GameStop went public on the New York Stock Exchange today, February 13, 2002, for a whopping $325 million. It closed at roughly $20.10 a share, a roughly 12-percent premium on what analysts had expected ahead of the spin-out. The market for video games and consoles hit $9.4 billion last year in 2001, a nearly 30-percent jump over where it was just a few years prior.
Book retailer Barnes & Noble has been consolidating its position in the video game retail market over the last couple of years as people opt for games over books. It started with the purchase of Babbage’s Etc in 1999 for $215 million, followed by the acquisition of FuncoLand in 2000 for $160 million. The popular magazine Game Informer was also part of that sale. Both will now be housed under GameStop, which sports a big presence in malls and online via its website. Barnes & Noble currently retains a majority stake in the new, publicly traded entity, which ended today with a total valuation of $972 million.
“Make no mistake about it, the new investors are getting a chance to ride the PC entertainment software wave that appears to not even be close to cresting, but the company is raising $325 million and in the process, giving Barnes & Noble a huge financial windfall,” wrote analyst David Menlow of IPOfinancial.com.
But GameStop will still face stiff competition from places like Toys “R” Us, which uses a company called Amazon to sell its games online, and rental chains like Blockbuster, which let players rent the newest games for a short time for much lower prices. Many industry watchers are expecting that 2002 could be the biggest year for gaming on record as a new generation of consoles brings hardcore fans back into stores looking for cutting-edge releases.
“This year is going to really be the software year,” Activision CEO Bobby Kotick told CNN last month. “We have, starting with the Spider-Man movie, Star Wars movie, and then Minority Report, the new Steven Spielberg movie. So those will be three big products. My favorite is Kelly Slater Surfing.” The gaming mogul expects gaming to continue to grow as the internet becomes a bigger part of it.
“In 2005, when you see PlayStation 3 or Xbox version 2.0 or Game Cube or whatever they’re going to call it, those boxes are all going to have an integrated broadband capability,” he continued. “And for the first time, you’ll be able to download games. You’ll be able to play against other people. The most exciting part to me, though, is we’ll actually be able to reward you for your play. So you’ll be playing against a group of other folks in the tournament, you may pay $10 to enter the tournament with a pot of $100,000.”
Maybe by the time the PlayStation 4 comes out, we’ll all just be putting on headsets and playing games our friends made themselves in cyberspace. For now, the only place to get Grand Theft Auto: Vice City this fall before anyone else will be at midnight launches like the ones at GameStop.
The story you just read is part of the 2002 edition of Warp Week, a Kotaku series that takes readers back to gaming’s past through a mix of time-dilated reviews, retrospectives, and on-the-ground reports.
