Good morning. Welcome to the GameStop Corporation's Third Quarter 2012 Earnings Call. [Operator Instructions] I would like to remind you that this call is covered by the Safe Harbor disclosure contained in the GameStop public documents and is the property of GameStop. It is not for rebroadcast or use by any other party without the written prior consent of GameStop. At this time, I would like to turn the conference over to Mr. Paul Raines, CEO of GameStop Corporation. Please go ahead, sir.

Thank you for joining the third quarter GameStop earnings call. Before we begin our remarks, I want to thank our 30,000 hardworking associates in 15 countries around the world who day-in and day-out are providing the finest customer service to gamers, in stores, online and on digital platforms. I particularly want to recognize our heroic teams along the mid-Atlantic coast and in the Northeast who have worked passionately to reopen our stores, damaged as a result of Hurricane Sandy. We are happy to report that all of our associates and their families are safe, and our Gamer Fund Charitable foundation is working to provide those most affected with the support they need. As you saw in this morning's release, the quarter played out within our guidance on top line and ahead on earnings by $0.06 over consensus. The GameStop formula continues to show strong resilience in the face of challenging category headwinds, and the new categories of digital and mobile are creating new profit pools that we are exploiting aggressively. Rob Lloyd will give you more detail on how the earnings were achieved in the quarter. New software declined at a rate slower than the market, driving another unprecedented 320 basis points of market share growth. Our business model is more dominant than ever on new titles, and although the category has declined this year, we are excited about the new titles coming now and in the near future. Tony Bartel will share some insight with you on how we see the software outlook improving now and into 2013. With just a few days left until the Wii U launch, our consumers' appetite for innovation is very high. We encourage you to come to one of our 3,000 stores with the new interactives and experience for yourself the fresh and…

Thanks, Paul. Good morning. I'd like to start by reviewing the results of the goodwill impairment testing we discussed on our second quarter earnings call. As a brief reminder, we initiated an interim impairment test of our goodwill and other intangible assets as required under ASC 350 of Generally Accepted Accounting Principles due to a temporary decline in our stock price during the second quarter. As a result of the completion of this impairment test, the company recorded a charge to goodwill of $627 million and a charge to intangible and other assets of $51.8 million or $44.5 million net of tax. These are noncash charges, which do not affect our future operations, cash flows or liquidity position. The charges primarily relate to our international reporting segments, with charges of $101 million and $107 million relating to goodwill recorded in Australia and Canada, respectively, upon the merger with Electronics Boutique in 2005. The charges for Europe were $420 million for goodwill and $47 million in other assets and were largely due to the goodwill and other assets recorded from the merger with EB and the acquisition of Micromania in 2008. Now I'll discuss the quarter. During the third quarter, our consolidated global sales were $1.77 billion, down 8.9% from last year with comps down 8.3%. Comps were down 9% in the U.S. and down 7% internationally. Our same-store sales were within the range we forecasted in last quarter's call. There were a few strong titles launched during the quarter, such as Madden 13 and Boderlands 2, but due to comparisons to last year's title lineup and declines in hardware at the end of the cycle, we saw a decline in comps. On a category-by-category basis, new software sales declined 12% compared to a 19% decrease in the U.S. market. Pre-owned…

Thank you, Rob. Although the industry had another difficult quarter, we continued to outperform the rest of the market, as our competitors saw 24% software declines, but we only had a 12% software decline, increasing our Q3 software market share to 44% in the U.S. In addition, our digital revenues grew 32% over Q3 of last year, with PC digital growing at 55% and console digital growing at 20%. As mentioned earlier, we have shared the success of launching DLC at the day of launch that we had with Activision's Call of Duty Modern Warfare 3 Elite. And most major titles are now launching with Day 1 season passes. For instance, we attached 13% of the season pass to Ubisoft's Assassin's Creed 3, and 27% of the Halo 4 map pass to Microsoft's Halo 4 at launch. Finally, we are attaching double-digits for the Black Ops II season pass on Activision's Call of Duty: Black Ops II. It is important to note that we are now the only retailer that is selling Microsoft game-specific DLC and we deliver its PowerUp Rewards customers at the time of purchase so that they can begin the download to their Xbox 360 before they leave our store. Even though our digital receipts outgrew the software category by 51 basis points in the third quarter, the decline in the gaming category has negatively impacted our console DLC and POSA cards, resulting in a lower growth rate than we anticipated. Although Q4 is expected to be significantly higher than our year-to-date digital growth rate, we anticipate that we will end the year between 30% and 40% overall digital growth or $590 million to $635 million of digital receipts. We now offer over 2,000 downloadable games in our stores and on GameStop.com. And we saw our PC…

