Revisiting our strategic plan with you to set the stage for the rest of the conversations today. As we look at our strategic plan from 2011, we can now add some updates and proof points from our latest fiscal years. We continue to use this foundational strategy as our guide and are finding that it continues to provide us a framework for thinking about the future of GameStop and driving innovation. If we start on brick-and-mortar stores, we continue to maximize our brick-and-mortar stores. Our store footprint has allowed us to have dominant market share in the recent console launch, which we know will provide benefits for years to come. We utilized our stores to acquire customers for our digital and recommerce businesses as well.
PowerUp Rewards gives us data insight that let us consolidate traffic into fewer stores, and we've had a net consolidation of about 2% for the last three years of our GameStop footprint in the U.S. The skills we have developed in our stores give us opportunities beyond gaming, as you see with our entrance into technology brands. Make no mistake, stores are the anchor to the consumer engagement model with GameStop, and we augment that model with online and digital properties. We have repositioned the pre-owned business through the use of PowerUp Rewards. We are also adding value titles and an expanded assortment to continue bringing more and more value options to our customers. We expect the pre-owned business to grow through the early stages of this new console cycle.
Our new technology brands are becoming additional ingestion points as we accept customer trades on phones, tablets, and soon wearable devices in all three technology brands, and we sell refurbished Apple products at Simply Mac and refurbished phones at Cricket. We own the customer relationship through PowerUp Rewards and the highest customer service levels in the industry in our stores. Digital growth has been solid as we lead the market in DLC, are a major player in casual and PC gaming, and own the largest digital magazine in the world. Disciplined capital allocation is at the heart of everything we do, and our commitment to shareholders is proven. Let's look at the GameStop market model that we've shown you in the past. As we've shared with you, the console gaming industry has a very healthy outlook.
Driven by the strength of the next gen consoles of Xbox One, PlayStation 4, and don't forget the Wii U, we expect continued growth of the console physical and digital industry for the foreseeable future. This model does not include our pre-owned international or technology brands businesses but includes our console physical and digital businesses. In thinking about our future, a market back approach is useful. Investors frequently ask the question: how will GameStop grow? Let's look at some of the addressable markets that we are participating in. First of all, our core business of physical and digital gaming will grow in the aggregate, and we are uniquely positioned to succeed in that market. You see there the size and growth rates of those markets.
Our motto on this subject is, "Ni un paso atrás", which is Costa Rica slang for saying, we will not take one step back in the gaming business. Make no mistake. Looking beyond gaming, though, the recommerce business, which continues to grow and evolve, fits very well into our competencies. As you remember, we were early on in seeing the potential for buy-sell trade of phones and tablets and have by far the broadest physical store presence in this category, and we expect to grow with the market. The Apple ecosystem is large and our share of it is growing. Simply Mac is the largest and fastest growing Apple specialist, and we have opportunities to roll up dealers and build out white space stores. We have spent a lot of time in Cupertino with Apple leadership, and we have their support to grow Simply Mac.
The market size you see there is U.S. opportunities only. We are exploring international opportunities as well. The wireless market is perhaps the most exciting market in the consumer space. We have built a broad partnership with AT&T leadership, bridging across Spring Mobile, postpaid stores, Cricket, and Aio prepaid stores, and various technology initiatives. We are the third largest and fastest growing AT&T dealer in the U.S., and we anticipate large growth in our Cricket no contract prepaid business as well. Connected devices are forecast to go from $8 billion today to $50 billion in five years, and many will be sold in a store and available for trade and refurbishment at GameStop. The wireless growth opportunity for GameStop is only beginning.
If you add up these addressable markets, they add up to $280 billion, 10-15 times larger than our addressable market five years ago. The buy-sell trade model has potential applications for all of these markets. We are successfully gaining share in all of these categories today, and you will meet extraordinary leaders today who have the management teams in place to win in those markets. After looking at markets, we asked ourselves the question, this sounds really tough, have other companies made the kind of transformation that we are undertaking? As it turns out, some have very successfully, and we've chosen a couple to share with you. Williams-Sonoma, a very successful multi-channel retailer, has developed adjacent brands to their core, skillfully leveraging core skills in design, operations, and multi-channel to create concepts for new customer segments very successfully. Another great example is VF Corp.
VF Corp is a very well-known transformational story. It's a great example that we have studied rigorously for the past few months. Believe it or not, they began as an underwear manufacturer, and believe it or not, I worked in one of their facilities in Tepotzotlán, Mexico, in the mid-1990s as a production engineer. Interestingly, today, that same company owns multiple brands, and they've integrated forward into retail stores and new apparel and footwear categories. We are students of extraordinary business transformation stories, and these are just a couple that we've looked at. Williams-Sonoma and VF are great examples to us of the potential of understanding your consumers and matching that insight to your own core competencies. The next question would be: what are GameStop's core competencies that we can leverage? Well, first, we have deep real estate knowledge.
With over 4,600 leases in the United States, it is rare for us to find a commercial center or a landlord where we don't have an existing relationship, and that gives us leverage for the Technology Brands stores. Second, we are very good at attracting, hiring, and training technology-oriented store associates. Our net promoter scores are among the highest of any competitor set, and that is a reflection of a superior talent model. PowerUp Rewards has the potential to link across our brands to be the defining loyalty program for technology products. Let me say that one more time. PowerUp Rewards has the potential to link across our brands to be the defining loyalty program for technology products. We're using our deep data insights to drive store performance and customer loyalty.
