Formerly the property of Barnes & Noble, GameStop struck out on its own in 2004 and has gone on to become a fixture of shopping malls across the world, attracting consumers away from big-box chains by offering trade-ins or cash on used titles. Despite some negative forecasts about the future of physical stores when many consoles now allow users to download games, the company's shares are up 39 percent this year and more than 6700 stores dot the globe. Check out some details on how the company profits, proper etiquette for robberies, and how a former vice-president wound up in a federal courtroom.
1. THEY STARTED OUT SELLING ATARI TITLES.
In 1983, Texas entrepreneurs James McCurry and Gary Kusin opened a software store named Babbage’s (after 19th century computer pioneer Charles Babbage) in a Dallas shopping mall. While Atari and the video game industry in general was about to suffer a steep decline in interest, Babbage’s was also trafficking in personal computer programs: The diverse inventory allowed them to tread water before Nintendo reinvigorated the industry. In 1994, the company merged with Software Etc. before being acquired by Barnes & Noble in 1999 and changing its name to GameStop. Executive Dan DeMatteo took the name after BookStop, a chain he remembered from the 1980s.
2. THEY DON’T ALWAYS GET ALONG WITH GAME PUBLISHERS.
GameStop’s lifeline is the buying and selling of used game titles. Rather than spend full retail on a new game, buyers can often find a used copy for significantly less. One estimate puts the "used" section as the source of 44 percent of their profits thanks to healthy mark-ups: A $15 trade-in like LEGO Hobbit can be resold for $38. The game developer, naturally, doesn’t see any money from those secondhand sales, which has historically led to friction: Microsoft was once rumored to be working on lockout chips that would prevent games from being resold.
3. THE USED GAMES YOU SELL BACK DON’T STAY IN THE STORE.
Used titles that are purchased by GameStop don’t get plopped right onto store shelves. Instead, they’re sent to the company’s refurbishment center near its Grapevine, Texas headquarters. The games are “buffed” and inspected to make sure they're still playable before being shipped back out. The facility processes more than 400,000 games every week.
4. EMPLOYEES CAN CHECK OUT GAMES.
GameStop allows staffers to borrow game titles for up to four days. There are a few caveats, though: the game can’t be a new, popular title, and it can’t be the only copy in the store.
5. MICROSOFT’S “RED RING OF DEATH” WAS THEIR GAIN.
Microsoft’s highly-anticipated release of the Xbox 360 in 2005 was hampered by what gamers called the “Red Ring of Death,” an internal failure on the console’s motherboard that manifested itself months or years after purchase. (The error caused three flashing lights to appear around the power button and prevented gamers from playing their purchases.) In 2009, GameStop figured out a soldering technique that would easily resolve the issue. They bought damaged systems cheap, repaired them, and resold the newly-refurbished systems at a significant mark-up.
6. THEY GOT NABBED FOR “GUTTING” GAMES.
Typically, a manufacturer’s in-box incentives (coupons, freebies) are developed and distributed without requiring input from a retailer. In the case of Square Enix’s 2011 PC release, Deus Ex: Human Revolution, GameStop was irritated the developer had inserted a promotional flyer for OnLive, a cloud gaming service. According to CBS News, GameStop had employees open new copies of the title, retrieve the coupon, and throw it away. Customers were so enraged that the company later offered a $50 gift card to anyone who had pre-ordered the game or purchased it using the store’s rewards program.
7. PEOPLE LIKE TO DIVE INTO THE COMPANY'S TRASH.
GameStop does such a brisk business with its used inventory—12 million titles passed through its refurbishment center in 2012—that stores often don’t have enough room to carry as many as they have in stock. As a result, the company tends to throw away games and other items that take space away from profitable inventory. Once discarded, titles, accessories, and guidebooks can be retrieved by enterprising gamers willing to paw through the dumpsters. When GameStop caught wind of the practice, they issued a new policy, “Field Destroy,” that calls for employees to damage anything that could be resold by the trash-picking opportunists.
8. A ROBBER ONCE CALLED AHEAD TO MAKE SURE A GAME WAS IN STOCK.
It wasn’t exactly a heist worthy of Danny Ocean, but it was certainly unique: a Nashville, Tennessee thief who stormed a GameStop at gunpoint in January 2014 actually called ahead and asked the clerk to gather an “order” of an Xbox One and several games so he could swing by and pick it up—per his story, he was on his way to work and in a hurry. (Both technically true.) The man then entered wearing a mask and made off with the goods, which the employee had dutifully gotten together near the counter. There were no subsequent reports of the thief being caught.
9. STORES IN PHILLY ONCE REQUIRED SELLERS' FINGERPRINTS.
According to a CBS affiliate, Philadelphia-area GameStop locations began requiring customers to have their fingerprint scanned if they were selling or trading in a used game: The prints were checked against a database operated by law enforcement that tracked stolen goods. Not surprisingly, customers were slightly offended by the measure. Riding a wave of negative publicity, the Philly-area stores abandoned the policy in August 2014, just a month after it had been enacted.
10. THEY BOUGHT OUT THINKGEEK.
Novelty ice-cube trays are about to become a lot more convenient to purchase. In June, GameStop announced their acquisition of Geeknet, parent company of ThinkGeek, the online resource for plush bacteria and monkey-related business. As part of the arrangement, GameStop plans to open a series of retail ThinkGeek stores. The first location opened in Orlando last month.
11. A FORMER VICE PRESIDENT DEFRAUDED THEM OUT OF MILLIONS.
The FBI issued a press release in 2012 detailing a large and convoluted scheme by former GameStop vice president of communications Frank Olivera to defraud the company out of millions of dollars. From 2009 to 2011, Olivera billed GameStop using invoices for a fictitious vendor called Cloud Communications. When they paid, Olivera would have the money transferred from the fake business account to his own. He cost GameStop nearly $2 million before being caught; the resulting mail fraud charge netted him four years in prison.
12. DIGITAL GAMING A PROBLEM? IT’S OK. THEY HAVE WHALES.
With investor forecasts consistently predicting bad times ahead as a result of cloud-based and downloadable gaming, GameStop thinks they’ll stay afloat. Speaking with Fast Company in 2013, president Tony Bartel expressed confidence in their “hybrid gamer” consumer base, which he refers to as “whales.” Hybrids, Bartel said, buy both physical and digital copies of games. Thanks to their PowerUp Rewards Pro Card program, the company can track spending habits and recommend games in a way similar to Netflix’s suggestions.
13. THEY’RE ALSO COUNTING ON RETRO GAMING.
GameStop is hoping nostalgia will help keep their bottom line intact. In April, the company announced a new trade-in program for classic consoles like the Nintendo Entertainment System, Sega Genesis, and their massive cartridge-based game libraries. It’s expected that all of their stores will be buying and selling retro merchandise by year’s end.