Thanks, Tony. Good morning, everyone. As Paul mentioned, our International operations exceeded expectations in the third quarter. Excluding impairment charges, all 3 segments individually improved profitability versus Q3 of 2011 and in total, increased operating earnings by 34%. Despite overall comparable store sales of minus 7% during the quarter, a strong focus on cost control and a 240 basis point increase in gross margin percent drove the improvement in operating earnings with the most significant improvements generated by our German and Australian businesses. As a reminder, over the last 12 months, we restructured our businesses in Spain and Northern Europe where we consolidated operations in Ireland, resulting in significant reductions in SG&A. During this time, we have continued to focus on driving profitability in the pre-owned business and I'm pleased to say that during the third quarter, international pre-owned margin rates increased 500 basis points over prior year and are now in line with U.S. pre-owned margin rates. During the quarter, we continue to make progress with our strategic initiatives. International e-commerce grew 35% during the quarter. Digital sales grew at greater than 30% and our mobile product sales increased 55% versus Q2 as these new product lines were rolled out to all countries. Finally, our loyalty program continues to expand with Australia's loyalty program reaching 1.3 million members or 6% of the country's population. And we continue the expansion this month to new markets in Germany, Austria, Switzerland and Italy. Our strong focus on managing the basics of our business and the rapid execution of GameStop's strategic transformation is driving profitability, not only during the bottom of the current cycle, but will ensure that GameStop international is the international leader as we enter the next new console cycle. And now I will turn it over to Mike Hogan for his comments.

Thanks, Mike. I have a brief update on PowerUp Rewards. Our PowerUp membership continues to grow. Today, we have over 21 million U.S. members. By way of comparison, last year at this time, heading into holiday, we had only about 14 million members. Year-to-date, roughly 75% of GameStop U.S. sales are attached to a PowerUp member; that is up significantly versus this time last year. And our PowerUp Pro renewal rates are increasing, now running in the high 50s. Year-to-date, that puts us at around 40% Pro members overall. Our database of customer transactions also continues to grow, and we now have over 360 million games in the customer game library which, as you know, we use for a multitude of purposes including customer segmentation, targeted game offers, trades, et cetera. And PowerUp is driving top line growth in a challenging category. The physical games category is down more than 20% year-to-date according to NPD. GameStop sales performance is considerably better than the category and PowerUp member sales are leading total GameStop growth. PowerUp members sales also drive our pre-owned business, which is outperforming both the category and total GameStop sales. There are a number of reasons for this. We've seen real success in our ability to drive increased spend and share of wallet through better communication and through targeted offers, like the Buy 2 Get 1 coupon that's exclusive to Pro members, exclusives like the Modern Warfare 3 prestige token and value promotions like 50% off selected Sony titles. The purchase metrics continue to be extremely strong, with members still spending about 5x as much as nonmembers. We recently rolled out a program to communicate to our members the full value of their PowerUp Pro membership. As you know, the program costs $14.99 per year but we found that the average Pro member was getting many times that amount in annual value, between the savings, the bonuses, subscriptions, Buy 2 Get 1 and other offers, and that does not even include game exclusives. The initial response has been extremely positive and we expect it to help lift renewal rates. Finally, PowerUp Rewards is cost-effectively driving our new products and categories. One of the major barriers for any new business is the cost of customer acquisition. PowerUp Rewards allows us to leverage our current heavy spenders in new products and new categories at an extremely affordable cost. For example, we introduced members to the opportunity to buy DLC at GameStop. This is done through targeted email, but also through point-of-sale integration. This program has been extremely effective in driving our DLC business. A new category example would be our recommerce business. We're introducing PowerUp members to this new product category. PowerUp members are driving the success of this business, and already contributing more than 65% of our recommerce sales. Let me turn it back to the operator now.