Buy/Sell/Trade is now implemented in our Simply Mac, Spring Mobile, and Cricket stores, giving us margin enhancement opportunities and leveraging our refurbishment capacity. You saw today the kind of investment we have in refurbishment at our Refurbishment Operations Center. Stay with me now because this is confusing, but right now, you can trade an Apple or Android phone or tablet at GameStop, at Simply Mac, at Spring Mobile, and at Cricket, and you can buy a refurbished Apple laptop or tablet at Simply Mac and all types of refurbished phones and tablets at Cricket and at GameStop, with wearable devices arriving soon. What we have traditionally called the Buy/Sell/Trade circle of life is getting bigger and bigger at GameStop. Financially, we have the ability to efficiently deploy capital when we see opportunities to create shareholder value.
As we begin this meeting today, we want to introduce, as we continue to transform our business, we're sharing today with you a perspective that we believe more clearly reflects our view and the future of GameStop 3.0, as we called it this morning. As we see it, GameStop is a family of specialty retailers that make your favorite technologies affordable and simple. In looking at both our Gaming Brands and our Technology Brands, we have great partnerships that give us long-term viability with our customers, and we've tried to list most of them here. In fact, there's a few more, our Gaming Brands are listed on the left side, and you see those. If you don't know Micromania, it's the largest video game retailer in France.
Our Technology Brands are listed in the middle, we went ahead and put our major partners on the right, and those are partners that we have large and growing relationships with. All of those partners, we believe, are key to the future of technology. We have a great agenda for you today as we bring on some more speakers. First of all, lead-off hitter will be Tony Bartel, who runs our U.S. stores, merchandising, supply chain, and refurbishment, Tony's going to share his view of where the video game industry is headed and how we plan to continue our dominant position and not take one step back. Mike Mauler, who runs our broad international portfolio, and I might say is a frequent flyer, will share the successes we have had in turning around Europe and how we will continue growth overseas.
Mike Hogan, who runs our strategy portfolio, marketing, and value business, will share his thoughts on value and on PowerUp Rewards. Steve Bain, founder of Simply Mac, will share his unique story with you and the opportunities in the Apple ecosystem. Jason Ellis, founder of Spring Mobile, will give you insight into the AT&T postpaid space and how we will grow there. Joe Gorman, vice president of Cricket, will share the size of the market for our prepaid business. Last, but of course not least, will be Rob Lloyd, our longtime CFO, who will give you a financial update. With that, I will turn the discussion over to Tony Bartel.
Thanks, Paul. As Paul mentioned, we're very excited to be at the start of another growth cycle in the video game industry. The technology is as powerful as advertised, it is good to see investment coming back into the development of games for the new consoles. We fully expect to see next-generation software exceed current-generation software in the fourth quarter of this year. While we have a lot of exciting things to share with you today, I want to be crystal clear about one thing: we are laser-focused on driving video game sales here at GameStop. We believe that we are at the start of a multi-year growth cycle, we are taking full advantage of our opportunities. In fact, 86% of our profit growth in 2014 will come from the video game business. We are very focused.
Working with our partners at Microsoft and Sony, we developed operational plans to optimize the launch of the new consoles. After weathering a 39% decline in the gaming category, we knew that innovation would drive growth we had a unique opportunity to expand and deepen our relationship with our customers. We trained and certified our passionate associates, leveraged PowerUp Rewards, used our unique buy-sell-trade business to drive market share that exceeded even our lofty expectations. All of you know that there were significantly more consoles available for this launch as compared to the previous launch. In fact, more than 12 million Xbox One and PS4 consoles have been sold so far. What is impressive is the market share gains that we achieved.
Our next-gen console hardware market share increased 38% versus the previous launch, our next-gen software market share increased 52% over the prior launch. Our strategy to enhance our relationships with more people was successful. In fact, we were so successful that our market share for all of 2013 ended up at the highest level in our history. We are seeing a strong flow of new consoles expect for them to be in high demand for the remainder of the year, especially during the critical holiday season. While driving market share during the critical launch timeframe was important, it was even more important that we drove our attach rate of more profitable software and digital offerings. For physical software, we attached 3.3 games per console sold since launch, this exceeded our competitor's attach rate by 60%, according to NPD.
This was slightly less than the 3.9 games that we attached during the prior year launch. However, when you add on our digital attach rate of full games, DLC, and console network cards, our attach rate per console increases to 4.3, a 10% increase in attach rate when including our digital attach. Two things are important here. One, digital has grown and is an important part of the gaming ecosystem, and more importantly, two, GameStop is an active, valued, and driving force in digital gaming. Clearly, we've seen a lot of success in gaming, and I'm going to spend the next few minutes talking about the unique way that GameStop leverages our assets to develop and grow the video game market. We start by driving deep relationships with our vendor partners.
While we have continual dialogue with all of our partners, we begin talking about specific launch plans about one year in advance. This gives us the opportunity to drive great exclusive content, coordinate marketing efforts, train our associates, and fully understand the customer benefits of each game. We punctuate this process with our annual manager show, where our partners interact directly with our store managers and field leaders to share ideas about upcoming game launches. We leverage our 34 million global loyalty program members throughout the pre-launch process with pre-order and informational campaigns. This was best seen in our First to Know program that was live within minutes of each new console's announcement and generated over 2.5 million people who received relevant information, offers, and notifications when their consoles were available.
