GameStop's Strategy for Future Sustainability in the Changing Video Game Industry

GameStop:
The paradigm of a shifting industry
PBS Consulting Team
Bernardo Pequito
Gustavo Moutinho
Laura Fernandes
Marta Andre
Porto Business School
Executive Summary
Challenge
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
To Sum Up
2
GameStop is facing declining results
3
GameStop is facing declining results
4
GameStop needs to act fast to tackle the weakening outcomes!
Challenge
5
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Challenge
6
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Challenge
7
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Challenge
8
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
Challenge
9
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
Triple AAA Strategy
Challenge
10
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
 
What is GameStop
?
12
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
What is GameStop
?
13
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
GameStop | EB Game | Micromania
5 830 Stores
Website
What is GameStop
?
14
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
Video Game Software
Video Game Software
Pre-owned video Game software
Digital currency for online Games
Paraphernalia
GameStop | EB Game | Micromania
5 830 Stores
Website
What is GameStop
?
15
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
Video Game Software
Video Game Software
Pre-owned video Game software
Digital currency for online Games
Paraphernalia
GameStop | EB Game | Micromania
5 830 Stores
Website
PowerUp Rewards
Program
Game Informer
Magazine
What is GameStop
?
16
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
Video Game Software
Video Game Software
Pre-owned video Game software
Digital currency for online Games
Paraphernalia
GameStop | EB Game | Micromania
5 830 Stores
Website
PowerUp Rewards
Program
Game Informer
Magazine
What is GameStop
?
17
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Traditional structure multi-channel retailer
Video Game Software
Video Game Software
Pre-owned video Game software
Digital currency for online Games
Paraphernalia
GameStop | EB Game | Micromania
5 830 Stores
Website
GameStop’s presence in the market is no longer aligned with the preferences of
consumers and that is leading to the declining results
PowerUp Rewards
Program
Game Informer
Magazine
GameStop has had a difficult path
18
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
1996 
  
1999
   
2000
    
Today
Bankruptcy
GameStop has had a difficult path
19
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
1996 
  
1999
   
2000
    
Today
Bankruptcy
Restructuring
GameStop has had a difficult path
20
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
1996 
  
1999
   
2000
    
Today
Bankruptcy
Restructuring
Leveraging from gaming
console popularity
GameStop has had a difficult path
21
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
1996 
  
1999
   
2000
    
Today
Bankruptcy
Restructuring
Leveraging from gaming
console popularity
Currently facing decreasing profits
with:
Down sales
Non-existing profits
Store traffic down
Store sales down
Stock price decline
GameStop has had a difficult path
22
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Currently facing decreasing profits
with:
Down sales
Non-existing profits
Store traffic down
Store sales down
Stock price decline
GameStop’s had recovered from difficulties and they can leverage today from the
market evolvements to recover once again.
1996 
  
1999
   
2000
    
Today
Bankruptcy
Restructuring
Leveraging from gaming
console popularity
What does the industry look like
?
 
23
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
What does the industry look like
?
 
24
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
Increasing search for online-first – Downloaded and streamed Experiences
Console sales remains the fastest growing market – CAGR of 13.4%
What does the industry look like
?
 
25
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
Increasing search for online-first – Downloaded and streamed Experiences
Console sales remains the fastest growing market – CAGR of 13.4%
How is the industry expected to evolve
?
What does the industry look like
?
 
26
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
Increasing search for online-first – Downloaded and streamed Experiences
Console sales remains the fastest growing market – CAGR of 13.4%
How is the industry expected to evolve
?
Shift to online retail
General decline in mall-oriented foot traffic
Online shopping accounting for 14.3%
What does the industry look like
?
 
27
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
Increasing search for online-first – Downloaded and streamed Experiences
Console sales remains the fastest growing market – CAGR of 13.4%
How is the industry expected to evolve
?
Shift to online retail
General decline in mall-oriented foot traffic
Online shopping accounting for 14.3%
eSports – competition through video
games
In-Person tournaments
Online streaming
What does the industry look like
?
 
