You might have heard of Play N Trade before. They are the largest Video Game Franchising retailer there is. I was able to get the chance to speak with Charles Beaupre who is the CEO of the company. Of course I had one or two questions to ask him about his thoughts on the retail side of the industry coupled with the rise in digital distribution and increasing amounts of DRM for games, also why he is so certain that this business model will be able to withstand the test of time.
To give you a bit of background about the company, they are based out of southern California with roughly 150 stores in the world. One of their biggest strengths is the power that they provide by the means of having a franchise opportunity available to those that have the grit, entrepreneurial spirit and a little capital to run a video game store the way that they want.
For those of you who don’t understand the concept of a franchise, it works a little like this. You will of course have to apply with the company to see if your ideas are a good fit for their business. They will help you along the way with product, resources; such as repairs and marketing. they will also help you make sure that this is the right decision for you. After both you and the company are in agreement, you will need to provide the initial capital to get it started and from there, it is what you make of it. Mind you, I skipped a few steps (here is the link to the complete list of information), but hopefully you get the general idea.
The PS4 was just announced, and with it they are partnering with Gaikai to provide a streaming service for their platform. In what ways do you have to adjust to meet the demands of a market that seems to be going digital?
I am very excited about the release of the PS4 and the next Xbox. What that means for our stores is not only are there going to be new games coming out along with the technology, but many of those gamers who have a PS3 or a 360 will be looking to trade it in. What that means for us is that our inventory levels are going to grow and we will be able to repair the broken consoles and resell them. The same goes for the mobile industry as well, there are new phones being released all of the time and we are able to resell them to the gaming public. Software aside, the business model is steadily growing for the console/device market because you are not able to digitally purchase a console.
How do you foresee the growth of software sales in the next five years?
I predict that you will be seeing a shift in who sells software. Currently you have the Big Box Retailers such as Wal-Mart, Best Buy, etc. They have been very aggressive in pricing their new software when it is released in order to bring people into the store and encourage them to purchase other items. What we are noticing is that the majority of customers who have made that trip to go to those stores are not paying out for those big-box retailers. They will just enter the store, purchase the game and leave. So the amount of investment from them has been high and the payoff has not met those expectations. Stores like Play N Trade are offering something to those customers who want to come into the store and get harder to find games and systems as well as trading their games in in order to purchase new games. So, to answer your question, we will be growing continually in our software sales in the next five years because those big box stores are slowly losing their market share.
Now, taking a look at the mobile market this is an area where there is no existing retail space to sell those titles other than through the online shops. How does Play N Trade respond to this huge market?
The mobile market is the biggest thing right now and everyone is making games for it. However, many of those companies are not making back on their investment. How we are able to work with this industry is to focus on the devices that you will play those games on. You can come in to the store, buy a iPad, and instantly have thousands of free games to play. The same can be said for Android devices and as this industry keeps growing we will find our niche in being able to deliver on the hardware necessary to run those titles. When looking at devices such as the Ouya, I believe strongly in that system as an accessible device for all players but like the iPad, we will have to have a reason why we can’t live without it.
I recently was admiring a friends game collection and noticed that it could be sold for thousands of dollars. Is there a focus on Vintage/Collectible games at Play N Trade?
My most favorite game is Ico for the PS2. This is the game that I will die with. There is a strong market for those who like to play those older games and one thing that sets us apart from our competitors like Gamestop is that we are able to take in these older systems and have them available in our stores whereas our competition, you cannot find N64 games in their stores at all if not ever.
What are you predicting to happen with the used game market in the next few years?
As we look at the market for used games, we have been shown support from leaders such as the CFO from EA Games Blake Jorgensen and Shuhei Yoshida of Sony that there will always be a need for disc based games. Because if you take a step back and look at used games/digital releases. You have to wonder about what you own. You have a disc and you can say that you own that physical disc. With digital releases, do you own the data that you downloaded to your hard drive or does it belong to someone else? If you paid for the game don’t you have the right to do with it as you please? I would like to be able to see in the future, the ability for consumers to sell the digital versions of their games in addition to the disc versions.
Speaking of Gamestop, they have been very well equipped at buying retailers across the globe. In what ways is Play N Trade looking at expansion?
We are very excited to be opening multiple stores across the globe. We Currently have a store in India and we are looking to open even more stores in the Middle East and Africa (We have two in Egypt.) as well as South America and continuing our expansion across North America. What we are keeping a close eye on is China. they have many restrictions in place that prohibit us from opening stores there but in the near future, we will be seeing a burgeoning market when consoles will be available for their people to buy and play. This is the largest untapped market there is right now and I would say that it is of particular importance for us to have stores located there. In the next five years we could possibly have up to 2000 stores in operation.
So, has Gamestop contacted you about acquisition?
Gamestop is a corporate company and with that, comes a centralized distribution channel. When they purchased EB Games (Still called that in Canada) it took them roughly five years in order to be able to communicate effectively with that market. For example, during hockey season they were heavily promoting basketball games. They are good at certain things but when you end up being a huge corporation like that which has shareholders, you tend to loose touch with Customer Service and that is how we are set apart from them. In our business, owners are able to run their store based on the needs of their respective area. That is something that can be mainly done with franchising. So I don’t thing that neither us nor them would be a good fit for an acquisition?
So, no plans on going public then?
The main reason that we would go public is if we needed the capital for rapid expansion. Currently our business model is built in a way where we do not need to rely on outside investors but rather with franchisers who want to actively take part in our business.
What is one of the biggest successes in your company recently?
There are many to note but I would have to say that the largest growth in our company specifically has been due to mobile devices and as we grow into digital expansion, we will be able to see how this new model of mobile devices can be an ever greater success.
Charles has over 17 years of experience in the world of video gaming. He built the largest video game franchise network in Canada, DimensionGames. He is also the founder of SE2, a technology company that contributed to the success of his video game franchise. His understanding of the industry and the technology it takes to be successful makes him an expert in this exciting industry.
Charles merged his stores with Play N trade in 2012 and has taken over as CEO of the new, larger franchise operation. Charles’ passionate leadership is contagious and he is a leader in the world of franchising. In advocating the benefits of franchises, he remarks that, “We are constantly challenged by our franchisees to become better in all aspects of the business. It’s like sitting in the control center with a team made up of brilliant entrepreneurs all pushing to succeed”.