[Operator Instructions] We will take our first question from the site of Brian Karimzad from Goldman Sachs.

I guess first one is on the assumptions you have baked in for the fourth quarter comp outlook, what range of supply scenarios do you have baked in there for that Wii U launch?

Rob?

I'm not sure that we're comfortable stating exactly what the units are that we're looking at. But we did bake in a pretty wide range just given what we know from past Nintendo launches, as well as what we have visibility to at this time. We are confident in the consumer demand; the supply side is what's the unknown for us.

Brian, part of what's happening here, too, is we are approaching this launch very differently from every other competitor and from our own historical. And we think that influences decision making as well so we're going to be very cautious with that.

Okay. And then any reason the margin progress we've seen in the new and used software businesses this year won't hold for the foreseeable future?

Well, clearly, what's going to be an impact on the margin rate in the fourth quarter overall, and particularly in the hardware area will be the Wii U launch. When new hardware consoles launch, they typically have a more like a mid single-digit margin rate attached to them as opposed to the rates that we've seen, particularly in the third quarter overall. So that will be an impact.

You'll certainly see -- you'll see mix effects. The precision, though, of what these teams are doing, you heard Tony and Mike talk about what's happening with pre-owned. I mean, the tools that we're using here aren't going to change. Mix definitely will change.

All right, I guess what I'm getting at is on the software side specifically, I mean, the games you've seen have been a result of actions you've taken and there are some sustainability to them. They’re not just mix?

Well, the mix in any particular quarter on software can depend somewhat on the titles that are released in that quarter. And so I can't tell you that I've examined the impact of the 3 titles we've seen so far versus the titles that are coming from Nintendo. But generally, I would expect that it would be in the range that you typically see from our software margins.

Okay. And then just quickly on the buyback, it slowed down a bit in the quarter, and then it looks like it was a bit front-end loaded, although it's a pretty strong quarter for you on cash. Anything to share there on your philosophy?

Well, if you look at the second and third quarters combined, we bought back $213 million worth of share. Comparing that to the second and third quarters of 2010 and '11, we were in the range of $75 million to $100 million. So what we're trying to do is be more -- spread the buyback out throughout the year and then take advantage of opportunities where we see that the price is not where we want it to be. So clearly, in the second quarter, in the early part of the third quarter, the price was suffering and as a result, we were able to buy more heavily in that timeframe.

And our next question comes from the site of Seth Sigman from Credit Suisse. Seth Sigman - Crédit Suisse AG, Research Division: A question on the mobile business. It seems to be ramping nicely. Looks like in your guidance you implied a big pickup in the fourth quarter. Obviously, there's some holiday seasonality there, but how should we think about the drivers of that growth? Any metrics on per-door economics? And maybe you can share that, that would be improving in the fourth quarter? And any early thoughts on how that business should play out in 2013?

Seth, Tony will answer some of this on the store model or trades and some of the other things. I would say to me when we talk about this mobile business first of all, the consumers' appetite for this as a holiday gifting item is clearly going to be pretty strong. I mean it's a great area. We've expanded the assortment and we've expanded linear footage. Tony, maybe you want to share some of that -- some color on that?

Sure, clearly, as I talked about the stores that we've actually expanded linear footage on, we're just completing that. So that's clearly going to contribute, too. We have a couple of factors that are going to take place. Seasonality is definitely one of this -- one of these. We did have a good sample last year of stores and so we have modeled similar seasonality in the fourth quarter. The other thing is that we're still rolling out internationally with the sale of recommerce and so you're also going to see international play a large part in contributing to the growth and the expansion in the fourth quarter.

It’s a very good web business, as well. Yes, that's the other thing is consumers, particularly at holiday, go to the web, shop for these items. Our web in-store technology now opens thousands of storefronts that weren't there before, so there's lots of tailwinds on this.

We've also used the BuyMyTronics acquisition to identify additional SKUs that are very popular with consumers and so we're using that to actually expand the amount of SKUs that we accept in all of our stores, and therefore, sell in all of our stores. So that's another contributing factor. Seth Sigman - Crédit Suisse AG, Research Division: Okay. And just a quick question on expenses. As you start to plan out for sales growth going forward, I mean, how do you think about the operating leverage in the model in Q4 and into next year? Are there any areas where you still need to increase spending or you're pretty lean at this stage?

