GameStop 2014 Annual Report Download - page 36

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The introduction of another new generation of consoles could negatively impact the demand for existing productsorour
pre-owned business.
The introduction of another new generation of consoles, the features of such consoles or changes to the existing generations
of consoles, including any future restrictions or conditions that may adversely affect our pre-owned business or the ability to play
prior generation video games on such consoles, and the impact on demand for existing products could have anegative impact on
our sales and earnings.
We depend upon the timely delivery of new and innovative products from our vendors.
We depend on major hardware manufacturers, primarily Microsoft, Sony and Nintendo, to deliver new and existing video
game platforms and new innovations on atimely basis and in anticipated quantities. In addition, we depend on software publishers
to introduce new and updated software titles. We have experienced sales declines in the past due to areduction in the number of
new software titles available for sale. Any material delay in the introduction or delivery,orlimited allocations, of hardware
platforms or software titles could result in reduced sales.
If we fail to keep pace with changing industry technology and consumer preferences, we will be at acompetitive
disadvantage.
The interactive entertainment industry is characterized by swiftly changing technology,evolving industry standards, frequent
new and enhanced product introductions, rapidly changing consumer preferences and product obsolescence. Videogames are now
played on awide variety of products, including mobile phones, tablets, social networking websites and other devices. In order to
continue to compete effectively in the electronic game industry,weneedtorespond quickly to technological changes and to
understand their impact on our customers’ preferences. It may take significant time and resources to respond to these technological
changes. If we fail to keep pace with these changes, our business may suffer.
Technological advances inthe delivery and types of video games and PC entertainment software, as well as changes in
consumer behavior related to these new technologies, could lower our sales.
While it is currently possible to download video game content to the current generation video game systems, downloading is
somewhat constrained by bandwidth capacity and video game file sizes. However,broadband speeds are increasing and
downloading technology is becoming more prevalent and continues to evolve rapidly.The newconsoles from Sony and Microsoft
have improved download technology.Ifthese consoles and other advances in technology continue to expand our customers’
ability to access and download the current format of video games and incremental content for their games through these and other
sources, our customers may no longer choose to purchase video games in our stores or reduce their purchases in favor of other
forms of game delivery.Asaresult, our sales and earnings could decline.
We may not compete effectively as browser,mobileand social gaming becomes more popular.
Gaming continues to evolve rapidly.The popularityofbrowser,mobileand social gaming hasincreased greatlyand this
popularity is expected to continue to grow.Browser,mobileand 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,
mobileand social games and transition our business to take advantage of these new forms of gaming, our financial position and
results of operations could suffer.Wehave been and are currently pursuing various strategies to integrate these new forms of
gaming into our business model, but we can provide no assurances that these strategies will be successful or profitable.
Our ability to obtain favorable terms from oursuppliers 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,Microsoft, Nintendo and Activision, which accounted for 24%, 17%, 11%and 10%,
respectively,ofour newproduct purchases in fiscal 2014. If our suppliers do not provide us with favorable business terms, we
maynot be able to offer products to our customers at competitive prices.
If ourvendors fail to provide marketing and merchandising support at historical levels, oursales and earnings could be
negatively impacted.
The manufacturers of video game hardware and software have typically provided retailers with significant marketing and
merchandising support for their products. Additionally,AT&T and Apple provide our Technology Brands stores with similar
support.Aspart of this support, we receive cooperative advertising and market development payments from these vendors. These
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