GameStop 2010 Annual Report Download - page 28

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Table of Contents
also generated through the sale of advertising space. We also operate the Web site www.gameinformer.com, which is the premier destination for
moment-by-moment news, features and reviews related to video gaming. English version results from Game Informer operations are included in the
United States segment where the majority of subscriptions and sales are generated. Other international version results from Game Informer
operations are included in the segment in which the sales are generated.
E-Commerce
We operate several electronic commerce Web sites in various countries, including www.gamestop.com, www.ebgames.com.au,
www.gamestop.ca, www.gamestop.it, www.gamestop.es, www.gamestop.ie, www.gamestop.de and www.micromania.fr, that allow our customers
to buy video game products and other merchandise online and, in some cases, allow customers to reserve merchandise and then pick it up in stores.
The sites also offer customers information and content about available games, release dates for upcoming games, and access to store information,
such as location and product availability. E-commerce results are included in the geographic segment where the sales originate.
Kongregate
In August 2010, we purchased Kongregate Inc., the operator of online video gaming site www.kongregate.com, which offers free-to-play
video games to over 13 million unique visitors per month. Kongregate earns revenues from in-game advertising and offering game players the
opportunity to advance their game play with in-game transactions (called micro-transactions). Kongregate has a proprietary virtual currency called
Kreds which can be purchased and then used to pay for in-game transactions. Over 8,000 developers have used the software development kits
created by Kongregate to integrate over 35,000 games into the Kongregate.com environment.
Advertising
Our stores are primarily located in high traffic, high visibility areas of regional shopping malls, strip centers and pedestrian shopping areas.
Given the high foot traffic drawn past the stores themselves, we use in-store marketing efforts such as window displays and "coming soon" signs to
attract customers, as well as to promote used video game products. Inside the stores, we feature selected products through the use of vendor displays,
"coming soon" or preview videos, signs, catalogs, point-of-purchase materials and end-cap displays. These advertising efforts are designed to
increase the initial sales of new titles upon their release.
On a global basis, we receive cooperative advertising and market development funds from manufacturers, distributors, software publishers and
accessory suppliers to promote their respective products. Generally, vendors agree to purchase advertising space in one of our advertising vehicles.
Once we run the advertising, the vendor pays to us an agreed amount.
In fiscal 2010, we launched our new PowerUp Rewards loyalty program in the United States which gives our customers the ability to sign-up
for a free or paid membership that offers points earned on purchases in our stores, on our U.S. Web site and on Kongregate.com, which can be
redeemed for discounts or merchandise. The program's paid tier also includes a subscription to Game Informer magazine, additional discounts on
selected merchandise and additional credit on trade-ins in our stores. This program is designed to incent our customers to shop more often at our
stores and to allow us to market directly to our customers based on their individual tastes and preferences. Our PowerUp Rewards program provides
members with the opportunity to earn one-of-a-kind video game related rewards not available through any other retailer. Vendors also participate in
this program to increase the sales of their individual products.
In the last several years, as part of our brand-building efforts and targeted growth strategies, we expanded our advertising and promotional
activities in certain targeted markets at certain key times of the year. In addition, we expanded our use of television and radio advertising in certain
markets to promote brand awareness and store openings. We expect our investment in advertising, including PowerUp Rewards, to increase as we
continue to expand our membership base and build our brand. 12