Many of these people who signed up were new members, providing us with the opportunity to deepen our relationship with them. Clearly, buy-sell trade is at the heart of everything we do. This is not a program. This is part of our DNA. It's how we do business, and our associates view it as a currency that helps gamers get what they want. We run trade offers on nearly every major launch and allow for people to prepay their product with unique trade currency during the pre-launch phase. We also leverage our multi-channel assets. Mike Hogan will provide more details on how important our multi-channel efforts are to driving both in-store and online sales, but each launch has a coordinated multi-channel marketing effort.
Finally, Game Informer, which Paul referenced earlier, the number three physical magazine in America and the largest digital magazine in the world, provides independent previews that we leverage in all of our channels to aid customers in making their best gaming choice. At launch, we provide customers with unique entertainment event. It is not uncommon for us to have hundreds of gamers lined up at our stores, interacting with our associates and other gamers about the upcoming games. This is where our associates shine. Their deep knowledge of the games, their passion for gaming, and our efficient proprietary checkout process drives dominant market share. Our associates walk the line with franchise marketing flyers that show the gamers all of the ancillary products and digital content that is available for purchase. This all creates a great gaming experience.
As a result, we drive significant non-game attach rates during this launch timeframe. After the launch, we continue our relationship with the customer by informing them of additional items that they can purchase for their games. We currently have over 515 million games in our loyalty member libraries, and we leverage this information to provide them with targeted emails that provide relevant offers, again, increasing our attach rate. We also have a structured program that provides gamers with relevant trade offers at predetermined dates to maximize the trade-in value of all of their games. Finally, we again leverage our multi-channel efforts, including our web and store program, to provide customers with information, relevant deals, and convenient delivery options to optimize their shopping experience.
The combination of these programs throughout the launch cycle is unique, defensible, and enabled by our loyalty programs, a strong and tested buy-sell trade DNA, and a strong and passionate workforce, all competencies that our competitors cannot emulate. To ensure that we retain our edge over the competition, we invest heavily in our most valuable asset, our people. We have a proprietary training program called Level Up that each of our associates uses to understand GameStop's values, the core attributes needed to be successful at their job, and it provides exclusive training on products and processes. This program has over 70 modules, and we are able to track each associate's progress and understanding individually. We also open our training tool to our partners, and they provide unique, tailored content, which results in sales associates that are certified as the most knowledgeable in the gaming industry.
We invest over $30 million annually in training our associates through Level Up. As an example, our store managers spend, on average, 150 hours per year in cultural, job-specific, and product training. This helps drive our industry-leading low store manager turnover, which has averaged 28% for the last three years. In addition to Level Up, we also invest over $10 million a year to bring all of our field leaders to our annual national training event and expo. This four-day event allows each of our managers to have hands-on learning with all of the new consoles, games, and accessories, and to provide our partners with candid and relevant feedback. The event culminates in an E3-like event where all of our managers play the upcoming games.
Following best practices gleaned from our France and Australian partners, we then open up this expo, sans the exclusive GameStop content, to thousands of happy gamers. In addition to investing in training, we also invest more in labor than our competitors. Our small footprint allows us to provide more intimate service, as our associates cover only one-tenth of the square feet that our big box competitors ask their associates to cover. This investment, coupled with the extensive gaming knowledge of our associates, provides us with an industry-leading net promoter score. It's higher than all of our competitors. The closest competitor is an online company, so we are more than double the net promoter score of our closest brick-and-mortar competitor. Our associates also drive our strong buy-sell trade process. As mentioned earlier, buy-sell trade is not a program but an integral part of who we are.
We see games that are on our customers' shelves as a form of currency to help the gamers get the games that they really want. In short, this is the embodiment of our tagline, "Power to the players." We generated $1.2 billion of currency in the form of trade credits in 2013. 76% of this currency was used to purchase new video games, which clearly helped drive our new market share. Customers recognize the value of this currency, as we are viewed as the best value for new games at double the rate of our competitors, even though they discount new games and consoles far more aggressively than we do. We have consistent feedback that a physical new game has a perceived residual value of $20. It is important to note that this perceived value is significantly higher than the dollar margin that we make on each new game.
In spite of our success in driving the buy-sell-trade model and putting currency in the hands of our customers, only 40% of the gamer population realizes that we accept trades on video games. We view any campaigns that drive awareness of the ability to trade games as positive for our business. While gaming remains a central and core priority, we are also leveraging our stores to drive ancillary offerings such as digital and mobile products, and we expect these to continue to outpace physical video game sales. Our digital offerings range from mobile games such as those sold by Kongregate and other mobile publishers to full game digital downloads. Kongregate has published nine games so far and has over 10 million game downloads on the iOS and Android platforms.
One of these games, "Tyrant Unleashed," reached the status as one of the top 50 grossing games on the iOS platform. We also sell a digital copy of Game Informer in all 15 countries, making it the number one digital magazine in the world, with nearly 3.3 million subscribers worldwide. Through our partnership with Kongregate and other free-to-play publishers, Microsoft, Steam, EA, and Activision, we have a strong and growing digital PC business. In fact, our worldwide Steam Wallet business grew 160% in 2013. We also have an expanding selection of POSA cards to participate in the growing free-to-play business. On the console side, we offer full game digital downloads, downloadable console expansion content that we call DLC, Xbox Live, Sony PlayStation Plus, and other digital points.
