 Hey everyone, this is Nathanian Ruffal Jantz from Nintendo Prime and today I wanted to talk to you about GameStop. Now I want to make it very clear that I do think that GameStop corporate is pretty scummy. In fact, most overall corporations, you know, you're Walmart's of the world, your Best Buy's, even Nintendo at times, can be pretty scummy about things. And that's because they are businesses. They solely exist generally to make money. Some companies might try to sugarcoat things, obviously Nintendo included to make them feel like they care about the fans, but what they really care is that people spend money on their products. And GameStop is really no exception. So there's obviously been controversy earlier this year with the Circle of Life program and maybe now they've stepped back on that a little bit and aren't punishing individuals anymore, but they're still punishing stores, which is going to lead to other issues. But it is what it is. GameStop is greedy at the top, like every business in existence. However, I like GameStop, at least my local stores. They have always treated me well. I've gotten the best customer service I've ever gotten anywhere. Even when I've had to call in to their help lines, I've gotten help promptly and they've answered my questions. And what I would say is a pretty good manner of vote as well as I feel like they could have answered them. And they treat me like I matter, like they care about my business at those stores. Now that's a massive credit to the people who work at those stores, because as I just said, GameStop corporate has issues, has a lot of issues. And that isn't to say that GameStop always has the best practices. I know as a consumer, if I want to buy a brand new video game at GameStop and have it be factory sealed, I need to show up during launch week. If I show up four months later when the game costs $40, chances are it's been cracked open and they put in an envelope that is behind the counter. And I understand some of this to a degree, because unlike stores like Walmart, they don't keep their games behind glass cases, right? They're right out there in the open and it'd be very easy to just steal the disc right out of the box or steal the box itself with the disc in it, because even the little security things they can sometimes put in there, the security tags, those just don't always work and it's really easy to get away with theft. In fact, you can find hundreds of YouTube videos out there explaining exactly how to steal a DVD right out of a box and Walmart. So this is something that I understand at a level and I also understand, because I'm a consistent consumer there, when I can get the product sealed. Which again, that's during launch week, typically when they have the games on those shelves behind the counter. Now, as I said, I've had excellent service at GameStop and it's why I continue to go to GameStop. It's why I pre-ordered my Nintendo Switch at GameStop and all this other stuff and why I still plan to go to GameStop in the future. But GameStop is finally biting the bullet. What I mean to say is the video game industry is catching up with GameStop and now GameStop is heading towards their downturn of collapse when it comes to their video game stores. They finally had a financial briefing because we're at the end of the fiscal year of 2016-2017, which runs through March. And on a financial earnings call, they reveal a few interesting things. Obviously, number one, the Pokemon Sun and Moon are the best performing games, which I mean, good job. Good job GameFreak. They're best performing games for GameStop all year. The pre-orders for the game were the highest at GameStop in five years, so that's insane. Pokemon, the craze of Pokemon Go into Pokemon Sun and Moon, just huge numbers, huge numbers. Call of Duty Infinite Warfare massively underperformed. The PS4 Pro is apparently off to a strong start while the PlayStation VR units are selling well. They don't see those units on shelves for longer than 10 days. And 27% of GameStop Power ProWars members who are aware of the Nintendo Switch plan to buy the console, and this is all pre-launch purchase intent. We have no idea what that actually led to on day one and what it's led to since. However, we do know that GameStop has commented on Switch Sales saying that they have been phenomenal and that they are now projecting the Switch to be as popular, if not more popular, than the Nintendo Wii, which is insane. I think it's almost an idiotic statement, but whatever, that's what they're projecting. Now when I say GameStop's heading on the downturn, it's because overall, overall, they have declined in sales 2 to 3%, or I should say they have declined in sales 13.6% from the prior year. So that means that their stock obviously took a huge plummet with those sales declines by 31%, and these losses were made apparently in the sale of new games and new consoles, not so much their used game market, which GameStop is attributing to aggressive console promotions by other retailers on Thanksgiving Day and Black Friday, as well as weak sales of certain AAA titles, and they also had some guy go out there and made this idiotic statement that the reason that the sales are bad have to do with the fact that there hasn't been like new iterations of consoles coming out, which is insane considering the PlayStation 4 Pro just came out, and Xbox One S came out, and the Switch came out now, it's anyways. So, reality is that GameStop profit margins are