The PC's Place at Retail, and Digital Downloads

Now, something that bears talking about, also, is the performance of PC sales in your stores. Have you found that it's been consistent and strong?

BM: That is down from a year ago. We had planned for it to be down. Again, the number of new titles we have on PC is down probably more than what I had anticipated it would be down, but again I don't see that as a threat or a signaling -- we're not backing away from it at all.

A year ago we had 350 stores that didn't carry PC merchandise and today, that number hasn't grown any. There are some big titles coming out, especially World of Warcraft: Lich King. For a PC title to approach being in the top 10 for the year, there are very few that can do it, and obviously Blizzard does have the majority of them when that does happen.

TB: And we just had a great launch on Sunday, with Spore.

BM: That's correct, with Spore. The PC market is definitely still very alive, and a portion of our business that we're hanging onto.

TB: Another thing that we've done since last year -- Bob really lead this initiative -- but we've taken a lot of the PC games where we kind of had them on a gondola, from a space perspective, but we've just realized, this is too important of a category, so we've put a lot of them up on the wall again where there's stronger representation in our stores.

Do you find that those kinds of decisions make a really big difference in consumer reaction?

BM: Yeah, we really did. It's a lot more accessible, the customer doesn't feel like it's just an afterthought or that we're closing out that merchandise. It is meaningful. We represent our top sellers. Still, with value product, we'll continue to have that merchandised within a gondola. That doesn't need as much prime wall space as the frontline assortment.

Do you feel the bite from the competition of download services like Steam, on the PC platform?

BM: It has changed a lot. It is growing, but we're also growing with it. We offer digital downloads on PC, especially, through GameStop.com, we see that continuing to be a market that will continue to grow, obviously. EA has made some recent announcements on download of a full game.

But again, our position with our publishers is that we're not afraid to compete with them -- against that digital distribution model. We can offer it. It's really another choice for the consumer, as long as they're not making that choice an unfair advantage for them, where they're able to sell it earlier or they add something into the game that we can't get our hands on for our consumer.

TB: We know that we have evangelists -- you're seeing them all walk by here [at the show] -- but they're evangelists for the game world. We know that there are a lot of people, the majority of people, that are still going to want to experience the retail experience -- we think, in particular, the GameStop experience, where you go in and talk to a knowledgable person about the game.

And you're able to get it at the same time, most of the time even before [you could otherwise], when you go into a GameStop and pick it up. As Bob said, we're at parity. We're all about giving consumers what they want, so if consumers want to digitally download it, then that option is available. We just want to continue to offer the best retail experience that we can.

How has the performance of the digital downloads through GameStop.com been? Have you been satisfied with that?

BM: Yes, I would say that we are. Again, on Spore, we had a pretty good response on the number of digital downloads. I wouldn't say that it's a significant part of our business, but again, as we've mentioned, it's another option or a choice for our consumer that we'll make available to them and they can decide whether they want to sit at how and download or come into the store.

What do you think of EA moving to having the full Burnout Paradise game downloadable on the PlayStation Network?

BM: That particular game, that's a game we've had on the shelf and we've been selling. The difference there again, is that it's a smaller game --

TB: About two gigabytes, I believe.

BM: So it's an option for the consumer to have a game we've already been able to say that and market it to our consumers. It's another distribution option for them.

Sure, and you have been able to sell the game for quite a long period of time, but games like that could potentially have a lot of success as a Greatest Hits title, and that could potentially eat into that success. There's still significance there.

BM: Yeah, you're right. I think the position that we're in there is that really it's a choice for the consumer. Our passionate salespeople are really what represent what we believe is the advantage that we have and will continue to have, and as you know from being in our stores and working there for us, it's that it's just part of what the excitement that we create -- especially around these launches, giving them the ability to come in and talk to the talk with these people. [Ed. note: by "working there for us", McKenzie is referencing a previous conversation where the author commented he had previously worked in Babbage's and FuncoLand stores.]

TB:  I see the publishing very much as a partnership. In this case, you could see it as a competition to the way that we sell. So we're going to treat it like any other competition -- we're going to try to be the best experience for the consumer, and we think that we're going to become that. So again, if the customer wants to digitally download it, then it's available for them, but we really fundamentally believe we offer a much better experience in our stores.

BM: We've done some internal studies, really looking at the bandwidth of the internet in the U.S. as it is now, and I mean it's years before you would be able to take a larger game and timely download that within the current configuration of the internet, within the U.S.

So again, there is a percentage of the consumers that are going to want to have that type of distribution choice, but as far as it turning into a significant threat, I think is several years -- from the study we had, it is out to 2020 or beyond, before the bandwidth of the current internet configuration would allow that.