Insights on Future Business Strategies and Target Market Segmentation

Explore the future of business consulting through a comprehensive analysis of profit margins, e-sports market growth, and strategic recommendations for companies like GameStop. Witness how Lazaridis Consulting Group and team present innovative solutions, including targeting young gamers like Zack and Valerie. Discover the evolving landscape of brick-and-mortar and e-commerce strategies amidst the dynamic world of sports and entertainment.

• Business consulting
• Future strategies
• Target market segmentation
• Profit margins
• E-sports market

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1. Lazaridis Consulting Group THE FUTURE OF BUSINESS The Future of Business

2. Lazaridis Consulting Group THE FUTURE OF BUSINESS Have you ever felt the thrill of a live event?

3. Lazaridis Consulting Group MLS? THE FUTURE OF BUSINESS Champions League? NBA? NHL? MLB? E-Sports

4. E-Sports and Physical Game Market Growth 2019 2022 2025 E-Sports 2028 Physical Gains

5. PROFIT MARGINS 2012: 2019: Less than 7 % Less than 4 %

6. TODAYS RECOMMENDATION GameStop is in reactive mode: Act fast with directive leadership. Brick-and- Mortar Strategy E-Commerce Strategy Become data-driven Continue to gather customer data Leverage for: (a) Targeting (b) Personalization (c) Consumer trends (1) Experiential stores for an arena experience (2) Events (3) Downsize Leverage website for: (a) E-commerce (b) Live streaming (c) Marketing Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

7. GAMESTOP: WHERE TO NEXT? CONSULTING TEAM: TONY DAO, AUDREY GOTTLIEB, JUDY TRAN, SHAHIN SAFAKHOO PRESENTING TO: GEORGE SHERMAN (CEO, GAMESTOP)

8. AGENDA I. Background Analysis I. Problem II. Alternatives II. Recommendation III.Implementation I. Financial Impacts II. Contingencies IV.Closing

9. Lazaridis Consulting Group THE FUTURE OF BUSINESS Background

10. TARGET SEGMENT Zack Valerie 31 23 Young, attractive woman New dad Still loves playing video games! On the e- sports university team Predominantly male, but female viewers are also increasing. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

11. INTERNAL ANALYSIS STRENGTHS WEAKNESSES Management turnover Lack of customer segmentation Lack of customization capability Not data driven Sales Margin Non-existent profits Store traffic Same store sales Locations worldwide Strong following & reach PowerUp: 39.6 M GameInformer: 6.6 M Active on social media New EVP & CCO: Expertise in e-commerce, marketing, loyalty Consumers appreciate a sense of community. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

12. EXTERNAL ANALYSIS OPPORTUNITIES E-Commerce E-Sports is a growing industry Digital game content & new video game product: Growing at 18 B 32 B per year THREATS Policies from game publishers (e.g. Sony as first mover) Consumers are looking to online Industry and consumer preferences are changing. There is opportunity to pivot. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

13. COMPETITIVE LANDSCAPE High revenues Walmart Steam Target Origin Best Buy Online Brick-and-mortar Uplay Kmart Low revenues Buying games and consoles: Consumers have many choices. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

14. KEY TRENDS E-Commerce: Shift from physical game disks to online retail Mall-oriented foot traffic E-Sports is growing: $1.1 B USD 27 % Opportunity to: 1. Align with new shopping behaviours. 2. Enter growing industry. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

15. KEY PROBLEM GameStop s Stock Price Instability in leadership 2008: $63 2014: $53 2019: $5 Sales are down Failure to sell company Unfavourable industry trends and consumer trends for GameStop . Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

16. Lazaridis Consulting Group THE FUTURE OF BUSINESS Recommendation

17. TODAYS RECOMMENDATION GameStop is in reactive mode: Act fast with directive leadership. Brick-and- Mortar Strategy E-Commerce Strategy Become data-driven Continue to gather customer data Leverage for: (a) Targeting (b) Personalization (c) Consumer trends (1) Experiential stores for an arena experience (2) Events (3) Downsize Leverage website for: (a) E-commerce (b) Live streaming (c) Marketing Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

18. Lazaridis Consulting Group THE FUTURE OF BUSINESS Alternatives

19. ALTERNATIVES Can Execute FAST Ability to Execute Achieve Profitability Sell Merge Acquire Downsize: Reduce brick- and-mortar Pivot: Enter e-commerce Innovate: Create an experience Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

20. ALTERNATIVE: SELL Pros Cons Stock price has plumetted Cash flow Go out of business Employee layoffs Difficult to find a buyer & negotiate attractive sale price. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

21. ALTERNATIVES: MERGE Pros Cons Gain market share Not financially feasible Company disruption Operational complexity Most mergers fail! Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

22. ALTERNATIVES: ACQUIRE Pros Cons Gain market share Not financially feasible Company disruption Operational complexity GameStop is not in the financial position nor organizational health to acquire. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

23. ALTERNATIVES: DOWNSIZE BY REDUCING BRICK-AND-MORTAR Pros Cons Frees up capital Some layoffs Reduce operational costs (e.g. store staff) Reduces employee morale Change management efforts will be critical. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

