GameStop Reimagined: A Strategy for Market Leadership Revival
GameStop faces a critical need to innovate and adapt in the rapidly evolving gaming industry. This strategic plan emphasizes the importance of re-establishing market leadership through innovative approaches, while considering community, technology, and competitiveness in the market landscape.
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C Carolina Consulting It s Easy, It s Easy, Georgie Boy: Georgie Boy: Stabilizing Stabilizing Game GameStop Stop Presented to: George Sherman, CEO of GameStop January 9, 2020 Presented by: Jason Cline, Will Richardson, Carly Seneca, and Caroline Wright Situation Analysis Recommended Strategy Implementation Conclusion Overview
Key Question Key Question What can GameStop do to innovate and re-establish market leadership? Reality Check: GameStop s offerings are becoming irrelevant and need a drastic change This is not an overnight fix The gaming industry has evolved much faster than GameStop We need a multi-pronged approach. Situation Analysis Recommended Strategy Implementation Conclusion Overview
Executive Summary Executive Summary GameStop s present product offering has become irrelevant due to changing technology and customer preferences. Problem Goal Develop an innovative strategy to re-establish market leadership. COMMUNITY Alternatives Downsize Innovate M&A Bloated B&M presence in undesirable locations Outdated revenue stream Hurdles Lack of data leveraging Situation Analysis Recommended Strategy Implementation Conclusion Overview
Agenda Agenda Analysis Alternatives Recommended Strategy Implementation Q&A Situation Analysis Recommended Strategy Implementation Conclusion Overview
Qualifiers Qualifiers Licensing deals with game designed Access to a vibrant user base Competitive pricing Brand awareness Situation Analysis Recommended Strategy Implementation Conclusion Overview
The Story The Story N BLOCKBUSTER We need to act fast in order to re-establish market dominance Situation Analysis Recommended Strategy Implementation Conclusion Overview
Goals & Objectives Goals & Objectives Key Stakeholders: Definition of Success: Re-establishment of market leadership through revenue growth, community, and data Gamers (Consumers) Shareholders Parents Key Performance Indicators Revenue growth Paid memberships Comprehensive data development Game Makers Employees Situation Analysis Recommended Strategy Implementation Conclusion Overview
Timeframe Timeframe Create 3rd Party Data Partnerships Evaluate Retail Stores Develop App/Launch Community Interface COMMUNITY Situation Analysis Recommended Strategy Implementation Conclusion Overview
Key Numbers Key Numbers 15 million Twitch daily active users $5 per share 31 years old 454 million eSports viewers $1.5 billion in eSports prize money Situation Analysis Recommended Strategy Implementation Conclusion Overview
Data Hierarchy Data Hierarchy Where we are right now Prescriptive Analytics Predictive Analytics Data Analytics Data Aggregation Data Collection Situation Analysis Recommended Strategy Implementation Conclusion Overview
Decision Tree Decision Tree M&A GameStop is becoming irrelevant Downsizing Acquire U Play Leave international presence & focus only in North America Innovate Reposition within the industry Situation Analysis Recommended Strategy Implementation Conclusion Overview
Decision Tree Decision Tree M&A GameStop is becoming irrelevant Downsizing Acquire U Play Leave international presence & focus only in North America Innovate Reposition within the industry Situation Analysis Recommended Strategy Implementation Conclusion Overview
Operating Landscape Operating Landscape Competitors Company Customers Situation Analysis Recommended Strategy Implementation Conclusion Overview
Operating Landscape: Competition Operating Landscape: Competition Competitors Company Customers Situation Analysis Recommended Strategy Implementation Conclusion Overview
Competitive Overview Competitive Overview Industry Overview Strengths How We Win Brick & Mortar and online gaming Brand awareness Market presence Profitability Focus in retail and online Expand data capabilities Competitors BestBuy Walmart Target Origin Steam UPlay Weaknessess Focused operations in retail Underutilized data Potential Landmines Competition enters digital Data integrity Situation Analysis Recommended Strategy Implementation Conclusion Overview