28
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Market size 18$ billion USD
Increasing search for online-first – Downloaded and streamed Experiences
Console sales remains the fastest growing market – CAGR of 13.4%
How is the industry expected to evolve
?
Shift to online retail
General decline in mall-oriented foot traffic
Online shopping accounting for 14.3%
The industry in growing with a shift in Business model. GameStop will need to
accommodate these changes to ensure a stable growth for the future.
eSports – competition through video
games
In-Person tournaments
Online streaming
Who is the customer of GameStop
?
29
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
Who is the customer of GameStop
?
30
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
What is the consumer looking for?
Who is the customer of GameStop
?
31
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
Shifting to online retail
Decreasing use of mall traffic
Increasing Online shopping -- 
14.3%
What is the consumer looking for?
Who is the customer of GameStop
?
32
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
Shifting to online retail
Decreasing use of mall traffic
Increasing Online shopping -- 
14.3%
What is the consumer looking for?
Experience
Differentiation | Valuable | Benefits | Frictionless |
Unique Experience | Support | Sociability
Value for Money
Convenience
Who is the customer of GameStop
?
33
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
Shifting to online retail
Decreasing use of mall traffic
Increasing Online shopping -- 
14.3%
eSports – competition through video
games
In-Person tournaments
Online streaming
What is the consumer looking for?
Experience
Differentiation | Valuable | Benefits | Frictionless |
Unique Experience | Support | Sociability
Value for Money
Convenience
Who is the customer of GameStop
?
34
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Engaged customer base | Gaming interests
Shifting to online retail
Decreasing use of mall traffic
Increasing Online shopping -- 
14.3%
eSports – competition through video
games
In-Person tournaments
Online streaming
What is the consumer looking for?
Experience
Differentiation | Valuable | Benefits | Frictionless |
Unique Experience | Support | Sociability
Value for Money
Convenience
The customer of today values the personal touch and is looking for different
products to meet their gaming needs.
Competition
35
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Brick and
Mortar
Size
Walmart
BestBuy
Target
Kmart
Online
Competition
36
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Brick and
Mortar
Online
Size
Walmart
BestBuy
Target
Kmart
Uplay
Origin
Steamed
GameStop
Competition
37
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Brick and
Mortar
Online
Size
Walmart
GameFly
Amazon
BestBuy
Target
Kmart
Uplay
Origin
Steamed
GameStop
Competition
38
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Brick and
Mortar
Online
Size
Walmart
GameFly
Amazon
BestBuy
Target
Kmart
Uplay
Origin
Steamed
Competition is fierce in both markets. Still, GameStop can differentiate attacking
the growing market segments.
GameStop
To Sum Up…
39
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
S
O
W
T
Fierce competition
Rising market segments
Consumers changing
preferences
Decreasing Sales
Not up-to-date with latest
gaming trends
Engaged customer base
Cash Available
Alternatives & Recommendation
 
Which Alternatives does GameStop have for the Future?
41
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Which Alternatives does GameStop have for the Future?
 
42
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
INORGANIC
Quick impact
No future risk
SELL
ADVANTAGES
DISADVANTAGES
Not good time to sell now,
declined price per share
Quick impact
Dispersion of risk
Possibility to enter new
segments
Lost of control
Strategic designment
Cultural challenges
Compound of the problem
Cultural challenges
Quick impact
Dispersion of risk
Possibility to enter new
segments
MERGE
ACQUIRE
Which Alternatives does GameStop have for the Future?
 
