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GameStop Corporation

Type	Public (NYSE: GME)
Founded	1984 (as Babbage's) in Dallas, Texas
Headquarters	Grapevine, TX (USA)
Key people	Dick Fontaine (Chairman, CEO), Daniel A. Dematteo (Vice-Chairman, COO), David W. Carlson (CFO), Steve Morgan (Former President)
Industry	Electronics stores
Revenue	▲ $7.093 billion USD (2007)[1]
Employees	33,000+
Website	www.gamestop.com

GameStop Corporation (NYSE: GME) is the world's largest video game and entertainment software retailer. The company, whose headquarters are in Grapevine, Texas (a suburb of Dallas), United States, operates 5,889^[1] retail stores throughout the United States, Canada, Ireland, Australia, Denmark, Finland, France, Germany, Italy, New Zealand, Norway, Spain, Austria, Puerto Rico, Switzerland, Portugal, Sweden and 2 test stores in the United Kingdom. GameStop is expected to open around 600 new stores for the 2008 business year.^[2]

Retail stores operate primarily under the GameStop and EB Games brands. In addition, the company runs two e-commerce websites, GameStop.com and EBgames.com, and also Game Informer magazine, GameStop's proprietary video and computer game publication. In addition to video and computer games, GameStop sells magazines, strategy guides, entertainment DVDs, and other related merchandise. A major source of the company's profit is also buying used games and movies from its customers and selling them back at an increase. A new store concept called MovieStop, which focuses on selling movies rather than games, is currently building and operating stores in the southeastern United States, including the Dallas area.

In 2007, Gamestop upset the creators of the Penny Arcade webcomic by giving them an in-store ultimatum regarding an upcoming game that the two writer/artists were releasing digitally first. Penny Arcade lashed back in interviews as well as in comic strip form.

[edit] History

[edit] Babbage's and Software Etc.

Logo of retailer Software, Etc. on a 5.25" floppy disk branded by the company

GameStop traces its roots to Babbage's, a small software retailer that started in Dallas, Texas in 1983. The movements that made Babbage's into GameStop started in 1994 with a series of mergers. The first was with Software Etc. in 1994, the second was with Funcoland stores in 2000, and the third was with Electronics Boutique (now EB Games) in 2005, taking four competing, major mall software retailers and placing them under a single corporate umbrella.

When Babbage's merged with another mall software retailer, Software Etc., in 1994 ^[3] the combined company was named NeoStar Retail, but the two halves continued to operate as if they were separate entities.

The combined management of the newly formed entity developed a classic case of the right hand not knowing what the left was doing. This ultimately caused NeoStar to go into Chapter 11 reorganization in early fall of 1996. At this point the company had approximately 800 stores in the United States. Several potential buyers of NeoStar's assets emerged.

[edit] Leonard Riggio

On the last day of the manager's conference there was a special guest during lunch. Leonard Riggio, the head of Barnes & Noble, announced that he and a group of investors were going to put in place the financing to keep the company afloat, and get new merchandise into the stores in time for Christmas (at this point, the company's creditors were owed so much back revenue that they were no longer shipping anything to NeoStar).

In a personal comment during the address, Riggio stated that he "hated" the name NeoStar Retail, and thought that the merged Babbage's/Software Etc. should have been called Babbage's Etc. He said should his buyout bid be successful that the company would be renamed.

From the potential buyers, the judge desired to accept the offer from the one that would keep the most people working, preserve the most competition and consumer choice, and be the most stable. Ultimately, Riggio's offer was accepted on the day before Thanksgiving. Barnes and Noble, through B. Dalton, was the original owner of Software Etc. A new management team largely composed of former Software Etc. executives and long time associates of Len Riggio was put in place to run Babbage's Etc.

[edit] 1996 closures

The day after Thanksgiving 1996 approximately 100 Babbage's and Software Etc. stores closed their doors. The remaining merchandise from these stores was shipped to 100 of the remaining stores that would participate in a massive "going out of business" sale throughout December. These 100 stores would close for the last time on Christmas Eve, and all merchandise left would be shipped back to corporate headquarters by New Year's Eve. The company would be pared back to about 600 of its best performing stores.

[edit] Acquisition by Barnes & Noble

When Funco, Inc. (operator of FuncoLand stores) was acquired by Barnes & Noble in 2000, there was a corporate restructuring, and Babbage's Etc. became a wholly owned subsidiary of Funco. The name at that time was changed to GameStop, Inc.

In 2002, GameStop bought out the Gamesworld franchise in Ireland and immediately took control of their 10 stores; the company now operates at 51 locations in the Republic of Ireland as well as 7 stores in the United Kingdom.

On November 12, 2004, GameStop spun off from Barnes & Noble. Due to Riggio's involvement, GameStop and Barnes & Noble employees still receive employee discounts at each other's stores, despite the companies being completely separate.

A GameStop in Blue Star Shopping Center in Watchung, New Jersey.

