Paid Subscribers to ‘Call of Duty Elite’ Top One Million; Service Still ‘Intermittent’

Premium memberships to Activision Publishing’s new Call of Duty Elite gaming service have quickly topped one million, establishing a new subscription business for the publisher’s multi-billion-dollar franchise.

Yet Activision said that demand for the Elite service  has so exceeded its expectations that the publisher continues to grapple with “scaling challenges.” The service remains “intermittent,” Kotaku reports.

In acknowledgment of Elite’s launch hiccups, said Activision Publishing CEO Eric Hirshberg, “we are giving all Call of Duty Elite premium Founder members an additional 30 days of the service free of charge.”

Purchasers of the new “Call of Duty: Modern Warfare 3” video game (released November 8th) pay an additional $49.99 to receive a year’s worth of digital content and social gaming extras via the Elite online network. Activision said that some three million “Modern Warfare 3” players have registered for a free version of the digital service, which enables users to create online profiles and join multiplayer gaming groups.

The “Elite” service has changed Activision’s marketing dynamic with retailers as well. GameStop, for itself, is touting its role in “delivering” 600,000 paid Elite subscriptions, thanks to its pre-order partnerships with Activision and console makers Microsoft and Sony. (Best Buy markets Elite subscriptions as well.)

“Modern Warfare 3” sold 6.5 million copies on the first day of its release in North America and the UK, according to Activision (via PC Magazine).

GameStop Offers $50 Gift Cards in Apology for Response to ‘Competitor’s Coupon’

GameStop, seeking to restore goodwill among its customers, is giving away $50 gift cards and running a “buy 2 get 1 free” promotion on pre-owned titles as an apology for its decision to remove coupons from retail packages of Square Enix’s “Deus Ex: Human Revolution” last week (via Joystiq).

“We regret the events surrounding this title release and that our customers were put in the middle of this issue between GameStop and Square Enix,” Paul Raines, GameStop’s chief executive, wrote in an email to members of the chain’s loyalty program as well as customers who pre-ordered the affected PC edition of “Deus Ex.”

It remains unclear whether GameStop is extending its offer to walk-in customers who purchased copies of the game (via PC Magazine). In PC-edition packages, Square Enix had included a promotional offer from streaming game site OnLive, which GameStop regards as a competitor. The chain faced customer outcry after news reports revealed that GameStop had directed store employees to open the “Deus Ex” packages, remove and discard the OnLive coupons, and restock the packages for sale. More on the issue at CBS News.

Walmart: Xbox Price Promotion Was an ‘Error’

In other video game news, Joystiq reports that Walmart’s stated price “rollback” of the Xbox 360 Kinect console bundle in an advertising circular was an “error.” The retailer says that it is honoring the $50 sale on the video game system this week, but it will not permanently reduce the price of the bundle, according to the report.

GameStop Pulls Publisher’s Promotion of Streaming Service

GameStop has stopped selling copies of a hit new video game in its brick-and-mortar stores, as the retailer attempts to contain customer outcry over its initial response to a publisher’s promotional offer.

Square Enix, publisher of the PC video game “Deus Ex: Human Revolution,” included in the title’s physical packages coupons for free online access to the game at OnLive, a video game streaming service. But GameStop, which is developing a streaming service of its own, regards OnLive as a competitor (via Wired).

The retailer, which appears to have learned of the promotional offer only after its outlets received copies of the game, first directed its store staff to remove and discard the OnLive coupons from the “Deus Ex” boxes, and still sell the copies as new (via GameSpy). That move has riled some customers, even as GameStop defends its policy on its Facebook page.

Coverage of the episode by the gamer press (more at Ars Technica, Joystiq and USA Today) may be giving OnLive a greater publicity boost than the “Deus Ex” promotion would have on its own. The company, whose investors include AT&T and Warner Bros., launched its streaming service in the U.S. last June. It currently offers more than 100 games for rental or permanent-access purchase; customers can play games on their computers or via Internet-connected TVs.

Square Enix issued a statement on Wednesday acknowledging that it had not made GameStop aware of the OnLive promotion. The publisher pledged to ship the retailer new boxed PC copies without the OnLive offer, noting that it “respects the right of GameStop to have final say over the contents of products it sells and to adjust them where they see fit in accordance with their policies….Square Enix invites gamers who want to purchase the PC version of ‘Deus Ex: Human Revolution’ without additional coupons to buy the game at any one of over 4,000 GameStop stores in North America or purchase a digital download copy online from www.gamestop.com.”