43
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
ORGANIC
Increase efficiency
Reduce fixed costs
Focus on future
opportunities
Leasing expiration for stores
DOWNSIZE
ADVANTAGES
DISADVANTAGES
Job Loss
Possible inseminations
Brand image
No previous experience
Enter fast growing
segments
Be align with the trends of
the future
Assure future sustainability
of the business
PIVOT
Which Alternatives does GameStop have for the Future?
44
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Minimum : 1 – Maximum : 5
Which Alternatives does GameStop have for the Future?
45
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Minimum : 1 – Maximum : 5
ADAPT Business Model
Triple A strategy to tackle the GameStop Challenges
46
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Implementation
 
Triple A Strategy – How to Adapt Business Model?
48
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Triple A Strategy – How to Adapt Business Model?
49
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Hard Copies
Hardware
Used Games
25%
75%
CORE
ACCESSORIES
Video Game
Accessories
Digital
Others
PRESENT
Triple A Strategy – How to Adapt Business Model?
50
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Hard Copies
Hardware
Used Games
25%
75%
CORE
ACCESSORIES
Video Game
Accessories
Digital
Others
INVEST IN FAST
GROWING
SEGMENTS
PRESENT
FUTURE
Triple A Strategy – How to Adapt Business Model?
51
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Adapt
business
Model
Decrease
sales of
traditional
segments
Reduce 10% of 
physical stores and open 5
flagship stores in strategic Locations
Reinforce collectibles 
and video games
accessories
Partnership with 
nutritional supplements
retailers
E-sport Segment 
:
Create GameStop team to compete in
champions
Participate, organize and sponsor Events
Innovate with the concept of 
Digital Gym
and
 Digital Personal Gamer (
coaching to
success)
Decrease
Fixed costs
and
increase
product
portfolio
Triple A Strategy – How to Amaze Customers?
52
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Triple A Strategy – How to Amaze Customers?
53
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Triple A Strategy – How to Amaze Customers?
54
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Amaze
Customers
Physical
retail
decreasing
Digital Gym – to play in store
Create support for each player and in-
house team
Build game experience on sight
Provide training environment for gamers
Instant orders while playing
Community
Communit
y and
Experience
Physical Stores 1\2
Triple A Strategy – How to Amaze Customers?
55
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Amaze
Customers
Physical
retail
decreasing
Store of the Future
Experiential Stores
Virtual and Augmented reality Holograms
– explanation of each product
Fantasy Mirror – with possibility to try
accessories and customs
Electronic Assistance – that will guide you
through the store
Communit
y and
Experience
Physical Stores 2\2
Triple A Strategy – How to Amaze Customers?
56
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Amaze
Customers
Growth of
online
channels
Redesign Website according with new strategy
trends
ChatBot – for tailored support
Create other inbound Marketing such as V-
logs about top accessories and collectibles
Influencers – contact top 10 video gamers
Use premium clients as advocates for the
brand – 2 minute videos for experience
reporting
Client
Informatio
n and
Support
Online Stores
Triple A Strategy – How to Amaze Customers?
57
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Amaze
Customers
Customer
Retention
Introduce Tutor
ial videos on YouTube platform
Sponsor videos with top 10 video gamers
Possibility to see the accessories being
used
Big data and AI 
to personalize experience
to each customer
Digital purchase profile
Value and
Experience
Loyalty Program – PowerUp
Rewards 1\2
Triple A Strategy – How to Amaze Customers?
58
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Amaze
Customers
Customer
Retention
Divided in Freemium and Premium models
Freemium – 
Bate and Hook 
videos to
attract, access to one inhouse event per
year, birthday discount
Premium – Personal Gamer experience
(1time offer),  Discounts in paraphernalia,
Tailor made offers and bundle packages,
online and offline premium support
assistance
Value and
Experience
Loyalty Program – PowerUp
Rewards 2\2
Triple A Strategy – How to Align Vision?
59
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Triple A Strategy – How to Align Vision?
60
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
What?
Why?
How?
Impact
How to
Align
Vision?
Managem
ent
alignment
with Future
Create a change Management Team
Global clear communication
Team-Building Activities for Top Management
Mentoring with Top Executive – Visit to new
stores after revamping
Clarify New vision and Mission
Gathering events – Solidify with team spirit and
Company Culture
Ensure Situational Awareness
Everyone
on board
of the new
strategy
Detailed Implementation Plan
61
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Financials
 
