowest since 1991. But not many retailers are enjoying the kind of success that GameStop is.

The company consistently beats analyst estimates and just reported second-quarter revenue of $1.8 billion, up from $1.34 billion a year ago. Profit rose to $57.2 million from $21.8 million over that same time. The company’s shares, however, have declined substantially from over $60 at the end of last year. They lost $1.49 Friday to close at $41.21. One of the things fueling GameStop’s growth is its focus on buying and selling used games and consoles. Mr. DeMatteo said those bargains are attractive to customers who might be tightening their budgets in a down economy.

“We think that our trade-in program at this point in time, in a weak economy, not only benefits us, of course, but really benefits the consumers too, because it gives them cash to buy new games.

“That’s our big focus right now.”