gamers could begin putting toward digital products.Millions of consumers are
engaged in the trade-in system, and now GameStop has to convince publishers of
the value proposition on the other end of FIFA Coins that transaction. Are they, the
publishers, willing to accept the used game market more readily if cooperating
with the retailer means that the extra $15 of trade-in credit can go toward its
high-margin DLC? Look for GameStop to push this angle more in the coming
year.Even while GameStop
DLC as a growth opportunity now, it is building paths into other parts of the
digital economy for the future. Without them, the company will find it difficult
to reach its $450 million goal of digital revenue for its current fiscal year,
and it certainly won't reach its 2014 goal of $1.5 billion.The $450 million goal
looks rather modest, when compared to GameStop's current business. The Cheap MUT Coins company
expects total revenue of less than $9.8 billion for its current fiscal year.
Under that assumption, the figure
shows that GameStop can expect about 5 percent of its revenue to come from
digital products this year.The Other CategoryEven if GameStop manages to grow
its business by 4 percent per year for the next few years, achieving its $1.5
billion goal would still represent a large chunk of its business. By our
estimates, that would mean that $1 out of every $7 that the company earned would
come from its digital sales. At that point virtual goods would be just as
important to GameStop's revenue
as console and handheld hardware are today.GameStop would likely welcome a
diminished dependence on hardware. It is clearly the least profitable segment of
GameStop's business, since they get to keep only 8 cents out of each dollar of
hardware revenue, on average.For comparison, new software brings in 20-22 cents
on the dollar, while used product (including hardware and software) is more
lucrative at 44 cents - 48 cents per dollar.When reporting its quarterly
results, GameStop at https://www.mmogo.com/