Main Assumptions
63
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main Assumptions
64
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main Assumptions
65
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main Assumptions
66
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main impacts on EBITDA
67
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main impacts on EBITDA
68
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Main impacts on EBITDA
69
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
CAPEX
70
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Financial Valuation
71
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
NPV 1bn USD
Contingency Plan
 
Risk Assessment
73
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Likelihood
Severity
1.Loss in Sales from
reduction in Brick &
Mortar Retail
2.
Fierce
competition
3.
New players in
the market
1. Accept
2.
Mitigate
3.
Mitigate
1.
2. Benchmark for
alternatives in the
market
3. Continue with
differentiation
strategy (A|B Testing)
Risk Assessment
Risk
Strategy
Actions
To Sum Up…
 
Triple A strategy to tackle the GameStop Challenges
75
What should be the strategy of GameStop to ensure future sustainability of the
business
?
Distribution channels
Shift from Offline to
Online Retail
Outdated physical stores
Changing Video Game
Industry
Decline on hard copies
Preference for streaming
options
Organizational changes
Unsteady management
AMAZE Customers
ADAPT Business Model
ALIGN Vision
Triple AAA Strategy
Analysis
Alternatives & Recommendation
Implementation
Financials
Contingency Plan
Questions & Answers
 
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GameStop is facing declining results in revenue and operating income due to changes in the video game industry, such as the shift towards digital content and online retail. To ensure future sustainability, GameStop needs to strategize on adapting to these industry shifts by focusing on online distribution channels and revamping outdated physical stores.

  • GameStop
  • Strategy
  • Sustainability
  • Video Game Industry

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  1. GameStop: GameStop: The paradigm of a shifting industry The paradigm of a shifting industry PBS Consulting Team PBS Consulting Team Bernardo Pequito Gustavo Moutinho Laura Fernandes Marta Andre Porto Business School Porto Business School

  2. Executive Summary Executive Summary Challenge Challenge Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan To Sum Up To Sum Up 2

  3. GameStop is facing declining results GameStop is facing declining results Revenue (in Billion $) Operating Income (in Million $) 9.6 700 9.4 600 9.2 500 9 400 8.8 300 8.6 200 8.4 100 8.2 8 0 2012 2014 2016 2018 2012 2014 2016 2018 3

  4. GameStop is facing declining results GameStop is facing declining results Revenue (in Billion $) Operating Income (in Million $) 9.6 700 9.4 600 9.2 500 9 400 8.8 300 8.6 200 8.4 100 8.2 8 0 2012 2014 2016 2018 2012 2014 2016 2018 GameStop needs to act fast to tackle the weakening outcomes! GameStop needs to act fast to tackle the weakening outcomes! 4

  5. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? 5

  6. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Decline on hard copies Preference for streaming options 6

  7. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores 7

  8. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores Unsteady management 8

  9. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores Unsteady management Triple AAA Strategy Triple AAA Strategy 9

  10. Challenge Challenge What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores Unsteady management Triple AAA Strategy Triple AAA Strategy ADAPT Business Model ADAPT Business Model AMAZE Customers AMAZE Customers ALIGN Vision ALIGN Vision 10