Let me start it off, Rob and you can comment on planning. I mean if you go back, Seth, we were very focused on driving operating margin targets of this year. And I think we gave a guidance of 7% -- I think, it was 7% to 7.3% was our guidance at the beginning of the year. So we've been very focused on operating margin. If we can reach this range, we are very close to GameStop's all-time highs in operating margin. So that's a big priority for us. Rob, maybe you want to talk about what we're doing around the planning around the scenarios for 2013 based on launches, et cetera?

Well, going into 2013 and in this fourth quarter even, you have the opportunity with the top line being driven by hardware sales to really gain some leverage on the cost side. And so steps we've taken in the past have not only protected the profitability as we've gone through 2012 but they set us up for what can then be further leveraged as we go forward. So we remain focused on our cost structure and cost control and reducing costs where possible.

And our next question comes from side of Colin Sebastian from Robert Baird. Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division: I guess, first of all, looking out beyond the holiday period, I'm curious what we should expect in terms of current gen software pricing just given the aging cycle, what your expectations are there. And related to that, how you're seeing, currently, pricing hold up on used software? And then secondly, on the mobile question, I guess as a follow-up, I'm curious if you're refining your strategy deal in terms of providing unique game-centric platforms where you've loaded up games on devices. Or is this shifting more towards GameStop becoming a tablet retailer? Obviously, you've done very well with Nexus 7 and that presumably gives you some ammunition to sell other popular platforms.

There's a lot there. Why don't we start with the pricing, Tony? You got any comments on the current gen pricing?

Yes, Colin, I have received no information to lead me to believe that current gen software pricing will be going down. And as a result in the follow-up question, so given the fact that we anticipate that it will stay very consistent, I would think that our pre-owned pricing will also stay very consistent, as well. So there's no indication that I am receiving that there will be a reduction in the current gen software.

Yes. As far as the mobile, it is a challenge, right, Colin? We got into this mobile business because we had game -- we saw it as a gaming platform; customers were asking for it. What we've discovered is there is room for a buy-sell-trade electronics player. And so we have inside our stores this growth vehicle that we're trying to manage appropriately, et cetera. Tony, maybe you want to talk about some of the plans around mobile as far as gaming goes?

Sure. Clearly, we see mobile as a growth category, tablets in particular. And we started by putting games, actually preloading games onto the tablets. You will see us continue to be game-centric in our tablet selection. The highest attaching accessory that we have to our tablets is our proprietary Bluetooth controller. Now others are coming onto the market. Obviously, we see people using tablets a lot for gameplay and that continued on with the Nexus 7 as well. So you'll see us to be game-centric as we sell tablets, although consumer demand is really going to lead us. So as we see other devices in the mobile space that consumers are looking for, our buy-sell-trade model allows those products to be very affordable. And so we think that we can actually go beyond game. So far it's been very game-centric. I think you'll see us expand that.

The other thing, Colin, that we should discuss and I'll ask Mike Hogan to give his thoughts on this is one of the things we're finding is PowerUp Rewards is making us an extremely strong customer acquisition platform. And so we have a lot of people coming to meet with us who want to launch their product in stores. Mike, maybe talk about how you use PowerUp Rewards to drive the Google Nexus' successes we've had and so forth.

Sure. One of the things I think we're finding is that the cost to customer acquisition, of course, is very high and there's -- and that applies not only to our business, but to other businesses as well. And I think you've seen some of the successes we've had around DLC, for example, taking current heavy users, introducing them to a post end-product category. To Tony's point, we think that the tablet business is pretty -- iDevice and such is very close into our current business as well. So what we've been able to do is a number of things. One is to segment consumers and identifying by their preferences. We've been able to take consumers, once they've been introduced to the new product, and cross-sell a number of accessories, games and time cards and things that go with it. So we have a, we feel, a pretty full pipeline in terms of ways to do that. In addition, we're feeding information back at the store level because one of the things that we found is even more powerful than the email connection is taking the right information about the consumer and their preferences and what they purchased in the past and making it available at the point-of-sale. So that when the consumer is in the store, the associate can suggest that we sell the right device to the consumer. Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division: All right, great. And I guess Rob, just lastly, in terms of capital allocation, any planned uses of cash or liquidity needs that might prevent the board from considering a higher dividend down the road?

