GameStop 2014 Annual Report Download - page 24

Digital Gaming. The digital game market consists of both immersive and casual games delivered over the internet to consoles,
computers, tablets, smart phones and other devices. We sell avarietyofdigitally downloadable content in our video game stores
and on our websites. The recent generations of video game consoles contain the technology to digitally download video game
software content and agrowing market has developed for the sale of digitally downloadable add-on content for physical games,
which the electronic game industry calls “DLC” and, more recently,fullgamedownloads.The next generation consoles increase
the availability and ease of downloading game content and we expect the demand for downloadable video games to continue to
grow as the installed base of the next generation of consoles grows.
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 websites, and increasingly,onmobilephonesorother mobile devices. Casual games cost less to
develop and distribute than atraditional console video game and are often supported by in-game advertising or user-purchased
premium content. We earn revenues from browser-based games and mobile games through our Kongregate business, which is a
leading platform for web and mobile gaming.
Mobile and Consumer Electronics Industry
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 accessories.
•Wireless Services and Products. Our Spring Mobile businesses are exclusive resellers of AT&T’s pre-paid and post-paid
services, respectively,and avariety of phones, tablets and other wireless devices manufactured for use onAT &T’s network.
The market for wireless devices and services is estimated by CTIA -The Wireless Association®to be approximately $180
billion with growth projected over the next five years between 3-5% annually.Weexpectthatthe market for AT &T
services and products and the wireless market in general will continue to grow as more and more wireless devices connect
to the internet through wireless networks.
•Mobile Devices. We define mobile devices as smart phones, tablets and related accessories. We sell newmobiledevices
in our Technology Brands stores. We buy, sell and trade pre-owned mobile devices and tablets in many of our Video
Game Brands and Technology Brands stores.
•Consumer Electronics. OurSimply 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 expect the market for Apple products
sold at retail in the U.S. to grow 5-10% annually over the next five years.
Business and Growth Strategy
Our vision is to continue to expand our business as aglobalfamily of specialty retail brands that makes the most popular
technologies affordable and simple. Ourmission 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 Spring Mobile and Simply Mac businesses to diversify our
revenue streams. Additionally,following on the success of extending our core competencies into our mobile business, we continue
to seek other opportunities to extend these competencies to other businesses and retail categories to continue to grow our company.
We have abroad-based executive management team with substantial experience in the retail sector in merchandising, marketing,
supplychain management, store operations and real estate. Our strategy is to leverage our management team and core competencies
to identify other retail concepts that we can acquire and rapidly expand. We believe our core competencies include the following:
•Real estate knowledge, including extensive relationships with landlords, portfolio management, negotiating skills and
risk mitigation;
•Human resource management, includinghiring, training, systems and processes, particularly in multi-unit
managementofsmall,limited staffing, specialty retail stores with expert staffinassisted-selling;
•Knowledge of buy-sell-trade programs, including pricing algorithms, inventory balancing, refurbishment capabilities
and secondhand dealer laws;
•Customer retention programs, including using our loyalty programs to driveconsumerawareness of newretail
concepts and promote newproducts; and
•The ability to deploy capital in ways that diversify the underlying business, manage financial risk and increase
shareholdervalue, including finding acquisitionsthathave ahigh return on invested capital and are accretive to
earnings.
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