  11. Analysis

  12. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer 12 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  13. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer GameStop | EB Game | Micromania 5 830 Stores Website 13 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  14. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer Video Game Software Video Game Software Pre-owned video Game software Digital currency for online Games Paraphernalia GameStop | EB Game | Micromania 5 830 Stores Website 14 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  15. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer Video Game Software Video Game Software Pre-owned video Game software Digital currency for online Games Paraphernalia GameStop | EB Game | Micromania 5 830 Stores Website PowerUp Rewards Program Game Informer Magazine 15 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  16. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer Video Game Software Video Game Software Pre-owned video Game software Digital currency for online Games Paraphernalia GameStop | EB Game | Micromania 5 830 Stores Website PowerUp Rewards Program Game Informer Magazine 16 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  17. What is GameStop What is GameStop? ? Traditional structure multi Traditional structure multi- -channel retailer channel retailer Video Game Software Video Game Software Pre-owned video Game software Digital currency for online Games Paraphernalia GameStop | EB Game | Micromania 5 830 Stores Website PowerUp Rewards Program Game Informer Magazine GameStop s presence in the market is no longer aligned with the preferences of GameStop s presence in the market is no longer aligned with the preferences of consumers and that is leading to the declining results consumers and that is leading to the declining results 17 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  18. GameStop has had a difficult path GameStop has had a difficult path 1996 1996 1999 1999 2000 2000 Today Today Bankruptcy Bankruptcy 18 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  19. GameStop has had a difficult path GameStop has had a difficult path 1996 1996 1999 1999 2000 2000 Today Today Bankruptcy Bankruptcy Restructuring Restructuring 19 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  20. GameStop has had a difficult path GameStop has had a difficult path 1996 1996 1999 1999 2000 2000 Today Today Leveraging from gaming Leveraging from gaming console popularity console popularity Bankruptcy Bankruptcy Restructuring Restructuring 20 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  21. GameStop has had a difficult path GameStop has had a difficult path 1996 1996 1999 1999 2000 2000 Today Today Currently facing decreasing profits Currently facing decreasing profits with: with: Down sales Non-existing profits Store traffic down Store sales down Stock price decline Leveraging from gaming Leveraging from gaming console popularity console popularity Bankruptcy Bankruptcy Restructuring Restructuring 21 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  22. GameStop has had a difficult path GameStop has had a difficult path 1996 1996 1999 1999 2000 2000 Today Today Currently facing decreasing profits Currently facing decreasing profits with: with: Down sales Non-existing profits Store traffic down Store sales down Stock price decline Leveraging from gaming Leveraging from gaming console popularity console popularity Bankruptcy Bankruptcy Restructuring Restructuring GameStop s had recovered from difficulties and they can leverage today from the GameStop s had recovered from difficulties and they can leverage today from the market evolvements to recover once again. market evolvements to recover once again. 22 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  23. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD 23 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  24. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD Increasing search for online Increasing search for online- -first Console sales remains the fastest growing market Console sales remains the fastest growing market CAGR of 13.4% first Downloaded and streamed Experiences Downloaded and streamed Experiences CAGR of 13.4% 24 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  25. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD Increasing search for online Increasing search for online- -first Console sales remains the fastest growing market Console sales remains the fastest growing market CAGR of 13.4% first Downloaded and streamed Experiences Downloaded and streamed Experiences CAGR of 13.4% How is the industry expected to evolve How is the industry expected to evolve? ? 25 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  26. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD Increasing search for online Increasing search for online- -first Console sales remains the fastest growing market Console sales remains the fastest growing market CAGR of 13.4% first Downloaded and streamed Experiences Downloaded and streamed Experiences CAGR of 13.4% How is the industry expected to evolve How is the industry expected to evolve? ? Shift to online retail General decline in mall-oriented foot traffic Online shopping accounting for 14.3% 26 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  27. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD Increasing search for online Increasing search for online- -first Console sales remains the fastest growing market Console sales remains the fastest growing market CAGR of 13.4% first Downloaded and streamed Experiences Downloaded and streamed Experiences CAGR of 13.4% How is the industry expected to evolve How is the industry expected to evolve? ? eSports competition through video games In-Person tournaments Online streaming Shift to online retail General decline in mall-oriented foot traffic Online shopping accounting for 14.3% 27 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  28. What does the industry look like What does the industry look like? ? Market size 18$ billion USD Market size 18$ billion USD Increasing search for online Increasing search for online- -first Console sales remains the fastest growing market Console sales remains the fastest growing market CAGR of 13.4% first Downloaded and streamed Experiences Downloaded and streamed Experiences CAGR of 13.4% How is the industry expected to evolve How is the industry expected to evolve? ? eSports competition through video games In-Person tournaments Online streaming Shift to online retail General decline in mall-oriented foot traffic Online shopping accounting for 14.3% The industry in growing with a shift in Business model. GameStop will need to The industry in growing with a shift in Business model. GameStop will need to accommodate these changes to ensure a stable growth for the future. accommodate these changes to ensure a stable growth for the future. 28 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  29. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests Engaged customer base | Gaming interests 29 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  30. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests What is the consumer looking for? What is the consumer looking for? 30 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  31. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests What is the consumer looking for? What is the consumer looking for? Shifting to online retail Decreasing use of mall traffic Increasing Online shopping -- 14.3% 14.3% 31 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  32. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests What is the consumer looking for? What is the consumer looking for? Value for Money Value for Money Convenience Convenience Experience Experience Shifting to online retail Decreasing use of mall traffic Increasing Online shopping -- 14.3% Differentiation | Valuable | Benefits | Frictionless | Unique Experience | Support | Sociability 14.3% 32 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  33. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests What is the consumer looking for? What is the consumer looking for? Value for Money Value for Money Convenience Convenience Experience Experience Shifting to online retail Decreasing use of mall traffic Increasing Online shopping -- 14.3% Differentiation | Valuable | Benefits | Frictionless | Unique Experience | Support | Sociability 14.3% eSports competition through video games In-Person tournaments Online streaming 33 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  34. Who is the customer of GameStop Who is the customer of GameStop? ? Engaged customer base | Gaming interests What is the consumer looking for? What is the consumer looking for? Value for Money Value for Money Convenience Convenience Experience Experience Shifting to online retail Decreasing use of mall traffic Increasing Online shopping -- 14.3% Differentiation | Valuable | Benefits | Frictionless | Unique Experience | Support | Sociability 14.3% eSports competition through video games In-Person tournaments Online streaming The customer of today values the personal touch and is looking for different The customer of today values the personal touch and is looking for different products to meet their gaming needs. products to meet their gaming needs. 34 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  35. Competition Competition Size Size Walmart Walmart Target Target BestBuy BestBuy Brick and Brick and Mortar Mortar Kmart Kmart Online Online 35 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  36. Competition Competition Size Size Walmart Walmart Steamed Steamed GameStop GameStop Target Target Origin Origin BestBuy BestBuy Uplay Uplay Brick and Brick and Mortar Mortar Kmart Kmart Online Online 36 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  37. Competition Competition Size Size Walmart Walmart Steamed Steamed GameStop GameStop Target Target Amazon Amazon Origin Origin GameFly GameFly BestBuy BestBuy Uplay Uplay Brick and Brick and Mortar Mortar Kmart Kmart Online Online 37 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  38. Competition Competition Size Size Walmart Walmart Steamed Steamed GameStop GameStop Target Target Amazon Amazon Origin Origin GameFly GameFly BestBuy BestBuy Uplay Uplay Brick and Brick and Mortar Mortar Kmart Kmart Online Online Competition is fierce in both markets. Still, GameStop can differentiate attacking Competition is fierce in both markets. Still, GameStop can differentiate attacking the growing market segments. the growing market segments. 38 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  39. To Sum Up To Sum Up Decreasing Sales Decreasing Sales Not up Not up- -to to- -date with latest date with latest gaming trends gaming trends W W S S Engaged customer base Engaged customer base Cash Available Cash Available Rising market segments Rising market segments Consumers changing Consumers changing preferences preferences T T O O Fierce competition Fierce competition 39 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  40. Alternatives & Recommendation