GameStop: Profit and Sales Down in Q2, But Pre-Owned and Digital Businesses Exceed Expectations

Comparable store sales at GameStop declined by 9.1 percent during the company’s second quarter (ended July 30), as hardware sales ebbed and new game titles “underperformed.” However, pre-owned game sales during the quarter topped $633.1 million, a 12 percent increase from GameStop’s second quarter of 2010.

Used games, which are a leading profit source for GameStop, comprised 36.3 percent of the retailer’s total sales for the quarter, up by nearly five percentage points from the year-ago period. GameStop says that its digital business also exceeded its quarterly expectations, with sales increasing by 69 percent year over year.

More on the company’s earnings and outlook at The Wall Street Journal and Reuters.

Pre-Owned Sales, Digital Business Drive GameStop’s Q1

GameStop reported increased net earnings of $80.4 million for its first fiscal quarter (ended April 30), up 6.9 percent year over year, as comparable-store sales of pre-owned game products grew 9.5 percent.

Used games continued to represent GameStop’s largest source of gross profit — worth some $300 million during Q1 of 2011 — with a margin of 48%.

Among other highlights, the specialty retailer’s digital sales increased 53 percent over 2010, with each segment within the category experiencing “strong growth” during the quarter.

Sales of new release games contributed as well: the top five selling games for the retailer during the quarter were Nintendo’s “Pokémon Black and White,” “Mortal Kombat” from Warner Home Video Games, Capcom’s “Marvel vs. Capcom 3: Fate of Two Worlds,” “Call of Duty: Black Ops” from Activision, and THQ’s “Homefront.”

GameStop Sees 61% Increase in Digital Sales During 2010

Digital gaming was a highlight of GameStop’s fiscal 2010 results (ended Jan. 29, 2011), with sales of downloadable content (DLC) for console titles and other digital products increasing 61% to $290 million.

The retailer’s digital sales category includes console DLC and dowloadable games for PCs, as well as subscription and points cards for services such as Xbox Live, credits for the company’s Kongregate casual game site, and time cards for third-party sites such as Nexon.

Overall sales topped $9.47 billion for the year, a 4.3% increase, while comparable store sales rose 1.1%.

GameStop said it plans to invest $100 million in digital initiatives and technology systems, along with support for its loyalty program, during its fiscal 2011.

Tony Bartel, GameStop’s president, stated during an earnings call Thursday that the increased sales of digital goods coincided with an increase in the sale of physical goods. “Over half of the people who purchased downloadable content also purchased a physical good in the same transaction,” he said.

Regarding the concurrence of physical and digital sales, Bartel offered a recent example of the Feb. 1 release of an Xbox 360 map pack for Activision’s “Call of Duty: Black Ops”: the retailer “attached downloadable content to 28% of the [physical game copies] that we sold during the first week of the launch.”

Members of GameStop’s loyalty program will soon be able to preorder DLC for PlayStation 3 or Xbox 360 games “that will be digitally fulfilled at the time of launch,” Bartel added.

GameStop is upbeat on continued growth in digital sales in 2011. In the current first quarter, Bartel said, the retailer is on track to sell more DLC than it did during all of 2010.

Company executives said they would further quantify the company’s digital earnings growth, and share additional details on its other businesses, at its investor day conference on April 1.

Google Pulls Game ‘Arcade’ App from Android Market

A dispute between Google and social gaming site Kongregate reveals how the lines of competition continue to be staked out between app retailers and both aggregators and developers of digital content.

Hours after Kongregate launched an “Arcade” app on Google’s Android Market yesterday, Google removed the app from its digital storefront, reportedly citing violation of the mobile app store’s terms of service.

Kongregate CEO Jim Greer tells Joystiq that Google deemed the free Kongregate Arcade app — through which users can play and download some 300 Flash games from Kongregate’s mobile site — to be an app store in itself, placing it in competition with the Android Market.

But the Arcade app, Greer argues, is “all essentially cached content delivered in a browser, which to me is just bizarre that that would be considered an ‘app store.’ It’s just browser-based content.”

Kongregate is a unit of videogame retailer GameStop, which does not market game apps online, but does offer downloadable content for console game systems and PCs.

The flap could hold ramifications on other retailers that are planning to sell Android apps, such as Amazon (more at GigaOm). For Kongregate, the publicity over Google’s removal may work in its favor, MocoNews points out. The Arcade app is now available at upstart app store GetJar, which has seen heavy traffic for other popular game apps such as Angry Birds (1.5 million downloads from GetJar to date).

As a social site, Kongregate remains relatively small: at last check, its homepage’s real-time ticker claimed some 36,675 users were online playing games.

