GameStop: Next-Gen Demand ‘Unlimited’

The [a]list daily had the chance to sit down with GameStop president Tony Bartel at the recent GameStop Expo in Las Vegas. The show brought together GameStop’s managers for days of training, and the highlight for the managers was hearing that they will be getting a free PlayStation 4 and a free Xbox One, along with plenty of games.

The excitement over new consoles doesn’t end with GameStop managers, though. Pre-orders have already been sold out. “We opened Xbox One for two days last week; that may happen between now and the launch date,” said Bartel. The demand has been tremendous. “The best way to think about it is we have 750,000 people on the Xbox One First To Know List, and 1.5 million on the PS4 First To Know List. Compared to supply right now, we have unlimited demand.”

Microsoft and Sony are wise to be cautious about promising consoles to retailers, and by extension, to gamers. The backlash if customers were to pre-order a new console and then not get it could be considerable. GameStop is working to get as many new consoles as it can, and there will be some units available in store as well as the pre-ordered consoles. Of course, those consoles that appear in stores will be disappearing fast. “We’ve chosen not to talk about our actual allocations because it would not be good from a competitive standpoint for us to do so,” Bartel added. “All we’ve said is it’s a significantly higher number than last launch.”

There are additional considerations with new consoles that Bartel pointed out. “The other thing that people aren’t thinking about at this point is the complexity of these devices,” Bartel said. “These are the most innovative consoles, the most innovative CE device that will be on the market this holiday season. The good news is GameStop thrives on complexity.” Bartel feels that the effort GameStop is putting in to train its associates on the new consoles will help sales.

Getting an Xbox One properly hooked up and configured for your home system isn’t as simple as older consoles. The Xbox One has HDMI in and out, and you have to configure an IR blaster to send signals to other equipment. Is this a service opportunity going forward for GameStop, assisting customers with installing these complicated new systems

“We’ve thought a lot about that” Bartel admitted. “You put together all of the multiplayer entertainment and Skype features . . . it’s not something we’ve talked about publicly, but you could easily see someone coming into the marketplace to fulfill that service.” The power and complexity of new consoles is a problem, but it is also an opportunity.

The retail environment is going to be key for successful sales of next-gen consoles. GameStop is preparing for that situation, and kiosks where you can play with an Xbox One or a PlayStation 4 are part of that. “We optimize our stores. In some stores you will have interactives that will play this, but not in every single one of our stores,” Bartel said. “Every single store will have people who have played these machines. Mainly we’re going to represent it with the knowledge of our people. You’re not going to understand the complexity by playing an interactive. To really understand exactly what you need you’re going to need to talk to someone. That’s why we’re dedicated to having the most educated team out there.”

A large part of that is GameStop TV, and Bartel explained how that makes a difference. “Every one of our stores has GameStop TV in it, which will run through trailers. We’ll have people from Sony, and Microsoft get on GameStop TV and talk,” Bartel noted. “We’ll go on there, publishers will go on there . . . we educate our associates on that. We really want to make the experience come down to that one on one relationship with the customer and our associate. That demand creation has occurred because of that relationship in the store. I will guarantee you that a lot of the initial reservations we get are from our own associates.”

On the software side of the business, midnight releases are very popular and GameStop sees that happening more often. More importantly, GameStop is optimizing that opportunity for sales. “Imagine a store that has 1,000 GTA V reservations. We’re going to be replicating that in 15 countries, where we have lines outside the stores — it’s an exciting event,” Bartel said. “Now what we’re doing is talking to every customer that comes to those midnight openings. We’ll take a sheet up and down the line and say, ‘Do you understand this comes with downloadable content This comes with a Season Pass from day one Did you know you could get this headset that’s designed with this If you like Call of Duty: Ghosts, here are all these cool characters, we can send them directly to your home for free. We want to make sure all our customers are fully informed.”

The big news from the GameStop Expo was Nintendo’s announcements of a $50 drop in the Wii U price for the Deluxe system, and the surprising unveiling of the 2DS. Bartel is excited about both of these things. “Consider the fact that the global announcement of that was done at the GameStop manager’s conference. That’s never been done in our history before, where someone’s done a global announcement of that magnitude,” Bartel pointed out. “Our managers were the first people to hear that in the entire world.”

As for Nintendo’s pricing move on the Wii U, as you’d expect Bartel is happy about it. “I think the price drop is a great idea,” Bartel agreed. It’s not just about the price move, though. “They’ve got content coming up. The Zelda bundle’s really cool, we’ll sell a lot of that in the stores. I think it’s the right thing to do. Anything to remove the barriers to purchase they can do.”

Bartel pointed out what the Wii U has to do now, which is all about software. “It’s no secret that Wii U came out of the gates very strong, exceeded our expectations, but it’s fallen off,” Bartel said. “Mainly due to the fact that there’s just not as much first-party content out there. They’ve said their big guns are coming — Kart is going to be out in 2014, and Super Smash will be coming. It’s exactly the right thing to do, and I think it’s smart planning on their part.”

Finally, Bartel was enthusiastic about Nintendo’s new 2DS. “The 2DS at $129, there was a big roar from our people when they said it. I put a lot of stock in that. I can see a lot of those going out with Pokémon.”

As for the manager’s show overall, Bartel summed it all up: “The energy level has been amazing. We have come up with one conclusion at this conference — free sells.”