  41. Which Alternatives does GameStop have for the Future? Which Alternatives does GameStop have for the Future? What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores Unsteady management Triple AAA Strategy Triple AAA Strategy ADAPT Business Model ADAPT Business Model AMAZE Customers AMAZE Customers ALIGN Vision ALIGN Vision 41 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  42. Which Alternatives does GameStop have for the Future? Which Alternatives does GameStop have for the Future? ADVANTAGES INORGANIC DISADVANTAGES Not good time to sell now, declined price per share Quick impact No future risk SELL Quick impact Dispersion of risk Possibility to enter new segments Lost of control Strategic designment Cultural challenges MERGE Quick impact Dispersion of risk Possibility to enter new segments Compound of the problem Cultural challenges ACQUIRE 42 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  43. Which Alternatives does GameStop have for the Future? Which Alternatives does GameStop have for the Future? ADVANTAGES ORGANIC DISADVANTAGES Increase efficiency Reduce fixed costs Focus on future opportunities Leasing expiration for stores Job Loss Possible inseminations Brand image DOWNSIZE Enter fast growing segments Be align with the trends of the future Assure future sustainability of the business PIVOT No previous experience 43 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  44. Which Alternatives does GameStop have for the Future? Which Alternatives does GameStop have for the Future? Strategic Strategic Alignment Alignment 2 2 3 5 5 Financial Effort Financial Effort Cultural Fit Cultural Fit Time to Time to implement implement 2 1 1 4 4 RESULT RESULT Sell Merge Acquire Downsize Pivot 5 3 1 4 4 1 2 2 4 5 10 8 7 17 18 Minimum : 1 Maximum : 5 44 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  45. Which Alternatives does GameStop have for the Future? Which Alternatives does GameStop have for the Future? Strategic Strategic Alignment Alignment 2 2 3 5 5 Financial Effort Financial Effort Cultural Fit Cultural Fit Time to Time to implement implement 2 1 1 4 4 RESULT RESULT Sell Merge Acquire Downsize Pivot 5 3 1 4 4 1 2 2 4 5 10 8 7 17 18 Minimum : 1 Maximum : 5 ADAPT Business Model ADAPT Business Model 45 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  46. Triple A strategy to tackle the GameStop Challenges Triple A strategy to tackle the GameStop Challenges What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Preference for streaming options Shift from Offline to Online Retail Outdated physical stores Unsteady management Triple AAA Strategy Triple AAA Strategy ADAPT Business Model ADAPT Business Model AMAZE Customers AMAZE Customers ALIGN Vision ALIGN Vision 46 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  47. Implementation