24. ALTERNATIVES: PIVOT INTO E-COMMERCE Pros Cons Consistent with consumer trends Requires website development Reduce operational costs (e.g. store staff) New revenue stream This is consistent with changes in consumer trends. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

25. ALTERNATIVES: INNOVATE BY CREATING EXPERIENTIAL STORES Pros Cons Consistent with consumer trends: Experience! Requires updates to store infrastructure Increase foot traffic into stores Enter emerging e-sports industry This is consistent with changes in consumer AND industry trends. Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

26. ALTERNATIVES Can Execute FAST Ability to Execute Achieve Profitability Sell Merge Acquire Downsize: Reduce brick- and-mortar Pivot: Enter e-commerce Innovate: Create an experience Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

27. Lazaridis Consulting Group THE FUTURE OF BUSINESS Recommendation

28. TODAYS RECOMMENDATION GameStop is in reactive mode: Act fast with directive leadership. Brick-and- Mortar Strategy E-Commerce Strategy Become data-driven Continue to gather customer data Leverage for: (a) Targeting (b) Personalization (c) Consumer trends (1) Experiential stores for an arena experience (2) Events (3) Downsize Leverage website for: (a) E-commerce (b) Live streaming (c) Marketing Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

29. Lazaridis Consulting Group THE FUTURE OF BUSINESS Implementation

30. IMPLEMENTATION WHAT? Close ~4000 stores Transform brick-and-mortar stores into eSports arenas Immediately WHY? Console sales fastest-growing segment in 2020 Global market value of $47.9 billion USD CAGR of 13.4% Does not participate in in-person tournaments and online streaming sites Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

31. ESPORTS ARENA EXPERIENCE Featured gamer celebrities (JuegaGerman) Themed Game Nights Food and Beverage Sales Collectibles and merchandise Major Game consoles tournaments Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

32. ESPORTS ARENA EXPERIENCE In-store Revenue Streams Food and beverage (lease and commission) Used games (pick-up only) Experience (tickets and play time) New games (phased-out) Consoles (new) Collectibles Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

33. ONLINE GAMESTOP Marketing Channels: Twitter Facebook Instagram YouTube (-) Game Informer magazine Online Revenue Streams Experience (tiered- priced tickets and play time) Used games (pick-up or delivery) Streaming to watch live events Consoles (new) Collectibles Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

34. IMPLEMENTATION WHAT? Hire data analysts to become more data-driven WHY? Currently do not segment customers or customize PowerUp Rewards program Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

35. DATA-DRIVEN ANALYTICS: Personalized communication Targeting Segmenting Knowledge of trends Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

36. IMPLEMENTATION TIMELINE 2019 2020 2021 Close 1,503 stores Close 750 stores E-Sports Arena E-Commerce Platform Close 747 stores Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

37. Lazaridis Consulting Group THE FUTURE OF BUSINESS Financial Impacts

38. COSTS Implementation Costs (Thousands) Total $1,167,132 $179,310 $50,000 $350,300 Total Cost Early Lease Termination (3 Years) Revamp Stores (2020) Online Marketplace Dev/Maintenance Data Analytics Team (4 @ $80K) Marketing (Sponsorships) Inventory Costs Layoffs $2,560 $120,000 $643,772 $500 Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

39. REVENUE BREAKDOWN - ESPORTS Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

40. REVENUE COMPARISON Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

41. EBITDA AND BOTTOM LINE Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

42. Lazaridis Consulting Group THE FUTURE OF BUSINESS Contingencies

43. CONTINGENCIES Risk Likelihood Mitigation Plan Strong communication plan (including vision) and change management efforts. Employee morale and reaction to directive leadership Builds brand awareness and supports the sense of community. Group Viewing Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

44. Lazaridis Consulting Group THE FUTURE OF BUSINESS Appendix

45. PROVIDE CUSTOMERS WITH AN EXPERIENCE Analog: Indigo & Chapter Author or Speaker Outcome: Increased foot traffic Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

46. USED GAMES MARKET Competitors: Kijiji Craigs List Peer-to-peer Best Buy Background Analysis Problem Alternatives Recommendation Implementation Financial Impacts Contingencies Closing

47. EVENTS Different time zones Frequent events

48. EVENTS Different time zones Frequent events working with players worldwide.

49. E-SPORTS ATHLETE Through your gaming platform: You can recruit your own players.

50. ASSUMPTIONS Assumptions 2018 Sales (Thousands) 2018 Costs Organic Growth (half of industry growth) $8,285,300 $8,987,300 3% Store Revamp Cost (Thousands) Number of Stores 25 2000 Revenue Stream Assumptions Customers Ticket Cost $ Value (2020) 100 500 5000 Growth Rate Themed Game Nights (Weekly) Gamer Celebrities (Monthly) Large Tournaments (Quarterly) Collectibles & Merchandise Food & Beverages Lease & Commission $20 $40 $40 $160,000,000 $400,000,000 $1,600,000,000 $750,586,750 $64,000 10% 10% 10% 10% 10%

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