Collectively, these grew 6.6% in 2013 as a reduction of video game software and the lack of digital content for "GTA V" impacted our business. It is important to note that over 70% of the currency used to purchase digital content is currency other than a credit card, again, showing the strength of the buy-sell-trade model as a currency in the mind of our customers. As you saw in our stores, we have increased the size dedicated to digital, and we are seeing strong growth, generating $724 million of global digital receipts in 2013. This represents a 26% CAGR over 2011, which is nearly double the digital growth CAGR of our publishing partners during the same time frame. We anticipate that digital receipts will increase 12%-15% in 2014.
We have also expanded the space provided to our mobile offerings, and we are seeing strong growth in this area as well. We accept over 1,000 SKUs of mobile devices in our stores, and you saw the expansion of space that we have in our refurbishment center to data wipe, clean, and repair the devices that we receive in our store. This business grew to $304 million in 2013, and our technology brands will quickly accelerate our mobile business, as Jason and Joe will share with you later. As a reminder, between digital and mobile, we've built a $1 billion business in the last three years. As you also saw in our stores today, we have dedicated space to the growing category of ancillary gaming devices, such as toys, headsets, and other accessories.
We are highlighting these offerings both at the time of launch and in subsequent marketing elements, and we are driving, on average, a $53 additional attach of these items to every new console sold. In summary, GameStop is laser-focused on driving growth and strong customer engagement in the gaming space. We are excited to be at the starting line of a multi-year growth cycle in our industry, and we are embracing our role as product and gaming experts. We clearly understand and respect our position as market makers and product evangelists. Second, our investment in driving market share at the critical console launch is paying off as we are at our highest market share ever, with a growing number of loyalty members at the beginning of an expansive run in gaming.
Third, we have unique buy-sell-trade and relational DNA, and we are adding multi-channel tools that will expand our presence and leverage our customers' increasingly mobile habits while providing a similar GameStop experience, regardless of how our customers want to access us. Finally, we continue to invest in our number one asset, our people, to ensure that we maintain our edge over the competition and continue to offer the ultimate experience in gaming. Power to the Players is not just a sign on a wall. It is a promise that we intend to keep for a very long time. Thank you, and I would like to turn it over to Mike Mauler to talk about our international business.
Okay. Thanks, Tony. Good afternoon, everyone. We currently have 6,675 stores worldwide, of which a third of them are outside of the U.S. With a solid store base in Canada, Europe, and Australia, and New Zealand, GameStop is one of very few specialty retailers that has such a broad global footprint, and this makes us stronger and more competitive in many ways. Our philosophy of thinking globally and acting locally leverages our strengths across all regions, while at the same time building strong relationships with our diverse customer base. This diversity of thought, combined with organizational agility, allows us to create, test, and implement new concepts and best practices quickly around the globe and has been an integral part of building our dominant market share in most of the markets we serve.
GameStop currently has businesses in 15 countries outside the U.S., with 2,208 stores and approximately 8,000 passionate associates. In 2013, our international businesses generated $2.8 billion in sales, driven by a same-store sales increase of 5.6%. As a result, our international businesses generated approximately $108 million in operating earnings during the year. There are several key strategies that we are focused on to drive international growth and profitability that are consistent with many of the concepts that Tony outlined in his overview of the U.S. businesses. We continue to make investments and expand our multi-channel capabilities around the globe to drive growth. Our digital product offerings and services continue to increase and have generated significant sales growth over the last year. We continue to find new ways to expand the buy-sell trade model to increase the growth of pre-owned sales and margin.
Finally, we have made great strides in increasing customer engagement as we enhance our ecosystem of communication and services to develop deeper relationships with our millions of passionate customers worldwide. Over the last four years, we have made significant progress in building our multi-channel capabilities to drive growth. Less than three years ago, outside of our Micromania business in France, there was no international e-commerce, there were no loyalty programs, and there was no method for customers to interact with us using their mobile devices. As Paul has quite often said, "To be competitive, the internal rate of change must exceed the external rate of change." Wow, have things changed.
Today, not only have we built all of these capabilities in all major markets, but we continue to make major advancements in linking the variety of channels together to provide our customers with product, information, and interaction across all channels at their convenience. GameStop currently has e-commerce businesses in nine countries, including the U.K., where we do not have a store base. This is a model we are currently exploring for future expansion. Over the last three years, we have consistently achieved greater than 30% annual e-commerce growth. In fact, year to date, our e-commerce sales have increased 50% over 2013. Our e-commerce growth in 2013 was led by Italy, with 114% growth, and Germany with 98% growth versus prior year. During 2013, we implemented a number of enhancements that differentiate our multi-channel businesses, including the launch of the GameStop Digital Wallet.
This service allows customers to store trade credits on their loyalty card and use the credits to purchase products in store, on our e-commerce sites, and through our mobile apps. In 2013, we also launched our hugely popular Web in-Store channel, which gives customers complete access to purchase products which might not be available from their specific store but are available in our distribution centers, and they can have it shipped directly to their home. With complete access to all products available in our distribution center, there is no reason why we should ever walk a sale due to an out-of-stock item. This service also allows us to greatly expand our product offerings without having to carry every item in every store. This will aid us in expanding our franchise marketing in loot and other accessories.