[edit] Merger with EB Games

On April 18, 2005, GameStop and EB Games announced that they had entered into a "definitive agreement and plan of merger". After shareholders and US regulatory agencies approved the merger, it closed on October 10 of that year with the agreement that the companies would be run separately, but not as they had been in the past. To ease the transition process of the two companies being run as one, it was agreed upon that the two separate entities would not merge operating activities until the new fiscal year which starts February 1; this also included maintaining two separate distribution centers. At the beginning of the following year, operating activities of the two companies was integrated, starting with the realignment of districts and the closure of EB's West Chester, PA corporate office. Most of the upper management positions maintained GameStop executives; however, President at the time, Joe DePinto, resigned his position as President and returned to work as President and CEO of 7-Eleven leaving a vacancy for EB President Steve Morgan. The transition of the two major super powers in the industry was challenging because of so many different conflicting views in different areas. Executives felt it was best to conduct market research and incorporate the best practices from each company into the new business structure. This idea of incorporating only the best was carried over to many other aspects of the merger decision including the decision on who would maintain the middle management positions. For the most part, regional directors and district managers from the EB Games side of the business lost their jobs. In addition, commission-based incentives were instantaneously removed from the store level (a mainstay on the EB side) while sales comps, trade comps, daily planner compliance, reservation and subscription goals were enforced as a means for removing higher paid managers and associates as well as phasing in the new company philosophy.

Through the year, GameStop stores transitioned to the EB Games' Windows-based POS, or Point of Sale system, replacing GameStop's aging MS-DOS-based program. At the end of 2006, the only remaining differences between the stores were primarily the interior design and layout of each store, based on when they were built and what company owned them at the time. EB Games stores are in the process of receiving remodels to make them look like GameStop stores. Stores are also receiving the GameStop brand above the store front and inside the store.

Since the merger in 2006, GameStop began systematically firing all EB-side DMs to trim costs and drive profitability for stock holders. In 2008 (after Steve Morgan left to 'pursue other options'), the stock took a crippling blow as the months dragged on dropping from $70 a share to well below $26 per share. In order to combat this Gamestop began laying off store managers with a tenure of 6 years or more in order to save money. Additionally, this same measure was taken with management from Rhino Video Games after the GameStop acquisition of the company in 2007. Many believe this was done to allow GameStop to place "GameStop-minded" management in the Rhino Stores to increase game reservations and Game Informer subscriptions. This was, however, disproven in several stores where "store goal numbers" declined after the Rhino management was no longer present.

After borrowing $100 million from their parent company (Barnes & Noble) by putting all of their retail chain stores up as collatoral in order to purchase their biggest competitor at the time (EB Games), the company was given a deadline of 2011 to pay off their debt. Regardless Gamestop has continued expansion into Europe and Mexico.

[edit] Acquisition of Rhino Video Games

On January 4, 2007, GameStop Corp. officially purchased Rhino Video Games from Blockbuster and the stores were renamed GameStop during a remodel period lasting through late Spring 2007.

[edit] Acquisitions in Other Countries

[edit] Norway

On April 6th, 2008, GameStop Corp. officially purchased 51 stores from the Norwegian entertainment company Free Record Shop. Throughout the summer of 2008, most of the stores were rebranded to GameStop.

[edit] France

In October 2008, GameStop announced it would purchase France’s leading video-game retailer, Micromania, from the L Capital equity fund for $700 million, including debt.^[4] The purchase of Micromania will add 332 locations (boosting locations in Europe to 1,077 total) and expand GameStop into France for the first time. Micromania President Directeur General Pierre Cuilleret will keep his current post.^[1] GameStop financed the purchase with cash on hand, credit, and $150 million loan from Bank of America. ^[5]

This acquisition took place in November 2008.

[edit] MovieStop

GameStop franchised the name MovieStop to Russ Howard, a former executive for BlockBuster. The two companies are not directly related.

MovieStop stores focus on selling movies rather than games, with a structure similar to that of a GameStop. They buy, sell, and trade movies. MovieStop offers an array of movies, both used and new, in DVD, Blu-ray Disc, and Universal Media Disc formats. As of July 2008, there are 45 MovieStop stores across the United States, including those in Pennsylvania, Alabama, Virginia, Georgia, Massachusetts, New Jersey, Maryland, North Carolina, and Florida. Also, similar to GameStop's policy with games, customers do not need a case to trade movies. However, at MovieStop, an item traded without its original case yields less store credit or cash than an item with its original case.

MovieStop contracted E-Play to produce kiosks that buy, sell, and rent movies. These are normally found in GameStops in the midwest and southeast of the United States^{[citation needed]} . They exchange your DVD's or Blu-Rays for GameStop store credit. The kiosk pricing follows GameStop rules, however the kiosk itself does not sell disks in cases. If you wish to have the case you must ask a GameStop employee to fetch it. You may also rent movies from the kiosk.

MovieStop machines found outside of GameStop stores will accept disks in return for the credit of the store they are found at.

[edit] References

[edit] External links

• GameStop official website
• http://gonintendo.com/?p=59335/
• http://www.awesomeradicalgaming.com/
• http://www.tomfoolery4.wordpress.com/
• http://theexplodingbarrel.com/?p=1675/
• http://gonintendo.com/?p=44138
• http://www.gamespot.com/news/6198389.html/