  48. Triple A Strategy Triple A Strategy How to Adapt Business Model? How to Adapt Business Model? What should be the strategy of GameStop to ensure future sustainability of the What should be the strategy of GameStop to ensure future sustainability of the business business? ? Changing Video Game Changing Video Game Industry Industry Distribution channels Distribution channels Organizational changes Organizational changes Decline on hard copies Decline on hard copies Preference for streaming Preference for streaming options options Shift from Offline to Online Retail Outdated physical stores Unsteady management Triple AAA Strategy Triple AAA Strategy ADAPT Business Model ADAPT Business Model AMAZE Customers AMAZE Customers ALIGN Vision ALIGN Vision 48 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  49. Triple A Strategy Triple A Strategy How to Adapt Business Model? How to Adapt Business Model? PRESENT CORE CORE Hard Copies Hard Copies Hardware Hardware Used Games Used Games 75% 75% ACCESSORIES ACCESSORIES Video Game Video Game Accessories Accessories Digital Digital Others Others 25% 25% 49 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

  50. Triple A Strategy Triple A Strategy How to Adapt Business Model? How to Adapt Business Model? PRESENT FUTURE CORE CORE Hard Copies Hard Copies Hardware Hardware Used Games Used Games 75% 75% ACCESSORIES ACCESSORIES Video Game Video Game Accessories Accessories Digital Digital Others Others INVEST IN FAST INVEST IN FAST GROWING GROWING SEGMENTS SEGMENTS 25% 25% 50 Analysis Analysis Alternatives & Recommendation Alternatives & Recommendation Implementation Implementation Financials Financials Contingency Plan Contingency Plan

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