Over last year, we also launched and expanded our mobile channel, allowing customers to reserve and purchase products while on the go from any device. Purchases from mobile devices are currently our fastest-growing e-commerce segment. As we have consistently reiterated over the last few years, our strategy to grow our digital product sales is an important component of our future success. Over the last three years, we have continued to drive growth of our international digital business, with 2013 being a record year of 49% sales growth over 2012. This continued strong digital growth is driven by a number of initiatives that have been successfully implemented across our international markets. By partnering with publishers, digital content has become an important component of our franchise marketing plans in our stores, on our websites, and through our customer communications, as you will see later.
This integrated planning of our digital offerings helps drive strong digital attach rates not only at launch, but also during a title's life cycle. Using our proprietary AllSpark technology, we have also expanded our in-store digital offerings to include back catalog PC titles, which may no longer be available in a physical format. The number of digital titles that can be offered to customers through this technology is practically infinite, and we will continue to partner with publishers to expand the range. In 2013, we partnered with Sony in Europe to better promote their vast digital offerings to our customers. With a dedicated in-store section that can be seen on the far right of the slide, this Sony digital section highlights coming soon digital add-ons, new release digital content, and a large variety of back catalog titles that are available.
This dedicated digital marketing played a significant role in increasing our console digital sales in the back half of 2013. In fact, through our partnership and a strong training program for our store associates, we greatly increased our digital attach rate for targeted new releases, such as The Last of Us, where we achieved a digital attach rate at launch of over 30%. During the year, we experienced strong growth in POSA cards with 105% sales growth versus prior year. This growth was driven by a number of new titles that we added to our range, such as League of Legends and Minecraft. As we move forward, we will continue to expand the range of POSA cards offered to include the hottest new titles.
As we move forward in the next console cycle and continue to also add new product offerings for our customers, I'm sure it comes as no surprise that pre-owned product and our buy-sell trade model will continue to play a major role in driving market share gains. In 2013, pre-owned sales grew 1.8% internationally, and this growth trend has continued into 2014. We also experienced very strong trade growth at 7.7% in 2013. As our buy-sell trade model provided tremendous value to customers as they upgraded to the next generation of consoles. Making the next generation of consoles and associated software more affordable at launch drove an unprecedented increase in reservation growth in 2013 and subsequent dominant market share. This trade increase also provided us with a healthy inventory position of pre-owned product going into 2014.
Over the last three years, we have remained focused on driving our pre-owned business best practices across all of our international markets. From implementing best practices to drive trades in stores to fully launching our advanced pricing algorithms and refurbishment capabilities, we have significantly increased our pre-owned margin over the last several years, and I am pleased to say that in 2013, we achieved record international pre-owned margin of 46.8%. Far, we have reviewed our progress in expanding our multi-channel capabilities, increasing the growth of digital product offerings, and the major progress we have made in driving pre-owned sales and margin internationally. The glue that pulls all of these efforts together and creates millions of evangelized video game customers are the major strides that we have made in engaging our customers. The foundation for these efforts begins with our global loyalty program.
In 2013, we launched our loyalty program in four additional markets, and we now have over 7.5 million members across 11 countries. In 2014, we will complete the launch of this powerful program in our four remaining Nordic markets. Whether it is called PowerUp Rewards in the U.S., EB World in Australia, GameStop + in Italy, or Mégacarte in France, our integrated loyalty program is the foundation for enhanced customer communication and engagement across our worldwide customer base. During 2013, we also completed the worldwide launch of Digital Game Informer in all markets, and we now have over 700,000 international subscribers in five languages. Digital Game Informer's unique content, game reviews, and frequent scoops further personalizes the world of video games for our passionate customers and creates excitement across the category. We expect the number of subscriptions to double over the next 12-18 months.
One of the most important advancements that we have made to increase customer engagement and drive market share increases is the approach that we have taken to promote new title launches using all communication tools and as an integrated and planned approach. Four years ago, the primary marketing tool for building a new title launch was our passionate and knowledgeable store associates and point-of-sale marketing, such as posters in a window. Today, we are now able to build customer demand months in advance by utilizing advanced CRM techniques through our loyalty program, targeted communication through emails and SMS, utilizing social media such as Facebook and Twitter, promoting trailers and information on our websites, leveraging advertising and reviews in Digital Game Informer, and finally, increasing launch events.
The culmination of effectively using these tools can drive GameStop's market share at the launch of new title to 60%, 70%, or even higher on certain titles. While each component of customer engagement is important, when combined in a coordinated fashion, the benefits of an integrated communication program is incredibly powerful. These integrated efforts and the effect on customer engagement can best be seen in our consumer expo that we hold each year in Australia. In 2013, the show was attended by 35,000 paying fans. In 2014, we were expecting 45,000 attendees. That is 0.2% of the population of Australia. To put that in perspective, in the U.S., that would be 634,000 people attending one event. I think you will find the following video says it all.
This is the EB Games Expo 2013.
