Masters of the Game

If the present economy were a video game, it would probably be one of those post-Apocalyptic types that the kids seem to like so much. Every time you think things are getting better and you're ready to jump to the next level, you're ambushed by low consumer confidence or higher unemployment figures.

At a time when consumers are strapped for cash — saving more of it and spending less — it would seem that fewer would be willing to spend big bucks on video games. Yet GameStop's numbers tell another story: total sales increased 24.1 percent and comp-store sales rose 12.3 percent in fiscal 2008, making it the nation's 44th largest retailer (see STORES Top 100 Retailers, page 22). For 2009, GameStop forecasts sales growth of up to 12 percent and comparable-store sales growth of up to 6 percent.

With more than 6,200 stores in 17 countries, GameStop is the world's largest video game retailer. In addition to stores under the GameStop, EB Games and Electronics Boutique banners, the company operates Game¬Stop.com and EBgames.com and publishes Game Informer, a monthly video gaming magazine with more than three million subscribers.

GameStop COO Paul Raines says that gaming has gone from being a small niche market to a mainstream form of entertainment that is popular with all demographics, and surveys by Washington, D.C.-based Entertainment Software Association appear to back him up. They reveal that 65 percent of American households actively play video games, and that the average gamer is 35 years old. In 2008, 26 percent of Americans age 50 and older played video games – nearly triple the figure in 1999.

You have this changing group of people and the merging of demographics of all kinds, he says. You have some families where three generations are playing games.

New game genres (like music, which includes hit titles like Guitar Hero and Rock Band) have brought in all types of new players. Nintendo Wii has broadened the gaming market to include senior citizens, who use the game for its exercise components. Further bucking the trend of video gaming being a sedentary pursuit, Wii even promotes activity with sweat-inducing titles such as Gold's Gym Cardio Workout.

As a result, video gaming is the fastest-growing entertainment category in the United States and throughout much of the world, says GameStop CEO Dan DeMatteo.

At an average of $60 per title, video gaming might appear to be a costly pursuit. But a closer look, Raines says, reveals that gaming is actually a relatively inexpensive form of entertainment.

The average video game provides approximately 80 hours of entertainment, he says, and many become family activities that can involve parents and children. Therefore, the cost-per-hour can make gaming less expensive than a night out at the movies.

We saw the same thing after 9/11, DeMatteo says. When most retailers went into a slump, the video gaming category did quite well. We're seeing that [again] right now, but the characteristics of the market have changed [and expanded] tremendously.