Midnight launches might be a thing of the past for GameStop
). A person familiar with the video game retailer told Benzinga
that it might cut back or end its midnight game and console
launches in 2013. A company spokesperson adamantly denied the
GameStop recently promoted the launch of Microsoft's (NASDAQ:
) Halo 4 and Activision's (NASDAQ:
) Call of Duty: Black Ops II with midnight launches nationwide.
The retailer is famous for hosting these events, which encourage
consumers to line up and purchase new games the night before they
are officially released.
That could change as the company searches for new ways to save
Midnight launches are very costly for the retailer. In
addition to the added expense of keeping stores open late,
GameStop must also weigh the risk of potential dangers versus the
cost of hiring security.
In 2006, numerous retailers and customers were
robbed at gunpoint
when Sony (NYSE:
) released the PlayStation 3. Few video game-related robberies
have occurred since that time, but one major game company has
decided to stop doing them anyway.
Despite the nationwide hysteria and
massive sales expectations
for Wii U, Nintendo (OTC:
) reportedly instructed retailers to avoid midnight launches this
year. The company did the same thing when it released The Legend
of Zelda: Skyward Sword last year.
This may not be an isolated incident, the person familiar with
the matter said. GameStop is planning to close
200 unprofitable stores
-- roughly three percent of the company's outlets worldwide. But
that may not be enough to reduce the firm's expenses.
GameStop shares are up eight percent year-to-date (YTD). The
company has managed to outperform the gaming sector, which has
experienced a downward trend as the existing consoles (Xbox 360,
PlayStation 3 and the original Wii) begin to age.
Comparatively, Activision is down more than eight percent YTD.
Take-Two Interactive (NASDAQ:
), which will release the next chapter in the Grand Theft Auto
series early next year, is down 13 percent YTD. Electronic Arts
) and Majesco (NASDAQ:
) are down 36 percent and 64 percent YTD, respectively.
GameStop and other retailers had hoped that the Nintendo 3DS
and PS Vita -- the two newest handheld devices on the market --
would revitalize the industry. Thus far this has not been the
case. The Nintendo 3DS got off to a
as consumers balked at the lack of software and the $249 price
tag. Sales began to pick up after Nintendo lowered the price to
Worldwide, Nintendo has sold
22 million units
since March 2011. Sony has sold three million PS Vita units since
December 2011. (PS Vita was released in Japan in December but did
not ship worldwide until February 2012.)
Despite the lack of interest in the new handhelds --
particularly PS Vita -- consumers have remained loyal to the
industry's biggest franchises. In just 24 hours, Call of Duty:
Black Ops II earned
$500 million worldwide
. Halo 4, which is exclusive to the Xbox 360,
earned $220 million
on the day it was released.
GameStop is not the only retailer cashing in on the success of
these games. Best Buy (NYSE:
) and Wal-Mart (NYSE:
) are among the major retailers that host midnight launches for
major game releases, allowing consumers to purchase the items as
quickly as possible.
If GameStop intends to scale back or eliminate midnight
launches within the retailer, it could inspire customers to look
for alternatives. Many of them could wind up at Wal-Mart, which
has numerous locations that are open 24 hours a day. At those
outlets, the added expense of selling a game at midnight is
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