Operating Landscape: Customers Operating Landscape: Customers Competitors Company Customers Situation Analysis Recommended Strategy Implementation Conclusion Overview
Customer Description Customer Description Youth Influencer (8-17) & their Parental Acquirers Kids who are still learning and exploring Like the competitive aspect of gaming Not heavily time invested Play legacy games Casual Bro gamer (18-35) Play lots of games Big investment in gaming communities Obsessed with eSports and Twitch streams Competitive Situation Analysis Recommended Strategy Implementation Conclusion Overview
CLV ($USD) CLV ($USD) MR Ret years Total acq cost CLV CLV Y Comp 750 2000 0.25 0.25 10 15 1875 7500 400 500 1475 7000 Y Comp 750 2000 0.35 0.35 10 15 2625 10500 400 500 2225 10000 Situation Analysis Recommended Strategy Implementation Conclusion Overview
Operating Landscape: Company Operating Landscape: Company Competitors Company Customers Situation Analysis Recommended Strategy Implementation Conclusion Overview
Internal Perspective Internal Perspective Company Overview How We Lose How We Win Multichannel retailer focused on gaming Overextended retail presence Not leveraging data Underutilizing memberships Brand awareness Expansive inventory Pre-owned games (resale) Key Products GameStop stores EB Games Micromania ThinkGeek Game Informer PowerUp Rewards Situation Analysis Recommended Strategy Implementation Conclusion Overview
Decision Tree Decision Tree M&A GameStop is becoming irrelevant Downsizing Acquire U Play Leave international presence & focus only in North America Innovate Reposition within the industry Situation Analysis Recommended Strategy Implementation Conclusion Overview
Alternative #1: Acquire Alternative #1: Acquire UPlay UPlay Given low adoption, it is an easy target for acquisition Provides GameStop with a game downloading capability to pair with its preeminent physical game offerings PROs Allows GameStop to maximize trend toward online purchases CONs UPlay s technical glitches indicate the platform may not really provide the intended capability Negative consumer stigma Situation Analysis Recommended Strategy Implementation Conclusion Overview
Alternative #2: Focus in North America Alternative #2: Focus in North America Close all international stores and focus solely in North America (Canada and the United States) Structure focus within the US and Canada by focusing on improvements in top 25% of stores and closing the bottom 25% stores PROs Allows for focus on one area rather than spreading the org too thin Sense of exclusivity CONs Many successful stores and important users internationally Cuts off a large revenue stream for the company Situation Analysis Recommended Strategy Implementation Conclusion Overview
Alternative #3: Reposition with in the Industry Alternative #3: Reposition with in the Industry Reposition retail locations as community locations Remove bottom 25% of stores and upgrade top 25% of stores Tiered pricing membership structure to generate revenue Leverage data and create a GameStop app PROs Takes advantage of strong community Focuses on data development Moves into different revenue streams CONs Possibly too slow Requires an initial capital investment Situation Analysis Recommended Strategy Implementation Conclusion Overview
Evaluation of Alternatives Evaluation of Alternatives Alternative #1: UPlay Alternative #2: North America Alternative #3: Repositioning Revenue growth Paid Memberships Comprehensive data development Situation Analysis Recommended Strategy Implementation Conclusion Overview
Decision Tree Decision Tree M&A GameStop is becoming irrelevant Downsizing Acquire U Play Leave international presence & focus only in North America Innovate Reposition within the industry Situation Analysis Recommended Strategy Implementation Conclusion Overview
Recommended Strategy Recommended Strategy Our recommended strategy is: To reposition GameStop retail locations as a gathering location rather than simple a video game store To implement a tiered pricing structure to leverage data and strengthen the GameStop userbase community Situation Analysis Recommended Strategy Implementation Conclusion Overview
