Gamestop Confident in Xbox One Price Drop and Wal-Mart Competition
Nine days ago, Microsoft announced a price drop from $499 to $399 for the Xbox One sans the Kinect device. Since then, retailer GameStop has expressed strong feelings of confidence in the move. President Tony Bartel claims that the company is seeing "stronger demand" for the console that they predict they'll "sell a lot more units." Important to consider is that not only does this mean more units of Xbox One, at an obviously lesser profit, but the revenue gained from the amount of games and accessories sold off of it. While they might make less cash per Xbox unit sold, GameSpot stands to make much more in the form of new titles sold in addition to their secondhand market increase.
Not afraid of the competition
The CEO of GameStop, Paul Raines, also mentioned that the company isn't worried about the recent entrance of Wal-Mart into one of GameStop's most profitable markets: used games. Despite some claims that the company is, or has been in the past, too frugal with their used game exchanges, they are not worried in the slightest that Wal-Mart has become competition in the market. Raines went on to say:
"We have not seen any impact from our competitors entering the used space. I would encourage you to go do some trades at all of our competitors, because I think all of them are in the trade business. We have a deep knowledge of how execution looks at all of those competitors and we do not have any impact from them."
GameSpot reported that the retail game company pulled in $2 billion worth of revenue during the recently closed quarter, including $68 million profit "thanks in large part to strong sales of the Xbox One and PlayStation 4." Many game retailers have come and gone in the past, but their domination of the used game market is something that has helped GameStop stay a step ahead of all of their competitors, and they need to continue to do so to stay powerful.