I would say that there isn't anything that's planned at this time. We continue to look at opportunities out there for us to invest in. But we don't see anything on the horizon that would deviate us from the share buyback and the dividend plan that we're on. And we have spoken about our desire to continue to have a dividend that increases over time. And that there is room in the formula for us to increase that dividend when the time is right.

And our next question comes from the site of Arvind Bhatia from Sterne Agee. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: I wanted to talk about your long-term goals with respect to the mobile business. I think you've given us some long-range plans, dollars, margins, et cetera. I wonder how you feel about them after you've had a chance to run this business for some time now. Recalling, I think a $650 million type number, do you see the market opportunity any differently today, larger, about the same? Any color there long-term would be helpful.

I'll guess I'll start it off and maybe Mike Hogan can talk about what we see in sort of the size of the market and that kind of thing. I think, Arvind, we got it into this because it was adjacent to gaming. And consumers were coming to us with iPhones trying to trade them and Samsung products and wanting to trade to buy a gaming product. We also saw consumers playing games on tablets so that's how we got into it. We did a pilot; it went extremely well and we discovered that our competencies around refurbishment worked very well in this space so now we're in it. I think the thing that is going to be interesting for us is we continue to see this buy-sell-trade competency as being a very unique and differentiated capability for GameStop. So while we have tremendous expertise in gaming, the buy-sell-trade impact to electronics is enormous. And if you look at BuyMyTronics.com, they're able to handle literally thousands of SKUs that we don't carry in our stores. So we think there’s -- and we're not ready to give you revisions to the market size, et cetera probably ‘til next year. We certainly feel pretty good about our estimates for this year and think it's been a very exciting profit pool. So Mike, maybe you can talk a little bit about what you think the size of this market, just general numbers, is in the U.S. and around the world?

Sure. We have a pretty detailed model that we use in terms of projecting the video games market and we also have a model that we built to take a look at the recommerce market. And we would say the market in the U.S. was over $1 billion last year in 2011 and continues to grow in the double digits this year. We would think that this category is going to be between $2.5 billion to $3 billion in the U.S. by 2015. So we continue to see a lot of growth in the category and I think to Paul's point, things that we've learned about the category is retail footprint is very important. A lot of players we see struggling with growth because they don't have stores, places where consumers can come and actually get cash for their -- or trade credit for their product. And also the buy-sell expertise, so we feel very good in terms of our positioning for our growth within the category but we're very bullish on the overall category growth.

And we'll have details for you in the New Year on how we plan to manage that in our various platforms and stores and brands. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: One question on '13. I know we're not talking about guidance here, but you gave us some really good color on some of the titles that are in the first -- in the early part of 2013. But I wondered if you can give us some of your views on just the year itself. If we assume additional console launches in '13, is that a transition year as people anticipate a new console and then maybe there is some slowdown sometimes prior to that? Are you looking at it that way or are you looking at this to be a different type of transition where it's pretty gradual and you don't really see much change? And like you said the titles in the early part of the year are very strong. So just some general color on the year will be very helpful.

Tony, you got the crystal ball out? You unchartered waters, kind of thing?

Yes. Well, I aren’t got the crystal ball out. I think Arvind, clearly we don't have announcements from 2 of the major platform holders, but there is a lot of speculation about the launches. I think it is important to note that we do go into 2013 as I said at record share levels. I mean we're more than double market share versus when we went in to these console launches last time. So I think that's really important to note as we move into these console launches. But that's the console launch, in general, whenever it may occur. I'll let Rob pull out his crystal ball and talk to you about 2013.

The market share is important because we continue to demonstrate our ability to gain share as we launch new titles. Tony talked about the title releases that we see coming up. The big unknown for 2013 is the base from which we're starting, which is an industry that's been down 20% to 25% this year. So you can put some strong titles in there. We put the unknown of the consoles in there and it's very difficult for us to form a picture at this point. But in the past, when we've seen this sort of year running up to big console launches, it is a bit of a transition year.