Pretty amazing. The show is actually held at the Olympic Park in Sydney, the energy and excitement of the fans is incredible. At the last show, when we stopped by the facilities the night before the event, there were customers actually lined up to camp out overnight in order to be the first to enter the show the following day. One surprise was the show's demographics. Obviously, there was a lot of hardcore gamers in attendance, but I was also very pleased to see the large amount of moms and dads that brought their families. While most tickets sold between $50 and $100, we also offered an ultimate gamer ticket for prices up to $700, which sold out very quickly. By the way, I would like to extend an invitation to any of you that might want to come to Sydney and attend the show in October.
If there's anyone who's interested, please let Matt Hodges know, you'll experience a show you'll never forget. With that said, I'd like to introduce Mike Hogan. Thanks.
Thanks, Mike. Good afternoon. I want to update you today on three key topics. The first is PowerUp Rewards. We'll take a look at the impact of the program and how are we using it to drive growth and support our new businesses outside of gaming. The second topic is our pre-owned business, including our strategy of expanding our presence into the value category. The third is our multi-channel business and its contribution to overall growth. Let's begin with PowerUp. As you know, PowerUp was launched in late 2010 and has quickly grown to become one of the most successful retail loyalty programs ever. We recently crossed the 27 million member mark in the U.S. PowerUp continues to move the needle. As you can see on this chart, PowerUp member sales continue to grow year after year. PowerUp represents the most valuable customers in gaming.
PowerUp members represent roughly 71% of GameStop U.S. sales. On average, they're five times as profitable as the average customer on three times the average sales per person. But PowerUp's grown to the point where it represents much more than just the gaming category. Roughly one in five U.S. households has a PowerUp card, and one in 12 mobile phone users in the U.S. is a PowerUp member. PowerUp is a key component in our diversification strategy of expansion into Technology Brands. Our ability to build and manage relationships with heavy category users gives us strategic advantage in these new businesses. And that makes PowerUp a key asset. In the chart on the left, you can see that 76% of PowerUp members own a smartphone. We know this from the member profiles, from surveys, and from email data. On the right, you can see tablet ownership.
The first thing you'll notice is 47% tablet penetration. You can see that PowerUp members are early technology adopters. These are just two examples of the kinds of data we have that can be used to bring new customers to our Technology Brands business. Let's take a look at a very specific example of just one way in which we are leveraging PowerUp to drive the new businesses. The map on the left shows the Dallas market. Specifically, the green pin represents the new Simply Mac store that opened in Cedar Hill, just south of the city. The purple dots represent approximately 96,000 PowerUp members we were able to target who live within a 10-mile radius of the store. On the right, you can see the offer that we sent to these targeted PowerUp members.
We know that there are many existing GameStop customers who have a strong interest in products beyond gaming, so we're making them aware of the new Simply Mac store and giving them incentive to drop in. The redemptions that we got on this offer were equal to well over a month's worth of transactions for the store. Our belief is that this type of programming can significantly accelerate the sales ramp-up for new stores. Here are two more examples of how we plan to use PowerUp to accelerate our new businesses. In the center, you see a map of the U.S. representing our 27 million PowerUp Rewards members. On the left is an example of an offer that we sent to targeted PowerUp members for a new Aio store opening. This is similar to the Simply Mac example on the prior page.
On the right is an example of an offer we used to promote the re-commerce business within the existing GameStop store base. We've had strong success with these programs and as we continue to explore new ways to leverage the power of PowerUp. I'd like to move on now to my second topic, which is an update on the pre-owned business and our expanded value strategy. Let's take a quick look at our core pre-owned business. The new console cycle will drive growth in our pre-owned business. We know this for several reasons. The chart on the left looks at GameStop pre-owned store comp sales for the years following the Xbox 360 and PS3 launches back in 2006 and 2007.
In each case, we saw significant positive growth fueled by a new generation of hardware and software driving consumers to trade up their systems and by a new generation of value-oriented consumers coming into the category at attractive pre-owned price points. History suggests strong pre-owned growth. We're seeing that same behavior with the next-generation consoles. The chart in the middle shows trade transaction penetration for next-generation hardware and software. This is the % of transactions that were partially or fully funded by trade credit. As you can see, nearly 30% of all of our next-gen hardware and software to date has been purchased with the help of trade credits. This is a strong sign that consumers see trades as a way to get the new technology that they want, and this provides the inventory to grow the pre-owned business. Finally, there's a lot more to come.
The chart on the right shows that 65% of PowerUp members indicate they still plan to purchase next-generation systems in the next year or so. This represents a huge wave of trades coming in over the next year or so. Now let's transition to the broader value opportunity. As we discussed a few weeks ago on the earnings call, GameStop has identified another way to deliver value-priced product to our consumers. Millions of consumers already associate GameStop with great value because of our trade-ins pre-owned games. We're building on our core strengths as we expand focus to the broader value opportunity. We see at least four competencies that can be leveraged to be successful in this area. The first is our category knowledge. The value of a specific game changes over time, and it can fluctuate significantly given market conditions at any given time.
We have years of experience keeping track of this. As a result, we know what to buy and we know when to buy it. Second competency is our customer relationships. Each of our 27 million PowerUp members has a game library with their historical purchases. By knowing what each customer has, we can get a sense for total market inventory. We can reach each customer individually to drive trades. A third area is our buy-sell trade expertise. Managing pre-owned inventory is a complex task. We look daily at inventory levels of thousands of items across all of our stores. We constantly rebalance inventory to ensure proper in-stock levels for daily demand, for regional and local preferences, promotions. Finally, our state-of-the-art refurbishment facility that all of you saw today gives us a competitive advantage in getting high-quality product to market quickly.
