Wii Got the Beat

In a videogaming coup, GameStop (NYSE: GME) will be the only retailer provided with playable kiosks of Nintendo's (OTC BB: NTDOY.PK) revolutionary Wii console.

The Dallas Morning News reported the announcement from GameStop's annual sales conference over the weekend.

Let's start with the obvious: The Wii won't need playable machines to move its initial supply of systems. We saw that last year, when Microsoft (Nasdaq: MSFT) immediately sold out of its first batch of Xbox 360 machines. We saw it a few years earlier, too, when Nintendo, Microsoft, and Sony (NYSE: SNE) had no problem clearing out their early deliveries of new video game platforms.

So is this really such a catch for GameStop? It's not as if the company will be able to crack the kiosk open and sell the in-store Wii as a floor model to desperate parents, right?

You bet it is. The PlayStation 3 has been plagued with production delays. The Wii is now sitting pretty as a less powerful console, but one that will be nearly twice as available -- at half the PS3's price.

Assuming that both Sony and Nintendo sell out quickly, the Wii kiosks will attract gamers to GameStop as the one place to actually play a system that won't be available on retailer shelves. That's good publicity for a hungry Nintendo, in third place in the stateside console wars.

It's even better news for GameStop. Casual and diehard gamers who come to the chain of 4,000 specialty stores to check out the Wii are unlikely to leave empty-handed. If they find themselves bargain-hunting as they pick through the selection of pre-played games and older consoles, all the better; it earns higher margins for GameStop than selling new games at more modest markups. This past quarter found GameStop deriving a third of its sales -- but half of its gross profits -- from the sale of used games and gear.

Well played, GameStop. You've got the gaming community just where you want it.

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Longtime Fool contributor Rick Munarriz has been a fan of video games dating back to Pong. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.