GameStop's Path to Becoming the Top Gaming Destination
LUSEM Consulting presents a strategic plan to propel GameStop to the forefront of the gaming industry by analyzing current trends, proposing innovative alternatives, and emphasizing adapting to changing times. Key assumptions and future potentials provide a compelling vision for GameStop's evolution into a gaming powerhouse.
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LUSEM Consulting GameStop GameStop Becoming the Nr. 1 stop in the gaming world LUSEM Consulting Group Akos Nagy, Gustaf Nordin, Johanna Sjoeblom, Anna-Maria Ostermann Presenting to: George Sherman, CEO
LUSEM Consulting Agenda Situation Analysis Alternatives Recommendation Implementation Financials Conclusion Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Old-school Arcade Halls Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Living Room Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Connected to the world Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Hold on to unchanging principles but adapt to changing times! Stores can perish but Gaming is eternal Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The current trends disrupt the gaming industry Changing & growing customer base Gaming Community Transform Business Using Big Data Engage Providing more Experience Control Value Chain E-Sport Competition Gaming 2.0 Watching Players Digital Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Key Assumptions & Future Potential Everyday new Lifetime gamers are born There will be no physical ownership of games & soon consoles will disappear! Market size: 18 bn USD/year ~ 30% of population is engaged What if we had 60%? 36 bn USD 1.7 bn USD of revenue may disappear within the next 10 years 30% profits may fall from current structure (5% from Hardware, 25% from Software) Streaming & E-Sport will grow in importance and become an accepted way of working Inline with the Entrepreneur Economy, and technological advancements Millennials want more E-sport today than traditional sport Independent developers need support & you have the cash flow of ~300 mn USD to partially invest in this Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The Main Challenges for GameStop Digital Competition Level of Control Differentiation Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Setting up for the Future No Physical Ownership Career Life Cycle E-Sports Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting What this future will look like Customer Experience Omnichannel Ecosystem Control of Value Chain Supplier Platform Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting What this future will look like Customer Experience Omnichannel Ecosystem Control of Value Chain Supplier Platform Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Main Challenge How to make GameStop ready for the new Gaming Industry? Recommendation GameStop will engage the community and transform to a service provider by becoming the incubators for Independent Developers and creating an E-Sport Hub for coaching and championships. Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Prepare for the game GameSto p Employee Customer Competiti on Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Who are we competing against? Targeted Origin (EA) Uplay ( Massive Enterainment) 567 Target Walmart Kmart BestBuy Amazon Broad Digital Brick & Mortar Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The different gamers Playing on the go Mobile platforms Fun Easy games & occasional in-game purchases Mostly consoles and gaming PCs Sports games & shooter games Casual gamers Main stream Profess ionals Hardcore gamers Influencers Play for a living Get sponsored Emerge in the experience High spenders Time investment Hobby Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Who works for GameStop? Game lovers Dedicated Knowledgeable Trained in Sales 10.000 fulltime up to 45.000 part time Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Who is GameStop? GameStop ThinkGeek Game Informer 5th largest consumer publication US 6.6 mill. Subscribers 2.1 mill. Digital subscribers EBGames Micromania Consoles Games Paraphernalia Popculture collectables Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The GameStop Brand Personality Fun Knowledgeable Experienced Tangibles Store Accessories Relationships Tight Loyal Strong Near Culture Engaging Supportive Safe haven Competitive Best products delivered by knowledgeable personnel Reflection I am a gamer Nerdy Smart Self Image I am a gamer I know what I am doing I have the right equipment I have fun Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The different ways to play the game Engage Community & include E-sport Digital transformation Acquire the experience More transactions and going online Non-organic growth Restructure parts of the stores Increased reach Acquire development studios Use the knowledge of personnel Attract more consumers to the store Reduce costs in locations Acquire online retailers Loss of unique value proposition Acquire peripherical producers Fit with brand No fit Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The right way to win the game Digital Acquire experience Engage & E- Sport transformation Efficiency 1 Customer Experience 2 Future Proof 3 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Main Challenge How to make GameStop ready for the new Gaming Industry? Recommendation GameStop will engage the community and transform to a service provider by becoming the incubators for Independent Developers and creating an E-Sport Hub for coaching and championships. Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Press release Revenues are stable, cash position for change Transform, move into experience- retail Focus, listen, engage the customer base Be Human, retain our talent Fit-out the stores for experience Make the Digital Forefront relevant 10K Full Timers 10K Experts Community faced 550 mn USD 10% 36. 9 mn USD Streaming Development oriented 500 USD/ sqf. E-Sports Custom Accessories Convenient Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting The three points to collect for the next level & only 1 life left 1. Analytics & Presence 3. Customer Obsession 2. Restructure Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Point Nr.1: Analytics & Presence $ ? Data scientist team James Bell Generate customer insights Making the franchise visible on Social Media Selling platform more engaging (e.g. Steam) 2019 2020 50 mn USD Untapped customer intelligence Limited use of platforms 39 mn members 39 mn viewers returning customers Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Point Nr.2: Restructure $ ? 360 mn USD 2019 - 2023 GameStop coaches Frank Hamlin Independent developers Customer accessories makers Professional gamers Sponsor gaming/ developing championships Sponsor/ buy Ind. Studios, kick starters Co-brand peripherals Create professional bundles Coach gamers Play Compete Watch Create 850 USD / sqf. 5200 stores Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Point Nr.3: Customer Obsession $ ? Data scientist team James Bell Generate customer insights Making the franchise visible on Social Media Selling platform more engaging (e.g. Steam) 2022 -2023 140 mn USD (+ 200 mn USD optional) Untapped customer intelligence Limited use of platforms 2 - 3 Championship titles per year Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Timeline Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting GameStop s financial landscape 36.9 million members of the PowerUp Rewards program 80% of 2018 sales from GameStops loyal customer base 180 USD per loyal customer The change proposal can financed by internal cash flow Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting GameStop s financial landscape Introducing Service to the mix 100% 80% 60% 40% 20% 0% 2018 2019 2020 2021 2022 2023 Retailer revenues Service revenues Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting GameStop s financial landscape 10% service operating profit margin 3% retail operating profit margin Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting What is the upside for 2023? Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Risks & Mitigation Risks Likelihood Impact Mitigations Fast action plan Transparent communication Fit with time More individuals want to go professional The gaming community is growing Communication Focus on training Redistribution Incentivize 1 Loose trust of investors Medium High 2 Lack of investment from consumers Medium High 3 Loss of trust from personnel Low Medium Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Hold on to unchanging principles but adapt to changing times! Stores can perish but Gaming is eternal Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Executive Summary How to make GameStop ready for the new Gaming Industry? Key Challenge Key Issues Differentiation Competition Digitalization Engagement & Community Key success Factors Unique value prop. E-Sports 34% annual share price return 20% revenue from services Key Figures 33% ROI Engage the community and transform to a service provider by becoming the incubators for IndependentDevelopers and creating an E-Sport Hub for coaching and championships. Recommendation Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
LUSEM Consulting Appendix We asked ourselves how much can GameStop spend if the Operating Cash flow continues to contract? Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
