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Less gaming, more tech and collectibles become focus for GameStop

🕐 2 min read

GameStop continues to cash in on geek culture, but this time, it’s not just video games driving the Grapevine-based company’s profits.

Although GameStop hopes physical video games will make up 50 percent of its earnings, the company wants the other half to come from mobile technology brands, digital gaming and collectibles by 2019, said GameStop CEO Paul Raines. Currently, products other than physical video games make up about 30 percent of GameStop’s revenue.

Raines and other GameStop executives talked Thursday about the company’s growth expectations at GameStop’s 2016 Investors Day event in Grapevine. With physical video games declining in popularity, GameStop plans to put more emphasis on its other brands.

“Growth of the company, despite what happens in physical gaming, is new school thinking,” GameStop CFO Rob Lloyd said.

In the technology sector, GameStop operates more than 900 AT&T stores, which is double the number of stores GameStop had in 2014. GameStop also has 70 Cricket Wireless stores and 76 Simply Mac stores.

This year, GameStop anticipates the acquisition of 400 to 500 more stores, said Jason Ellis, senior vice president of technology brands.

And with the smartphone becoming the “remote control of your life,” Ellis said GameStop expects the technology side to be profitable. GameStop’s technology brands earned $28.5 million in 2015 and is expected to earn between $850 million-$1 billion in 2016.

On the digital side, GameStop’s digital business is worth $1 billion, thanks in large part to the company’s PowerUp Rewards program, Executive Vice President Mike Hogan said. PowerUp Rewards allow customers to earn points by purchasing from GameStop and use those points to redeem more merchandise.

Hogan said GameStop Digital has grown 263 percent since its launch in 2010.

The company’s collectibles business – that is, novelty items like Pop! Vinyl bobble heads and Star Wars BB-8 backpacks – will soon be a $1 billion business as well, Hogan said.

He said the company is working to bring more attention to its collectibles retailer, ThinkGeek.

“Not everyone knows ThinkGeek, but those who know us, like us a lot,” he said.

But despite putting more emphasis on things other than video games, video games aren’t going away anytime soon, GameStop Chief Operating Officer Tony Bartel said.

He said digital gaming should keep the video game industry thriving. New virtual reality consoles, such as the Play Station VR launching in October, will add to revenue as well.

“The advent of this new technology is exciting, and we will dominate these launches,” Bartel said.

Overall, Lloyd said he expects GameStop’s total operating earnings to hit between $685 million and $715 million in 2016. By 2019, the company hopes earnings will grow by 3-5 percent, with at least 50 percent of sales coming from products other than physical video games.

“We believe we have a lot of substance in our plan,” Raines said.

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