GameStop 2012 Annual Report Download - page 33

Download and view the complete annual report

Please find page 33 of the 2012 GameStop annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

We may not compete effectively as browser, mobile and social gaming becomes more popular.
Gaming continues to evolve rapidly. The popularity of browser, mobile and social gaming has increased
greatly and this popularity is expected to continue to grow. Browser, mobile and social gaming is accessed
through hardware other than the consoles and traditional hand-held video game devices we currently sell. If we
are unable to respond to this growth in popularity of browser, mobile and social games and transition our
business to take advantage of these new forms of gaming, our financial position and results of operations could
suffer. The Company has been and is currently pursuing various strategies to integrate these new forms of
gaming into the Company’s business model, but we can provide no assurances that these strategies will be
successful or profitable.
We depend upon the timely delivery of products.
We depend on major hardware manufacturers, primarily Microsoft, Sony and Nintendo, to deliver new and
existing video game platforms and new innovations on a timely basis and in anticipated quantities. In addition,
we depend on software publishers to introduce new and updated software titles. We have experienced sales
declines due to a reduction in the number of new software titles available for sale. Any material delay in the
introduction or delivery, or limited allocations, of hardware platforms or software titles could result in reduced
sales in one or more fiscal quarters.
We depend upon third parties to develop products and software.
Our business depends upon the continued development of new and enhanced video game platforms and
accessories, PC hardware and video game and PC entertainment software. Our business could suffer and has
declined due to the failure of manufacturers to develop new or enhanced video game platforms, a decline in the
continued technological development and use of multimedia PCs, or the failure of software publishers to develop
popular game and entertainment titles for current or future generation video game systems or PC hardware.
Our ability to obtain favorable terms from our suppliers may impact our financial results.
Our financial results depend significantly upon the business terms we can obtain from our suppliers,
including competitive prices, unsold product return policies, advertising and market development allowances,
freight charges and payment terms. We purchase substantially all of our products directly from manufacturers,
software publishers and, in some cases, distributors. Our largest vendors worldwide are Sony, Activision,
Nintendo, Microsoft and Electronic Arts, which accounted for 17%, 16%, 14%, 13% and 11%, respectively, of
our new product purchases in fiscal 2012. If our suppliers do not provide us with favorable business terms, we
may not be able to offer products to our customers at competitive prices.
If our vendors fail to provide marketing and merchandising support at historical levels, our sales and
earnings could be negatively impacted.
The manufacturers of video game hardware and software and PC entertainment software have typically
provided retailers with significant marketing and merchandising support for their products. As part of this
support, we receive cooperative advertising and market development payments from these vendors. These
cooperative advertising and market development payments enable us to actively promote and merchandise the
products we sell and drive sales at our stores and on our Web sites. We cannot assure you that vendors will
continue to provide this support at historical levels. If they fail to do so, our sales and earnings could be
negatively impacted.
18