Why it might not work Why it might not work Key Concerns 1. Low interest in new offer 2. Users do not choose to leverage higher membership offerings 3. Offers inaccurate game listings and retail in store and online Key Pieces of Implementation 1. Community focus / brand campaign 2. Perks with higher tiers 3. Leverage data to target top games and best retail offerings Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation Overview Implementation Overview Tiered Pricing Membership Structure DATA DATA DATA Build Community Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Community Implementation: Community Tiered Pricing Membership Structure DATA DATA DATA Build Community Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Placement Implementation: Placement Reposition retail store locations in 3-phase approach: Phase 1: Determine 4th quartile underperforming stores based on sales per square foot (Gamestop average $657/sq ft) Phase 2: Limit retail offerings in store to 5 categories: Collectibles, paraphernalia, gaming consoles, pre-owned games, food & drink (ex: Mountain Dew) Phase 3: Update remaining space of profitable stores to offer live gaming capabilities and everything that supports it Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: GameStop App Implementation: GameStop App Create a GameStop app to help connect community members and keep them engaged Tabs on App would include: Game announcements Community connection center (blog, PR) Rising Stars feature Book online option Show all stores and all available games QR code for log-in App background running features Personal/member information Payment information Rules & regulations GAME STOP Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Promotion Implementation: Promotion Digital Mobile Word of Mouth Digital Web Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Promotion Implementation: Promotion App focused Website enhancements Community depth Brand awareness of repositioning Engaging links for sign-ups Relationship building Ads on legacy social media Ads on key gaming sites YouTube Partner with Twitch Brand Awareness of repositioning: Social media online sharing Gaming blogs YouTube Partner with Twitch for streaming (Amazon) Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Pricing & Membership Implementation: Pricing & Membership Tiered Pricing Membership Structure DATA DATA DATA Build Community Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Pricing & Membership (1/3) Implementation: Pricing & Membership (1/3) Tiered in-store pricing model $9.99 monthly unlimited $4.99 day pass $100 annual pass 24 hours pass to visit 1 store 10% off specific retail items E-zine access Includes 1 event Includes all events Includes all perks of monthly membership Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Pricing & Membership (2/3) Implementation: Pricing & Membership (2/3) Competition pricing Team price Events pass Age specific: $25/person Youth $50/person Rec $100/person competition $10/event/person Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: Pricing & Membership (3/3) Implementation: Pricing & Membership (3/3) Additional revenue streams E-zine and reading material Retail sales Food & drink T-shirts Paraphernalia Collectibles Pre-owned gaming consoles Mountain dew Soda Option to expand to alcohol long term Online - $5/month Print - $10/month Situation Analysis Recommended Strategy Implementation Conclusion Overview
Implementation: DATA Implementation: DATA Tiered Pricing Membership Structure DATA DATA DATA Build Community Situation Analysis Recommended Strategy Implementation Conclusion Overview
Data Hierarchy Revisited Data Hierarchy Revisited Year 3 Year 2 Where we are right now Prescriptive Analytics Predictive Analytics Data Analytics Data Aggregation Data Collection Situation Analysis Recommended Strategy Implementation Conclusion Overview
Financial Assumptions Financial Assumptions In year 1 and 2, we eliminate the bottom 25% of stores In year 1, we retrofit 25% of stores In year 2, we retrofit the remaining stores Average team size is 5 people Situation Analysis Recommended Strategy Implementation Conclusion Overview