Walmart Rolling Out Pre-Owned Games

Some 500 Walmart outlets have begun to stock used videogame titles, as the mass merchant takes another shot at the pre-owned market, according to analysts at Lazard Capital Markets (via Joystiq).

Analyst Colin Sebastian expects Walmart to “focus on the deep-value end of the market (e.g., games under $20 ASP)” — a move that would help differentiate the retailer’s offering from used games leader GameStop, while seving to “ultimately expand the market for used games.”

Walmart is also marketing pre-owned titles on its website. While 43 of the site’s 50 most popular games indeed sell for under $20, the current topper of the store’s chart is a used version of “Rock Band 3” for $49.96.

GameStop Store Sales Rise in Q3

Total sales for GameStop’s third quarter (ending Oct. 30) increased 3.5% to $1.90 billion, while comparable store sales in the U.S. were up by 5.3%, the company announced yesterday.

Market share gains on new releases such as “Halo: Reach” and “Madden NFL 2011” drove a 9% increase in new software sales, GameStop added.

“Based on brisk sales trends of new software titles and motion controller launches,” said chief executive J. Paul Raines, “we are enthusiastic about our business and have raised our full year earnings guidance.” The company now expects full-year earnings per share to represent a 16% to 19% increase over 2009.

GameStop Stores Selling DLC for PlayStation 3

Sony Computer Entertainment America plans to market select downloadable content (DLC) for the PlayStation 3 in more than 4,400 GameStop locations, as well as at GameStop.com, in a new campaign with the specialty retailer.

The downloadable content, including full PlayStation Network games and add-ons, as well as PlayStation Plus subscriptions, are currently available in select GameStop stores and will continue to be added to a PlayStation DLC section in retail stores and at GameStop.com throughout the rest of the month (see press release via IGN). Sony now touts more than 60 million registered PlayStation Network users.

Analyst: Digital Sales ‘On the Cusp of Contribution’ at GameStop

GameStop is on track to top a combined $200 million this year from sales of downloadable content, ad revenue from its Kongregate gaming site, and sales of online gaming point cards for PlayStation 3, Xbox 360, and Wii consoles, according to Lazard Capital Markets analyst Colin Sebastian (via Gamasutra).

Digital revenue streams are “on the cusp of contribution” for the game retailer, Sebastian says, adding that GameStop will be able to build its digital business in brick-and-mortar stores via trade-in credits for pre-owned games, promotion of its customer loyalty program, and merchandising initiatives.

GameStop is upbeat about holiday season sales in general, predicting “strong demand” for Microsoft’s Kinect motion sensor. The retailer, Sebastian reports, was “pleased” with the launch of Sony’s rival motion controller, the PlayStation Move, in September — although another game sector analyst qualified that overall product launch as “modest” (via CVG).

Best Buy Chases Pre-Owned Game Biz With Trade-In Program

Launching in nearly 600 Best Buy stores this week (with additional stores to follow), Best Buy’s trade-in program offers customers an opportunity to sell pre-owned videogames for store gift cards.

The retailer says that customers also will soon be able to purchase pre-owned games under the new program.

Best Buy offers a similar program online at BestBuy.com that enables customers to get estimates for their games, mail them in for free and receive a Best Buy Gift Card 7-14 days later. Trade-in prices in-store match the prices shown online.

Sales Up At GameStop In Q2

The videogame retailer reported sales of $1.8 billion for the quarter ended July 31, up 3.4% from the same quarter in 2009. Comparable store sales rose 0.9% on sales of new titles and hardware, with an overall increase in market share fueling a 5.3% increase in new software sales. More at Gamasutra.

‘Call of Duty: Black Ops’ Editions Include $149 Collector’s Version

Some packaged media still retains its collector’s value. Releasing pre-order details for its anticipated game “Call of Duty: Black Ops” (in stores Nov. 9), Activision Publishing says that a $149 “Prestige Edition” of the game will include a remote-control vehicle and audio/video transmitter modeled after pieces of in-game surveillance gear, as well as four playable “maps” that are unavailable in the standard edition. The media itself will come packaged in a SteelBook case.

Pre-order promotions include $20 off a future videogame purchase at Amazon.com, and a virtual avatar premium at GameStop.

GameStop To Acquire Social Gaming Site Kongregate

Kongregate, a website for free-to-play social games, brings to videogame retailer GameStop an online community with some 10 million monthly players. The agreement (release via BusinessWire) is the latest example of a brick-and-mortar entertainment retailer stepping up its digital presence. On a FAQ page for its user base, Kongregate says that players will be able to earn points in GameStop’s PowerUp Rewards program, as one of the benefits of the site’s new corporate ownership.

