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GameStop Has a Lot Riding on Tonight's "Watch Dogs" Launch

GameStop (NYSE: GME  ) employees won't be getting very much sleep tonight. The retailer plans to keep thousands of its stores open past midnight to welcome a massive new piece of intellectual property to the video game industry: Watch Dogs.

Image source: Ubisoft.

All signs point to a record launch ahead for the game. Ubisoft announced recently that Watch Dogs is its second most pre-ordered game -- ever. That's saying a lot considering that the publisher is behind hit franchises like Assassin's Creed, Just Dance, and Far Cry, to name a few. Likewise, GameStop said its customers' interest in Watch Dogs has been higher than expected, and the game is now the most pre-ordered title yet for the next-generation gaming consoles.

But this launch is important for GameStop beyond just the traffic and sales boosts that it should bring during the summer months, which are usually the slowest of the year for video games. The release party also shows how GameStop plans to use digital receipts and mobile electronics to keep on growing its sales.

Despite what many investors believe, GameStop isn't totally dependent on the market for physical video games; it actually has a strong digital business as well. In fact, digital receipts grew by 9.5% last quarter to reach a solid 10% of revenue. And most of those sales come during game launches like the one happening tonight.

GameStop is planning to take full advantage of that trend by promoting things like a 12-month subscription to PlayStation Plus during the launch. It's offering a $10 break on PlayStation Plus for shoppers that buy Watch Dogs at the release party along with a new PS4 console. 

Mobile electronics are also a growing part of GameStop's business that isn't shackled to the market for physical video games. Those sales doubled last quarter to more than $100 million. And they were some of the company's most profitable products, too, clocking in at a 36% gross margin as compared with the 10% margin it booked on sales of gaming consoles. It shouldn't be a surprise, then, to see GameStop pushing mobile electronics as part of the Watch Dogs launch: The retailer is giving $25 off to customers who buy the game, along with a pre-owned smartphone. 

The best news for GameStop investors here is that while Watch Dogs should enjoy a banner launch, any release record probably won't survive long. Activision Blizzard's Destiny, which is on track to be the biggest new video game introduction in history, comes out in just a few months. You can bet that GameStop will be rolling out the red carpet for that title, too, and pushing its digital and mobile products at the same time as key parts of the launch.

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  • Report this Comment On May 27, 2014, at 4:15 AM, slysilver wrote:

    Activision Blizzard's Destiny? Activison BUNGIE'S Destiny... come on guys, I'm a bottom of the totem pole Gamestop employee and I know this. Please do your research. Also; probably just saying it's Bungie's works, cause Activision has nothing to do with development, they're producers. In gaming producers give developers money, developers make the game.

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Demitrios Kalogeropoulos

Demitrios covers consumer goods and media companies for, as well as broader moves in the economy.

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