Caution for Q3 and Q4… GameStop predicts that its 2012 revenue will be between 2-10% lower than 2011.It was noted that PlayStation 2 inventory was moved to stores in more urban areas, generally with lower income levels. It's not hard to figure out what's pulling the number down here. Proof of this point: Sales of current-generation pre-owned games were flat for the quarter, and yet overall sales were off more than 11%. We've known for some time that GameStop has been taking its PlayStation 2 inventory out of some stores, and the reasoning is becoming more and more clear: Very few customers are buying them anymore. The market is increasingly as reliant on off-disc content as it is on what's on the game disc. Quotes from the call driving this point home included "You need to have DLC at launch" and "Every single major title is releasing with DLC". Despite the negative associations made by some consumers with this practice, it was made clear during the call that it's only going to expand moving forward. GameStop CEO Paul Raines and his executive team made this a recurring theme during the call. DLC, especially at launch, is vital for GameStop and for publishers.Here are five other observations that I made during the earnings call: This category includes mobile and digital sales, which are new sectors of business for the retailer. The bright spot for the quarter was growth in GameStop's "Other" category, which was up nearly 41%. Sales of pre-owned merchandise, which is GameStop's most significant margin category, were also down more than 11%.
Overall sales for the period were down by more than 11%, which was attributed to slow traffic due to a weak new release slate. GameStop has released its earnings and financials for the second quarter of 2012, and recently held a conference call to discuss the details and more with investors and analysts.
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