But the other thing, Arvind, that's not been discussed is we believe we can change the cadence and schedule of this transition because we're using PowerUp Rewards in a way that's never been done. We can tell console makers how many people want a particular feature on their console and we can share with software manufacturers what type of games do people want to play on the new console. And we think that our mission here is to use PowerUp Rewards to shape the schedule and shape what comes out in the future. So that's, I think, that's the work that has to be done. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: Very helpful. Last quick one is the impact of Sandy. I know it's hard to quantify it, but any early thoughts on numbers?

Tony, you want to talk about Sandy?

Well, clearly, having a major storm hit on the launch date of one of your largest title is not what we would have predicted. However, we had heroic efforts on the parts of our associates. We had hundreds of stores that were out on the day. And we did have -- literally have people on the ground, on the island of Manhattan, touching every single store the very next day. We were open before our competitors. And so as a result, we were able to minimize the loss, significantly, so it's really been a very minimal event for us. Like I shared earlier, we had record launches for Assassin's Creed 3. They met our expectations, so clearly it did not impact us dramatically. I cannot tell you how proud I am of the team on the East Coast. I have heroic story after heroic story of things that people did, but the ability for us to get up -- we only have 6 stores that are down at the current time. And so within 2 days, we had nearly every one of our stores that were impacted back up again, far outpacing the ability of our competitors and their stores. So to a certain extent, we really mitigated what could have been a very disastrous event and it really had no impact on our sales.

By the way, Arvind, I don't want to miss the opportunity to fill the analyst community, investment community in on something interesting. We created in September, here at GameStop, a charitable foundation we call the Gamer Fund and it's funded by internal donations by employees, et cetera. That charitable foundation has been very active in the community in Sandy, and we've been able to assist many of our associates who've lost homes, who’ve had all their belongings destroyed, et cetera. We would welcome donations from the analyst community so I'll ask our IR team and Matt to send you all envelopes if you want to support the Gamer Fund here through Sandy.

Our next question comes from Bill Armstrong from CL King & Associates. William R. Armstrong - CL King & Associates, Inc., Research Division: Just a question on the gross margin, the Other category. I know you talked about the mix shift causing the decrease. Were there any other dynamics going on during the quarter, perhaps movement in margins within some of the subcategories?

Bill, I think the one thing that we maybe didn't mention was that the video game accessories are in that category. That's a relatively high margin product set for us. And that was impacted by the overall NPD-type data that you see around the category. So that's really the only other thing I might call out. William R. Armstrong - CL King & Associates, Inc., Research Division: So the margins within accessory didn't change? It was just that accessory volumes were down?

Yes, again, the mix.

Our next question comes from Tony Wible from Janney Capital Markets.

A couple of questions. First is, what kind of inventory allocation did you get in 2006 on the Wii? I don't know if you could share kind of the number of units. And secondly, on the iDevice business, what's been the average transaction size you guys have been running on that? And now that you guys have had it up and running for a bit, can you kind of describe where the mix of trade-in versus kind of demand for units is coming? Is it touches, phones, tablets, et cetera?

Rob, you got any data on the -- we may have to get -- you've got a lot of numbers in your head. You got the Wii allocations from 2006?

I don't have the Wii allocations from '06 in any sort of accessible memory bank, unfortunately. But you know what? What we looked at in terms of forecasting this quarter is where our shares sit with Nintendo. How we’ve performed on recent launches. Clearly, our reservation list and the power of that waitlist that we created with the PowerUp customers in September has been a factor in what we have visibility into at this time as far as allocation is concerned.

Tony, on the mobile stuff, Tony will talk to you a little bit about the hot SKUs. I just would make a point with you that it's really very much a smartphone and tablet business now. We take Android SKUs. Amazon Kindle is becoming one of our emerging fast-growth SKUs. So it's gone beyond sort of just an iDevice business into a very much a smartphone type. Do you want to talk about the hot SKUs, Tony?