Best Buy To Sell Used Videogames

Like other mass merchants in the entertainment space, Best Buy has flirted with the prospects of buying and selling used videogames before. Yesterday the chain said it would make used videogame retail a reality across all of its stores this summer. In interviews with The Wall Street Journal, analysts differ over whether Best Buy would be successful in grabbing share from used-game leader GameStop.

GameStop Shifts Execs

Among the promotions at the videogame retailer: Daniel DeMatteo becomes Executive Chairman, from CEO; J. Paul Raines advances to CEO from COO; and Tony Bartel rises to President, from EVP Merchandising and Marketing. Via BusinessWire

EA Unveils Plan To Charge Used Game Buyers For Downloadable Content

Beginning with the release of “Tiger Woods PGA Tour 11” next month, EA Sports games for PS3 and Xbox 360 will include a single-use “online pass” for downloadable content and online services such as multiplayer modes. Purchasers of pre-owned copies will receive a seven-day free trial of the online access, but thereafter must pay $10 for the downloadable content.

Used game purveyor GameStop endorses the move. “GameStop is excited to partner with such a forward-thinking publisher as Electronic Arts,” GameStop CEO Dan DeMatteo, says in EA’s release. “This relationship allows us to capitalize on our investments to market and sell downloadable content online, as well as through our network of stores worldwide.” Via Joystiq

Estimates: GameStop Gains Sales Share

Drawing on NPD data, gamer site Gamasutra estimates GameStop’s U.S. market share for videogame software and hardware sales grew in 2009 to 22 percent. That number is roughly in line with recent estimates from Wedbush Morgan Securities, which have the specialty retail chain gaining software share but losing hardware sales to mass merchants such as Wal-Mart. The Gamasutra estimate excludes sales PC game software and accessories.

GameStop will report its first quarter 2010 earnings May 20. By Gamasutra

GameStop Sued Over Downloadable Content Claims On Used Game Packages

A California resident has filed a class action lawsuit against videogame retailer GameStop, alleging “deceptive and misleading practices” pertaining to the company’s used game sales. According to complaint, used titles at both GameStop and GameStop.com advertise free downloadable content. However, if a disc’s original owner redeemed the content with the package’s one-time-use code, the purchaser of the used disc must pay an additional fee for the download. By Gamasutra

At GameStop, Used Game Sales Make Up Lion’s Share Of Profits

For its fiscal fourth quarter, which ended Jan. 30, GameStop said net income fell seven percent to $215.9 million, from $232.3 million in the year-ago period. Used videogame sales made up more than 46 percent of the company’s total gross profit for the quarter. By MarketWatch

GameStop CFO Leaves For Wal-Mart

GameStop chief financial officer Catherine Smith has resigned after barely six months on the job for a position with Wal-Mart Stores. The videogame retailer said its senior VP and chief accounting officer Robert Lloyd has been named interim CFO, effective immediately. Smith will be chief financial officer of Wal-Mart’s international division. By the Dallas Morning News

GameStop’s Tony Bartel And Microsoft’s Owen Roberts To Keynote ‘GameSupply’ Conference

Tony D. Bartel, Executive Vice President, Merchandising and Marketing, GameStop, and Owen Roberts, General Manager, North American Operations, Microsoft Entertainment and Devices, will deliver keynote addresses at next month’s “GameSupply” conference, the supply chain academy for interactive entertainment. Bartel will provide his insights on the video game market in 2009 and prospects for the future, as well as how greater supply chain efficiencies can impact those prospects. Roberts will address the operational challenges of synchronization of the video game hardware and software supply chains in light of the long lead time and high cost of game development, decreasing life cycles, and retail marketing strategies.

The one-day GameSupply event brings together video game retailers, distributors, publishers, and their service providers to share knowledge about new developments and technologies in the interactive entertainment supply chain. The conference, which was inaugurated last year, will be held February 10, 2010 at the Hilton San Jose in Silicon Valley. GameSupply is jointly produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA).

Tony D. Bartel has been Executive Vice President of Merchandising and Marketing since March 2007. Prior to that, Bartel was Senior Vice President of International Finance, a role he held since joining GameStop in 2005. He has also held executive positions with NCH, PepsiCo, and Yum Brands, Inc., including Chief Financial Officer of Pizza Hut.

Since 2006, Owen Roberts has been responsible for end-to-end operations and launch management in North America for Xbox 360, associated software, and other Microsoft products. During his 11-year tenure with Microsoft, Roberts has spearheaded the European launch of the Xbox console and bridged gaps between the company’s various business units and worldwide retail teams as head of the Redmond-based “WW Retail Go to Market” initiative.

