GameStop 2004 Annual Report Download - page 3

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R. Richard Fontaine
Chairman of the Board and
Chief Executive Offi cer
During the year, we refi ned our approach
to entering smaller communities by fi ne-
tuning our site selection criteria, store size,
merchandise selections and staffi ng to
better serve markets with a small immediate
population, but a wide geographic draw.
2005 and Beyond:
GameStop and Electronics Boutique
announced a combination on April 18, 2005
which, when completed, will create one of
the world’s largest retailers of video games
with over 4,000 stores, including over 600
international stores, with a total projected
revenue of over $4 billion. After integrating
our two companies, and adopting the best
practices of each, we anticipate up to $50
million in annual cost savings starting in 2006.
This combination not only demonstrates the
faith we have in our business model and our
people, but is testimony to our belief that the
video game industry will continue to grow
both domestically and internationally. This
combination will signifi cantly improve our
position within the very competitive US market,
and will give GameStop a leadership position
in 10 countries around the world.
Over the next three years, the US video game
market is expected to grow by an average of
17%* per year. By 2008, consumer spending on
video games is projected to surpass other major
forms of comparable entertainment including
movie box offi ce receipts and pre-recorded
music** and GameStop is in an outstanding
position to reap the benefi ts.
We are now at the start of another innovative
game technology cycle. In March, Sony’s PSP
– their fi rst handheld unit ever – was launched
and has been exceptionally well received by our
customers; in November, we expect Microsoft
to release the Xbox 360 and Nintendo to
launch another handheld, the Game Boy Micro.
Moving into 2006, the future continues to look
even brighter with Sony expected to release
the PlayStation 3, and Nintendo to follow with
their next generation console, the Revolution.
And it gets better: At GameStop, thanks to
our unique new and used video game product
synergy, we also capitalize on the “cycles
within cycles”. When new hardware and titles
hit the market, we buy back and resell the
older units and get more game product into
the hands of more value-oriented customers.
We are confi dent in how we have positioned
GameStop for the future. We have built our
company to capitalize on all the opportunities of
this dynamic business. I believe both our past
growth, and the huge incremental potential that our
soon to be completed combination will unleash,
puts GameStop in an even better position to be a
superior performer and an excellent investment.
As always, thanks to our thousands of store
managers who meet our customers and serve
them well every day. And thanks to all of you
for your continued support.
* Source: Industry Analysts
**Source: PriceWaterhouseCoopers Media Outlook 2004-2008