Sure. And we don't give out details on our average transaction size, so I can't answer that question. But given the fact that we do set both the price -- the trade price and the sales price, we really have the opportunity to manage inventory. So we're constantly -- we literally deal with that on an hour-by-hour, day-by-day basis. So really, the demand -- the supply that comes in from a trade perspective is exactly what we need to meet the demand that we're seeing. So we manage that very closely, so that fluctuates. For instance, when you have a iPhone 5 launch, clearly, one of the – the SKU that comes in is the iPhone 4 and the iPhone 4S. So we get a lot of that. And we're able to fluctuate. That's the beauty of this business, we fluctuate the trade price and the retail price to ensure our inventory levels match demand.

Interesting thing is our online -- Mike Hogan talked about the online competitors. One of the big advantages when you have a storefront is you have great connection with the consumer to get trades. The Struggle the online players in this space have is customers just -- there's a lot of friction in shipping a product that doesn't even in the price agreed to on it, et cetera. So we're seeing advantages from that.

Got you. And going back to the inventory question, I guess another way, I wanted to think about the market share is double what it was in 2006. Is it too aggressive to imply that your allocation would be double? Or I know Nintendo might be a little bit more ambivalent but I also guess that Amazon, it doesn't look like is going to be carrying it out of the gate.

That's unfortunate but I don't know...

We can buy one for $1,200 from somebody else’s site.

I don't recall, Tony, what our allocation was at the time. I don't know what the initial shipments to the U.S. were 6 years ago compared to what they are today. So I really don't have the facts to answer that.

I think, again, the important point that we can't -- we really don't have visibility, full visibility to the quarter from Nintendo and as you said, that's a common place to be during a launch with Nintendo. I think what we do know differently this year than in 2006 is we have a really good read on demand. We know exactly where the customers are who want this product. So we are in constant communication through our PowerUp Rewards teams with these customers, so we are offering a true service here. When we get our allocation, we immediately are notifying the customer so you don't have to chase the UPS truck; you don't have to go store to store. We'll tell you when you're going to get this. That clearly is a superior customer experience than anyone else can offer. And we've talked with Nintendo at length about that process. Clearly, they understand the benefit that we're giving to the customer.

And the software reserves kind of reflect that. Mike, you had something to add?

There's one other additional difference this time with the Wii U versus the Wii. This time, Nintendo is doing a worldwide launch in a span of only about 3 weeks. With the Wii, it was spread over several months. So the allocation strategy and the numbers on the Wii probably are not real predictive of what we'll see.

Yes, that's a great point, too.

And we have one last question from the site of David Magee from SunTrust.

I just had a question regarding a comment you had made during the remarks about the majority of your products being sold now to PowerUp members. Did I hear 75% is the number there?

Mike Hogan.

That is correct. Year-to-date, this year, 75% of our U.S. sales are attached to a PowerUp member.

So I'm curious, how does that number change going into December, closer to the holiday when you've got perhaps more casual shoppers? And what maybe gives you an advantage this year that you maybe haven't had in the past to help the visibility of that transaction?

Sure, yes. So the answer is yes, the number will decline a little bit as you go into holiday because you have a much broader set of customers that comes into our stores during that timeframe. At the same time, it's also a great opportunity for us to sign up new members. We signed up -- I believe, we signed up over one million PowerUp members during December of last year. So it's a great opportunity for us to do that. And also, as we look at the holiday, you know PowerUp give us big advantages. As we think about things like for example, Wii U. We can offer consumers, not only the waitlist, but then opportunity to know what's available, when it's available, when they're going to get it, with direct communication with us. We've also found that it's a great opportunity to communicate our key value messages over the holidays to the consumers who represent the majority of our purchases. So you can imagine, even though the number’s going to drop a little below 75%, it's still the vast majority of our sales and it's extremely a cost-efficient, from a marketing perspective, way for us to communicate to people, not only the titles that are launching, but the hot deals at Christmas. We can take all of our external marketing, like our FSIs, we can replicate that out to our members. Our iDevice sales, we had great success there. As Paul mentioned, that will be a great gift idea for Christmas so we have a really full line up that we're getting -- and PowerUp is really the core of our marketing program for the holiday season.

Thanks very much. With that, I will wrap us up. Thanks very much for your support of GameStop and we look forward to talking to you on the next call and please, come down to our stores and check out the Wii U interactive. Thanks very much.

This does conclude today's teleconference. You may disconnect at any time, and have a wonderful day.