GameStop 2013 Annual Report Download - page 23

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Casual Games. The casual game market consists primarily of digital games and has grown rapidly over the last few years.
Casual games are generally defined as simple, easy-to-use, free or very low-priced games played through the internet in Web
browsers, on dedicated gaming Web sites, and increasingly, on mobile phones or other mobile devices. Casual games cost less to
develop and distribute than a traditional console video game and are often supported by in-game advertising or user-purchased
premium content.
Mobile and Consumer Electronics Industry Backgrounds
Mobile and Consumer Electronics. The mobile and consumer electronics market, as we refer to it, consists primarily of
wireless services, new and pre-owned mobile devices, such as smart phones and tablets, consumer electronics such as Apple
products and services, non-gaming headsets and related accessories.
• Wireless Services and Products. Our Aio Wireless and Spring Mobile businesses are exclusive resellers of AT&T and
sell AT&T’s pre-paid and post-paid services, respectively, and a variety of wireless handsets manufactured for use on
AT&T’s network. The market for wireless devices and services is estimated by CTIA- the Wireless Association to be
approximately $184 billion with growth projected over the next five years between 3-5% annually. We expect that the
market for AT&T services and products and the wireless market in general will continue to grow as more and more
wireless devices get connected to the internet through wireless networks.
• Mobile Devices. We define mobile devices as smartphones, tablets and related accessories. We sell new mobile devices
in our Technology Brands stores. We buy, sell and trade pre-owned mobile devices and tablets in our Video Game Brands
and Technology Brands stores. We take trades of other select pre-owned electronics and smartphones in our Video Game
Brands stores and in our Technology Brands stores. The market for pre-owned mobile devices and other electronics is
referred to as the recommerce industry, which has been growing in recent years as companies like NextWorth and Gazelle
advertise that consumers can trade in their pre-owned electronic devices. We estimate that the size of the recommerce
market is $2.3 billion in the United States and will grow at an annual rate of 20-25% over the next five years.
• Consumer Electronics. Our Simply Mac stores are authorized Apple resellers and also offer certified training, warranty
and repair services to customers. Based on Apple public statements and filings, we estimate the market for Apple products
sold at retail in the U.S. to be approximately $69 billion and is expected to grow 5-10% annually in the next five years.
Business and Growth Strategy
Our goal is to continue to be the world’s largest multichannel retailer of new and pre-owned and value video game products
and to strategically expand our Simply Mac, Spring Mobile and Aio Wireless businesses. We plan to strengthen our position as
the retail market leader in the video games industry by executing the following strategies:
• Increase Market Share and Expand our Market Leadership Position. We plan to increase market share and awareness
of the GameStop brand and drive membership in our loyalty program, expand our sales of new and pre-owned mobile
products and expand our market leadership position by focusing on the launch of new hardware platforms as well as
physical and digital software titles.
• Increase GameStop Brand Awareness and Loyalty Membership. Substantially all of GameStop’s U.S. and European
stores are operated under the GameStop name, with the exception of the Micromania stores in France. We operate loyalty
programs in each of the countries in which we operate our Video Game Brands stores. The Micromania stores introduced
a loyalty program in the 1990s. Using this program as a model, we introduced our U.S. loyalty program called PowerUp
RewardsTM ("PowerUp Rewards") in 2010. We introduced other loyalty programs in our video game stores in remaining
countries between 2011 and 2013. Building our brands has enabled us to leverage the increased awareness to capture
advertising and marketing efficiencies. Our loyalty programs generally offer our customers the ability to sign up for a free
or paid membership which gives our customers access to exclusive video game related rewards. The programs' paid
memberships may also include a subscription to Game Informer magazine, additional discounts on pre-owned merchandise
in our stores and additional credit on trade-ins of pre-owned products. As of February 1, 2014, we had 27 million members
in the PowerUp Rewards program, approximately 7 million of which were paid members. In total, our loyalty programs
around the world had approximately 34 million members. Our branding strategy is further supported by our Web sites
which allow our customers to buy games online, reserve or pick up merchandise in our stores, order in-store for home
delivery and to learn about the latest video game products and their availability in our stores. Together, our loyalty programs,
Web sites, mobile applications, magazine and other properties are a part of our multi-channel retail strategy designed to
enhance our relationships with our customers, make it easier for our customers to transact with us and increase brand
loyalty. In fiscal 2014, we plan to continue to aggressively promote our loyalty programs and increase brand awareness
over a broader demographic area in order to promote our unique buying experience in-store for new and pre-owned hardware
and software, trade-ins of pre-owned video game and mobile consumer electronics products and to leverage our Web sites