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GameStop: Four publishers account for majority of new sales

Nintendo, Sony, Microsoft and EA helped record profits in 2007, but used games are still the biggest earner

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US retail specialist GameStop has revealed that in 2007, only four of over 40 publishers and manufacturers accounted for the majority of sales of new product.

65 per cent of new product sales were down to the big four – with the continued success of the Wii and DS, Nintendo was the biggest earner for GameStop, accounting for 21 per cent of new product sales, while Sony products were responsible for 17 per cent.

Microsoft product made up 16 per cent, while Electronic Arts accounted for 11 per cent of new software sales.

Last month the retailer revealed 2007 sales of USD 7.1 billion, up 33 per cent, with net earnings of USD 288.3 million, up 88 per cent.

But aside from new product, it's the second hand market that continues to generate "significantly higher" profits for GameStop, according to its latest financial report.

The retailer offers over 3000 used titles for sale compared to 1000 new SKUs, with second hand games selling for an average of USD 16 while new titles have an average price of USD 42.

In 2007, used games brought in USD 772.2 million in profit, or almost 43 per cent of gross profit, while new titles generated USD 581.7 million.

New hardware contributed USD 108.2 million in profit, while "other" products accounted for USD 351.6 million.

The retailer was also honest about its allocation of new hardware from the top three manufacturers compared to its retail competitors, stating, "due to our strong relationships with the manufacturers of these platforms, we often receive disproportionately large allocations of new release hardware products."

As a seasonal business, GameStop highlighted that 40 per cent of sales and 58 per cent of operating earnings were generated during the fourth quarter of 2007, which includes the Christmas holiday season.

Despite the impressive success in 2007, the company did note that digital downloads could cut into the company profits in the future.

"While it is currently only possible to download a limited amount of videogame content to the next generation videogame systems, at some point in the future this technology may become more prevalent," stated the company.

"A limited selection of PC entertainment software and older generation video games is currently available for download over the internet.

"If advances in technology continue to expand our customers' ability to access software through these and other sources, our customers may no longer choose to purchase video games or PC entertainment software in our stores. As a result, sales and earnings could decline," it warned.

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Matt Martin

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Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.

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