down, they're down 13.6% in sales, and that now means that GameStop is closing 2 to 3% of their stores, or roughly 225 stores are going to be closed, out of their 7,000 plus stores they have. Now that seems like a small number, because it is, I mean for a company that has 7,000 plus stores closing a couple hundred isn't really a big deal, but it's kind of a sign of the times. Sales for video games are going more and more digital, I think I read something somewhere, I don't have an exact source for this at the moment, that EA has sold something like 30% of their game sales through digital, and we're talking AAA game sales through digital, that's a large chunk that 10 years back that was all going to retail, and that number is probably only increasing every year, and we know that Nintendo has stated that they have seen increased digital sales year over year, and that's probably going to continue now that the Switch has somewhat, kind of sort of a universal account system. They got some issues with it, but again until their full online stuff launches, it's hard to really know where that account system stands, but we do know that game purchases are now tied to the account rather than the console, so that's something, right? So with that in mind, digital sales are probably going to continue to grow for Nintendo, and with all these sales increasing at all these different companies is direct to consumer, let's call it, and then you also have fiercer competition from places like Amazon who are charging 20% off on brand new games, say for Amazon Prime members, it is something that GameStop has a hard time keeping up with, because we have heard in the past that GameStop has super thin margins on their games. At one point I remember hearing that GameStop pays something like $56 or $58 per game that's in their store, which means their profit margins are a few bucks per game sold, it's no wonder they push those used game sales really hard where they can have 50% to 75% to 85% markup margins. It's really hard to stay relevant in this space just selling new games. Still, GameStop is around and they've shown an increase on another side where they have a 27.8% increase in collectible sales, so that's the things you see out there like those Zelda puzzles and the notebooks and some of the merchandising you see around video games. Remember GameStop does own the brand ThinkGeek and apparently they are opening up 35 new collectible stores like ThinkGeek and 65 tech stores, whatever that means, whether it's for phones or what not, obviously I'm not an expert in all the different businesses that GameStop as a corporation is involved in. But the reality is that GameStop, the game store is finally coming to a close really. This is how it ends for any corporation that can see their market share slowly being eaten away by either other more competitive people in that marketplace such as an Amazon, such as a Best Buy, or they see a decline in the way that people are purchasing those games, i.e. buying them digitally versus buying them physical. So GameStop, at least in my opinion, is on the downturn. I could see 10 years from now where those 7,000 locations are now 3,000 locations and then 20 years from now I could see it down to a couple hundred if not being around at all or having all those locations replaced with gaming collectible stores that happen to have some of the latest games and GameStop itself only sells buys and sells games online. It's very hard for me, as I said, I love my local GameStop to think that GameStop is on the way out. But again, they have made mistakes in this field and I think GameStop's primary issue is unlike Amazon, unlike Best Buy, where even if they have super thin margins on the games, they can make up losses on those games and other avenues, GameStop primarily as a store sells video games. So if they don't have another revenue stream in that store, and yes GameStop's have been packing more and more collectible stuff in those stores, but if they don't have a big enough revenue stream outside of video games, it's going to make the stores kind of unjustifiable to keep open as a video game only place. So GameStop is trying to stem the tide, trying to keep things afloat as long as they can. And if the switch is as successful as they think it will be, if the Scorpio blows up and the PlayStation 4 blows up, who knows, maybe GameStop ends up reopening more stores in the future, but it's never good when a company downsizes. I know there's many of you out there that probably wish for GameStop to go away because of their greedy corporate practices or really, really bad experiences you've had some stores, some stores have really crappy managers, really bad employees. I've heard so many horror stories. In fact, you can hear these similar horror stories for places like Best Buy or Walmart or any of the major retailers out there. So something like this is a GameStop exclusive issue, but for us gamers, obviously GameStop is synonymous with gaming. It's been that way for, you know, 20 plus years and it's on the way out. And I, you know, I'm a little emotional about it, but am I going to miss GameStop someday? Maybe? I don't know. It's just, they've reached an end point, they've reached their tipping point. And there isn't going to be GameStop around for probably your children's children. Let me know what you think about this development down in the comments. As always, I am Nathaniel Ruffledance from Nintendo Prime. I guess bidding GameStop adieu.