GameStop is undergoing a retail transition as it expands its ThinkGeek footprint, doubles down on independent game publishing through GameTrust, and continues to develop original mobile and social games through Kongregate. But the retailer remains focused on its core business of selling new and used games, as is evident with its new TV and online push for pre-owned games through its “Goat” campaign.
At the recent GameStop Investors Day in Dallas, we sat down with GameStop CEO Paul Raines to talk about new game consoles, Nintendo’s mobile play, and how important retail is for virtual reality platforms in this exclusive interview.
What role do you see new consoles from Sony and Microsoft playing for GameStop?
We expect to be pretty dominant on new consoles, and the reason we’re dominant is because we have the PowerUp Rewards program with 46 million members around the world. We have those people on file, and we know how much trade credit they have at home that they bought from us. So it’s easy to market to them and say, “Hey Mr. Gaudiosi, you’ve got $48. Why don’t you bring that in and trade it against the new Xbox or PlayStation?” So we anticipate that we’ll see some new consoles in the next few years. We don’t like to talk about that because our partners get upset if we jump ahead, so we’ll let them disclose that. Consoles are good for us any way you slice it.
Are you seeing excitement through PowerUp Rewards members around the Nintendo NX?
There is some excitement around NX. Lately here, we’ve been hearing a lot more buzz than we have in the past. Nintendo is interesting in that they really are able to keep things as quiet as they can for a while. And then they just lost their leader, so they’ve gone through a mourning period and so forth. NX sounds exciting. We’re looking forward to it. They’re very innovative in everything that they do. I hope that they come out with something exciting and innovative. I think we’ll be dominant distributor of that platform.
Even though the Wii U didn’t repeat the Wii’s success?
Wii U was disappointing to everybody, including them. They made some bold bets, and maybe some of them didn’t work out. But they have a lot of creativity there. They’re a very innovative group of people, so we never count out Nintendo. Even now it’s incredible how strong some of their IP is—Pokémon, for example. We could have a Pokémon weekend this weekend at GameStop and we would break sales records just because every time they put out a new game they have a very loyal fan base. Super Mario, Zelda, all those IPs have a huge, loyal fan base.
That fan base is going to potentially get bigger with their mobile reach. Do you think Nintendo mobile games will get new fans interested in other Nintendo products?
Yeah, there are a lot of people who have never played a Super Mario game on a DS. A lot of the kids today have grown up only playing small games on their phones. As you introduce that exciting Nintendo IP and those characters, they’re going to want more of that. We think that will push them into our stores to see the big games. They’ll go, “Wow, there’s actually a game I can play for months and months instead of a few days.” That will be good for us. It will be very good for Nintendo, and we’re very positive on it.
Virtual reality is hot right now with the HTC Vive, Oculus Rift and PlayStation VR. What role do you feel VR will play with your business moving forward?
VR is exciting from just the pure gameplay experience. It fulfills a lot of your dreams and fantasies about gameplay because you no longer have to stare at the screen. You can look anywhere. You can see who’s behind you. You can see who’s above you. So it’s exciting technology. It will require higher processing power. That’s why Oculus and HTC require these high-end PCs that are going to process and render all those graphics. Sony is able to use their PS4, so that’s good.
We’ve seen all of the VR players and a few that haven’t come out yet. We’re excited about it. The other thing is VR has applications that go beyond gaming. I’ve seen some sports applications that are unbelievable, travel applications. I even saw an augmented reality Microsoft display, which was a medical thing where you train people on how to diagnose the heart.
Yeah, HoloLens. So we’re excited about all of it. We believe Sony, specifically, will be the dominant player because they have the most titles. One thing about gaming is you have to have great technology and also great IP that people know about. I’m a guy who loves Uncharted. So if you tell me: “Come in and buy our VR headset,” I’ll want to test it first and think about it. But if you said” Come in for the Uncharted 5 game in VR,” that’s a whole different story. Sony has the IP advantage. They also have the install base advantage with the millions of PlayStations out there.
Having said all of that, Oculus is a fantastic technology, as is HTC Vive. So we’re excited about all of it. We think it’s all going to work. Some may work faster than others, and some may be more of a leading edge product, while others may be more of a mainstream product. We have to wait and see how all that plays out.
What roles do you see demos playing for these VR devices?
We’re doing a lot of work on that right now. There are a lot of ideas floating around. First of all, we have a significant part of our footprint that’s big enough for us to do VR demos in. A lot of people say, “Well, you’ve only got 1,500 square foot stores,” but that is the average. We have hundreds of stores that are well over 2,000 square feet, so we can demo in hundreds of stores in the U.S. We can also do some events around the U.S. and different markets working in tandem with Sony—as we’ve done with Nintendo in the past. We could also do traveling exhibits in cooperation with Sony, where you go to malls and demo in cooperation with GameStop.
We’re working hard on a lot of exciting ways to demo the product. I don’t think that will be a barrier to us dominating our competitors. The big boxes always want to demo everything in their store, and we like getting the hands on the product. We also think that our associates are very knowledgeable. They really are the secret weapon for us to teach people how to play, how to use the VR, how to set it up, etc.