“Tony Bartel’s expertise in the retailing of video games and Owen Roberts’ experience in synchronization of hardware and software supply chains make them ideal choices to put in perspective the opportunities and challenges of video game supply chain management,” noted GameSupply Conference Chairman and MESA Chief Strategist Devendra Mishra.

In addition to the keynote addresses, GameSupply will feature seven sessions that will focus on the entire video game supply chain, from manufacturing, through packaging and distribution, to the sales floor.

Registration for GameSupply is $395 and is open to content holders, publishers, retailers, distributors, and service providers. Member companies of MESA and EMA, receive a $100 registration discount. For more information about the GameSupply conference or to register, please see www.GameSupplyAcademy.com.

The advisory committee for GameSupply consists of: Kurt Fischer, Vice President of Operations, THQ Inc.; Kim Motika, Vice President, Worldwide Sales and Operations, D3Publisher of America, Inc.; John P. Quinn, Executive Vice President, Worldwide Operations for Warner Bros. Interactive Entertainment, a division of Warner Bros.; and Murray Weir, Senior Director – Strategic Planning & Analysis, Nintendo of America.

Companies interested in sponsorship opportunities at the conference should contact Margaret Sekelsky at (310) 823-5805 or margaret@mesalliance.org.

GameStop: Console Stock-Outs Contribute To Lower-Than-Expected Earnings

GameStop CEO Daniel DeMatteo says the videogame retailer’s holiday sales were impacted in part by unexpected shortages of products such as Nintendo’s New Super Mario Bros. Wii game and the PlayStation 3. Nintendo and Sony couldn’t keep up with demand for consoles, DeMatteo tells Business Week in an interview. “They were out of stock right before Christmas,” DeMatteo says of Sony’s PS3. By Business Week

Wal-Mart Offers Deep Videogame Discounts, GameStop Shares Fall On News

The stock market is reading Wal-Mart’s newly announced videogame promotions as a salvo against GameStop and other entertainment retailers. Wal-Mart is offering a $50 gift card with the purchase of a $199 Nintendo Wii, along with 15% to 20% savings on the top 2009 videogames, including “Halo: ODST” and “Tekken 6.” Shares of the GameStop (GME) fell by 8% following Wal-Mart’s announcement on Wednesday, and opened even lower on Thursday. By The Wall Street Journal

GameStop Meets Guidance On Q3 Comp Sales

GameStop had expected same-store sales to decrease between 6% and 11% in its third quarter. Analysts feared much worse. But the retailer has met its guidance, reporting today a 7.8% same-store sales slip that’s primarily attributable to a decrease in new hardware sales. Among the report’s other figures: used product sales were up 19% year-over-year during the quarter. The company also said it sold some 2.5 million copies of Activision’s “Call of Duty: Modern Warfare 2” in the game’s first 72 hours of release. Via Business Wire

GameStop To Sell Digital Downloads

The new program, which GameStop will start testing early next year, will work in conjunction with online services already offered by console makers such as Microsoft and Sony. Retail shoppers will be able to purchase codes for a new game level in the store, and download the content from the console network when they get home. By Reuters

GameStop: Q3 Sales Down On Tough Comparison With ’08

The videogame retailer expects its same-store sales to decline by 6% to 11% in its third quarter. Analysts expect a steeper decline, since the company experienced a 35% surge in sales during the third quarter of 2008. One analyst predicts a 20% drop in sales for October alone. By TheStreet.com

Steam’s ‘Call of Duty’ Exclusive Draws Fire From Digital Game Retailers

Several digital videogame distributors are refusing to sell Activision’s hotly-anticipated “Call of Duty: Modern Warfare 2” this week, in a conflict-of-interest battle with online gaming leader Steam.

PC versions of the game reportedly require installation and use of Steam software for online multiplayer functionality. But in addition to providing back-end services such as anti-cheating technology and game-saving management, the Steamworks software also promotes Steam’s own online storefront.

That has rival online stores including IGN’s Direct2Drive, GamersGate, and Impulse boycotting the game.

“At Direct2Drive, we believe strongly that when you buy a game from us, you shouldn’t be forced to install and run a 3rd party software client to be able to play the game you purchased,” the Fox-owned site says on a store page for “Modern Warfare 2.” Direct2Drive offers a $5 coupon toward the digital purchase of other Activision titles on its site, while referring those who wish to purchase physical disc versions of “Modern Warfare 2” to “partner” site Amazon.com. Read more

GameStop Adds Digital Business Exec

GameStop hires Shawn Freeman, formerly of Ticketmaster, to grow the videogame retailer’s online business and digital ventures. By Home Media Magazine

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