A good case study is our recommerce business. We expanded into recommerce of consumer electronics several years ago. We leveraged each of these key competencies on our way to building a profitable and fast-growing new business. Here are two examples of where we're going in 2014. According to NPD, new software under $20 is a $400 million-plus per year business in the U.S. alone, a business in which GameStop can significantly increase share. The key to this opportunity is ensuring that everything we do here is incremental to our existing higher-margin pre-owned games business. It's worth taking a moment to explain the details of how we're going to do that. Historically, pre-owned has always been a supply-constrained business. We spend a lot of energy communicating to consumers to encourage trade-ins.
Despite our best efforts, there are always a number of pre-owned games for which the consumer demand exceeds the available supply. On the left, you see three examples of current pre-owned games for which the store out-of-stock rate exceeds 50%. The expanded value strategy allows us to go procure this inventory through other channels, in some cases, dealing directly with publishers on closeout products. The sales are incremental because we are replacing out-of-stocks. The margins are below traditional pre-owned, but above the GameStop average, thus adding incremental profit dollars to the business. On the gaming side, our strategy focuses exclusively on games where we can demonstrate unmet demand in order to ensure incrementality. The value strategy goes well beyond just video games. We see significant opportunity in emerging technology products as well.
On the right, you can see a few examples of the kind of technology products we believe offer a future opportunity for buy-sell trade. We are currently testing some of these products in our refurbishment center. I want to move on to my final topic, which is the role and growth of multi-channel at GameStop. Multi-channel is increasingly important to all retailers, and GameStop is no exception. As you can see in the chart on the left, 60% of our customers visit us on the web or mobile prior to making a transaction. This number continues to increase, particularly as our mobile traffic continues to explode. We can see the direct impact of multi-channel customer engagement. Our data shows that 26% of web visitors who do not buy on a given visit purchase in a physical GameStop store within 48 hours.
Multi-channel is driving growth at GameStop. For fiscal 2013, multi-channel sales increased by 48%. We experienced record multi-channel sales, profits, and growth. One key component of multi-channel is our web and store business, which grew over 400% in 2013. Our mobile traffic is exploding, 76% growth in traffic and 61% growth in revenue. Once again, GameStop ranks in the top 25 retail websites according to Comscore. We know the future is bright for multi-channel. 80% of surveyed customers say they plan to visit a store to purchase a product they saw on gamestop.com. Let's dive just a little deeper on mobile, a key component of multi-channel. Our current mobile app has proven to be a big success with over 4 million installs. We continue to see strong double-digit growth in both traffic and revenue.
Mobile app users spend significantly more, and the app provides engagement areas like search, product information, and store locations. We continue to invest heavily in mobile, and we are preparing to launch a new updated mobile app. We are adding new functionality in the areas consumers want most and upgrading the entire customer experience. Here is a peek under the tent. First, we will have an all-new user interface. We want to make it even easier to get what you want, find a game, find a store, get to PowerUp Rewards benefits, and discover our new technology brand products. Second, we are adding a whole new trade center. Customers can learn about trades, look up values, and see current promotions. Third, we will make the GameStop pre-order experience even better. You can pre-order or purchase in-app, select pickup in-store or home delivery, and have full visibility of all your reservations from your phone.
These are just some of the enhancements included in the launch, which will be in market in June. In summary, PowerUp Rewards is driving growth at GameStop, and it will be a key strategic advantage as we expand into Technology Brands. The pre-owned business is experiencing strong growth as consumers trade into the new consoles. We see an opportunity to significantly expand into a broader value business, both in gaming and in consumer technology. Multi-channel is a key priority at GameStop. It's driving both our legacy business and our new businesses. Thank you, and we will now take a 10-minute break.
Okay. All right. We're on to the Technology Brands section of the session. As we turn the discussion over to the Technology Brands leaders, let me show you the markets, just to remind everybody after we talked about video games for a while. The gentleman coming up here now to present will be talking about these addressable markets we discussed earlier, the Apple, the postpaid wireless, and the prepaid wireless that are very large, very exciting categories with addressable markets in the hundreds of billions of dollars of potential. Let me give you a word on each of these three leaders before we bring them up. The first is Steve Bain, and this is a little bit of inside baseball, but I think it's appropriate in this room.
The first time any of us ever heard about Simply Mac was when an email crossed our desks in May of 2012 from an investment banker in Denver who was seeking buyers for a little Apple business in Utah. Of course, we pursued that opportunity, and over the course of the next two years, we've all been blown away at GameStop by the resilience and persistence of founder Steve Bain in not only completing our transaction with Apple support, but by his build-out of stores in places like Midland, Texas, Shreveport, Louisiana, Tyler, Texas, Lubbock, Texas, Springfield, Missouri, Lincoln, Nebraska, and a few others. These are all places that are very far in many ways from Salt Lake City, Utah. Our second leader is Jason Ellis. Sometimes I like to say that the harder you work, the luckier you get.
