Marketing Exchange PresentationDecember 16, 2004

AGENDA AGENDA

1. EB GAMES Overview2. The Experience Economy3. How we do it at EB GAMES4. What Does This Mean for YOU?

1) EB GAMES Overview1) EB GAMES Overview

Company OverviewCompany Overview

• Leading specialty retailer of electronic

games in the world!

• 2,000 stores split evenly between malls

and strips. Stores in 9 Countries.

• $2 billion in yearly sales

• Opening over 400 stores a year

• Founded in 1977 at King of Prussia Mall

• Leading specialty retailer of electronic

games in the world!

• 2,000 stores split evenly between malls

and strips. Stores in 9 Countries.

• $2 billion in yearly sales

• Opening over 400 stores a year

• Founded in 1977 at King of Prussia Mall

DemographicsDemographics

Typical EB Consumer

• Sex: Male

• Ages: 18-30

• HH Income: $35,000-$49,999

• Employed Full Time

• Some College Education

Typical EB Consumer

• Sex: Male

• Ages: 18-30

• HH Income: $35,000-$49,999

• Employed Full Time

• Some College Education

PsychographicsPsychographics

• Extreme Early Adopters

• Purchase Influencers

• Trend Setters

• Very Passionate about Gaming

• Extreme Early Adopters

• Purchase Influencers

• Trend Setters

• Very Passionate about Gaming

Avid Gamers vs. Casual GamersAvid Gamers vs. Casual Gamers

• Avid Gamers Spend Significant hours a week playing video games (Core plays 19 hours per week)

• Avid Gamers are 11% of Users but 53% of Sales, Purchase 12 titles a year, own multiple systems and visit EB once a week.

• Casual Gamers are a larger group but buy less. This is a growing segment as we begin to build more strip stores

• Avid Gamers Spend Significant hours a week playing video games (Core plays 19 hours per week)

• Avid Gamers are 11% of Users but 53% of Sales, Purchase 12 titles a year, own multiple systems and visit EB once a week.

• Casual Gamers are a larger group but buy less. This is a growing segment as we begin to build more strip stores

CompetitionCompetition

• There are 20,000 – 25,000 locations that sell video games.

• Key Types of Competition:- Mass Merchandisers- Toy Stores- Specialty Video Game Stores- Electronic Superstores- Internet- Video Rental Stores

• There are 20,000 – 25,000 locations that sell video games.

• Key Types of Competition:- Mass Merchandisers- Toy Stores- Specialty Video Game Stores- Electronic Superstores- Internet- Video Rental Stores

EB GAMES Point of DifferenceEB GAMES Point of Difference

• Pre-Played Games

• Trade-In Old Games for Cash/Credit

• Reserve New Releases

• New Releases in Store Day 1

• Selection of Games

• Store Associates are Gaming Experts

• Location, Location, Location

• Community for Gamers (Starbuck’s)

• Pre-Played Games

• Trade-In Old Games for Cash/Credit

• Reserve New Releases

• New Releases in Store Day 1

• Selection of Games

• Store Associates are Gaming Experts

• Location, Location, Location

• Community for Gamers (Starbuck’s)

Pre-played BusinessPre-played Business

• Biggest differentiating factor

• Highest profit margin category

• Biggest competitive advantage

• Continue to grow at faster rate than overall

business

• Higher percentage of pre-played business in strip

center stores

Pricing OptionsPricing Options

EB Options Competitors- $29.99 - $49.99 with one or New Release more trades

- $39.99 - $44.99 pre-played

- $49.99 New Release

2) The Experience Economy2) The Experience Economy

Economic Shifts Over TimeEconomic Shifts Over Time

Agriculture Economy

Industrial Economy

Service Economy

Experience Economy

Agriculture Economy

Industrial Economy

Service Economy

Experience Economy

What is the Experience EconomyWhat is the Experience Economy

• The 4th Economic Offering

• Every Business is a Stage…therefore work is Theatre

• Memorable Events that a company stages and charges extra for

• Restaurants become Eatertainment Stores become Shoppertainment

• The 4th Economic Offering

• Every Business is a Stage…therefore work is Theatre

• Memorable Events that a company stages and charges extra for

• Restaurants become Eatertainment Stores become Shoppertainment

Economic Offerings of Products:Economic Offerings of Products:

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Commodity Good Service Experience

Price of Coffee$0.03 to $3.50

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Commodity Good Service Experience

Price of Coffee$0.03 to $3.50

The Progression of Economic ValueThe Progression of Economic Value

ExtractCommodities

Make Goods

Deliver Services

StageExperiences

Differentiated

Undifferentiated

COMPETITIVEPOSITION

Relevant To

Irrelevant To

NEEDS TOCUSTOMERS

PRICING

Market Premium

Economic Distinctions Economic Distinctions ECONOMICOFFERING

Economy

Economic Function

Nature of Offering

Key Attribute

Method of Supply

Seller

Buyer

Factors of Demand

ECONOMICOFFERING

Economy

Economic Function

Nature of Offering

Key Attribute

Method of Supply

Seller

Buyer

Factors of Demand

COMMODITIES

Agrarian

Extract

Fungible

Natural

Stored in Bulk

Trader

Market

Characteristics

GOODS

Industrial

Make

Tangible

Standardized

Inventories after Production

Manufacturer

User

Features

SERVICES

Service

Deliver

Intangible

Customized

Delivered on

Demand

Provider

Client

Benefits

EXPERIENCES

Experience

Stage

Memorable

Personal

Revealed over a

Duration

Stager

Guest

Sensations

3) How we do it at EB GAMES3) How we do it at EB GAMES

Why Apply this to EB GAMESWhy Apply this to EB GAMES

• Differentiate against Competition

• Allows for Premium Pricing

• Appeal to Avid Gamers and aspirations of Casual Gamers

• Creating a “Third Space” increases visits and time in store = SALES

• Differentiate against Competition

• Allows for Premium Pricing

• Appeal to Avid Gamers and aspirations of Casual Gamers

• Creating a “Third Space” increases visits and time in store = SALES

How do you bring the Passion and Excitement of Playing Video Games

into a Strip Mall?

How do you bring the Passion and Excitement of Playing Video Games

into a Strip Mall?

EB Games Creates ExperiencesEB Games Creates Experiences

• Gaming Tournaments• Interactive Gaming Units• Launch Events/Autograph Signings• Day 1 Releases• EBTV• GMR Magazine• Loyalty Club• Try any game in the store• Local Community Events

• Gaming Tournaments• Interactive Gaming Units• Launch Events/Autograph Signings• Day 1 Releases• EBTV• GMR Magazine• Loyalty Club• Try any game in the store• Local Community Events

4) What Does This Mean For You4) What Does This Mean For You

Who is Doing it Well?Who is Doing it Well?• Starbucks

• Disney World

• VEGAS

• Hard Rock/Planet Hollywood/Dive/ Rainforest Cafe

• NikeTown

• Cabela’s

• Progressive Insurance

• Hertz Gold Service

• Commerce vs. ING

• Starbucks

• Disney World

• VEGAS

• Hard Rock/Planet Hollywood/Dive/ Rainforest Cafe

• NikeTown

• Cabela’s

• Progressive Insurance

• Hertz Gold Service

• Commerce vs. ING

Questions To Ask Yourself:Questions To Ask Yourself:• What if Starbuck’s/Disney entered my

industry…what would they do?

• Ask Consumers what would make them pay more for your product? What if you charged an entrance fee?

• How can your product be more fun, more personal and more memorable?

• How can we ENGAGE people? From an Emotional, Physical, Intellectual or even Spiritual level?

• What if Starbuck’s/Disney entered my industry…what would they do?

• Ask Consumers what would make them pay more for your product? What if you charged an entrance fee?

• How can your product be more fun, more personal and more memorable?

• How can we ENGAGE people? From an Emotional, Physical, Intellectual or even Spiritual level?

KEY CONTACTKEY CONTACT

PAUL KOULOGEORGE

EB GAMES

Vice-President of Marketing

(610) 430-8100 x7940

Paul.Koulogeorge@ebgames.com

PAUL KOULOGEORGE

EB GAMES

Vice-President of Marketing

(610) 430-8100 x7940

Paul.Koulogeorge@ebgames.com