Budget & NPV Budget & NPV Year 1 $ $ $ $ $ Year 2 $ $ Year 3 Year 5 retrofit data app marketing total 5,465,625.00 300,000.00 10,000.00 100,000.00 5,875,625.00 10,931,250.00 300,000.00 0 0 $ 300,000.00 0 0 0 120,000.00 11,351,250.00 $ $ $ $ 120,000.00 420,000.00 $ $ 120,000.00 120,000.00 17,766,875.00 $ NPV ni exp NPV Year 1 $ (5,465,625.00) $ ($4,752,717.39) $370,787,665.41 Year 2 435,911,250.00 $ (10,931,250.00) $ Year 3 871,822,500.00 $ Year 5 2,133,645,000.00 $ - $2,194,764,097.12 Breakeven Situation Analysis Recommended Strategy Implementation Conclusion Overview
Income Statement Income Statement 2020 2021 2022 2024 comp subscrip 3,825,937.50 $ 210,000,000.00 $ 45,911,250.00 $ 315,000,000.00 $ 91,822,500.00 $ 630,000,000.00 $ 183,645,000.00 $ 1,575,000,000.00 $ food+bev total 50,000,000.00 $ 263,825,937.50 $ 75,000,000.00 $ 435,911,250.00 $ 150,000,000.00 $ 871,822,500.00 $ 375,000,000.00 $ 2,133,645,000.00 $ retail exp 8,000,000,000.00 $ 5,200,000,000.00 $ 6,400,000,000.00 $ 4,160,000,000.00 $ 8,320,000,000.00 $ 5,408,000,000.00 $ 12,480,000,000.00 $ 8,112,000,000.00 $ Net Income 3,063,825,937.50 $ 2,675,911,250.00 $ 3,783,822,500.00 $ 6,501,645,000.00 $ Situation Analysis Recommended Strategy Implementation Conclusion Overview
Timeline Timeline Year 1 Year 2 Year 3 Year 4 Year 5 Close bottom 25% of stores App development Retrofit stores Marketing 3rd party data Situation Analysis Recommended Strategy Implementation Conclusion Overview
Risks & Mitigations Risks & Mitigations Risk Severity & Likelihood Mitigation 1. Low interest from consumers Marketing to already-strong community of users 2. Transition store locations in malls too slowly Focus first on most profitable 25% for upgrades and immediately close bottom 25% 3. Strong competition undercuts GameStop Marketing and brand awareness of GameStop, and leveraging data and community engagement Situation Analysis Recommended Strategy Implementation Conclusion Overview
Metrics Metrics Key Performance Indicators Metrics 50% growth of new revenue streams Revenue growth 10% growth in customer retention Paid memberships Comprehensive data development Exponential growth in available customer data Situation Analysis Recommended Strategy Implementation Conclusion Overview
Executive Summary Revisited Executive Summary Revisited GameStop s present product offering has become irrelevant due to changing technology and customer preferences. Problem Goal Develop an innovative strategy to re-establish market leadership. COMMUNITY Alternatives Downsize Innovate M&A Bloated B&M presence in undesirable locations Outdated revenue stream Hurdles Lack of data leveraging Situation Analysis Recommended Strategy Implementation Conclusion Overview
Slide Index Slide Index Title Competitive Landscape Implementation: Product Key Question Operating Landscape: Customers Implementation: Placement Executive Summary Customer Description Implementation: Promotion Agenda Operating Landscape: Company Implementation: Pricing Qualifiers Internal Perspective Financial Assumptions The Story Alternative #1 Budget & NPV Goals & Objectives Alternative #2 Income Statement Timeframe Alternative #3 Timeline Key Numbers Evaluation of Alternatives Risks & Mitigations Decision Tree Recommended Strategy Metrics Operating Landscape Why it might not work Executive Summary Revisited Operating Landscape: Competition Implementation Overview Situation Analysis Recommended Strategy Implementation Conclusion Overview
Contingency Plan Contingency Plan Twitch partnership will position us for sale to Amazon Situation Analysis Recommended Strategy Implementation Conclusion Overview
SWOT SWOT Weaknesses Strengths Over extended in retail locations (malls) Strong global presence Revenue stream is declining Positive brand awareness Low incentives for consumers Access to a strong community SWOT Threats Opportunities New entrant/competitors entering market Growth of eSports Global recession Growth of online streaming Move to digital and away from physical retail stores Situation Analysis Recommended Strategy Implementation Conclusion Overview