When we were doing our strategic work last spring, trying to look at adjacent markets and how to grow and profit from the core of GameStop, we were seeking an opportunity in the wireless dealer space. We were able to find another extraordinary leader named Jason Ellis at Spring Mobile. As we got to know each other, Jason and his team chose to sell their business to GameStop to fulfill their vision of building the largest AT&T dealer in America. Now, Jason is known at AT&T as one of the top young leaders in their network, and he is a relentless deal maker. In fact, since we began our discussions, Jason has closed 12 acquisitions and added 101 stores, most recently on March 31st, a 24-store acquisition in the Northeast. Third is Joe Gorman.
One of the things that has occurred is as we entered into our broad partnership with AT&T, that relationship led us to an invitation by AT&T to enter the prepaid business. As they were launching that brand called Aio at the time, now it's become Cricket through an acquisition, we saw an opportunity to build a larger business with them. Joe Gorman, a longtime GameStop field leader and a buy-sell trade expert, runs that business for us today, and you'll hear from him. Joe's no stranger to a challenge as he demonstrated his tenacity and innovation in the startup of our recommerce business in 2011. All of these leaders are capable of running large businesses, and that's why they're in the roles they're in. We believe each of these technology brands has the potential to become a billion-dollar business within the next few years.
With that, I'll ask Steve Bain to come to the podium.
Thank you, Paul. Good afternoon, everyone. I'm excited to share a few brief details about Simply Mac, the largest Apple specialist and premium retailer in North America. As you know, GameStop made a strategic investment in Simply Mac in November of 2012 through an equity investment and purchase of 49.9% of the company. In November of 2013, GameStop completed the acquisition of the remaining 50.1% of Simply Mac, and we are extremely enthusiastic about the growth opportunities of one of the newest subsidiary companies of GameStop. Simply Mac was founded in Salt Lake City in August of 2006. Simply Mac currently operates 23 retail locations in 10 states, all in the Western U.S. 14 of these 23 stores were opened in a five-month period from August 2013 to December 2013 as a direct result of the equity investment made from GameStop.
Each location offers a full-service solution for Apple customers, including sale of new and certified pre-owned Apple products, warranty and non-warranty repair services, and personalized customer trainings through the company's proprietary training program branded Simply Answers. I know many of you were able to visit the Simply Mac store yesterday in Cedar Hill. Simply Mac leverages GameStop's extensive buy-sell trade expertise and corporate resources and offers buy-sell trade in each retail store for consumers in these markets. Simply Mac also has a business sales team based in Salt Lake City, servicing many small and medium-sized companies for break-fix repair, managed services, help desk support, and integrated server and desktop support.
We're excited to announce that as of April 1st, 2014, Simply Mac has also signed a contract with AT&T Mobility to offer an integrated sales and service solution to customers for Apple products like iPhone and iPad and offer them an integrated service solution with AT&T for these connected devices. This allows the customers to not only purchase all of the Apple hero products directly in our stores, but also creates an opportunity to connect these devices with the AT&T network and realize the additional revenue associated with signing contracts for each of these connected devices. Simply Mac currently employs 240 employees in these 10 states. Here are some examples of the exterior of our Simply Mac retail stores. Of our current 23 stores, nine are located in malls and 14 are in pads and strip centers.
Our stores are branded Simply Mac and have a very distinct and independent brand, but support the simplicity and innovation that's so key to Apple products. Many of you had that opportunity last evening to witness what it looks like inside of a Simply Mac store. Here are some examples of the interior Simply Mac retail stores across the country. The fixtures, colors, and construction support the look and feel of the brand while also allowing the customer plenty of open space to experience the Apple products. Separate tables and areas are available in each of these stores for service and repair and personalized customer trainings. As Apple continues to innovate and manufacture these amazing consumer technology products, there exists not only a need to distribute these products, but also to provide warranty and non-warranty service repair for each of these products.
Simply Mac is one of a very few select partners that has the ability to provide authorized warranty and non-warranty service on the iPhone, including the ability to swap the handset for the customer at the point of sale. This service is unique to Apple Retail and to a select number of authorized service partners. The service of swapping handsets for customers in retail stores is not currently available in carrier-owned retail stores. Through this program, the opportunity to meet the needs of customers and repair and swap iPhones in our stores grew substantially in fiscal 2013, as noted in the graph. Next only to Apple Retail stores, Simply Mac has the largest number of locations offering warranty service repair for these Apple products. Simply Mac launched the buy-sell trade program for computers about five years ago and for iPads about three years ago.
Facilitation of computer and iPad devices are managed internally at Simply Mac stores for trades. Through the recent partnership with GameStop, Simply Mac has expanded this offering to include iPhone, iPod, and non-Apple consumer technology devices, including Kindle tablets, Windows tablets, and Android and Windows smartphones. The facilitation of these additional devices are managed through the GameStop Refurbishment Center, which many of you visited today. Simply Mac has also been able to leverage the pricing and quoting technology from GameStop that is now available to customers on the Simply Mac Trade Program webpage that provides instant quotes for customers on these devices that they can redeem in our retail stores. Customers are able to receive instant quotes for these devices on the website that can be immediately used for store credit.
Simply Mac, an authorized Apple specialist, provides a complete solution for the sales and warranty service for the popular Apple devices. This specialty retail complete solution provides a competitive advantage for Simply Mac over many current national retail partners for Apple. Sales of all the Apple products and in-store warranty and non-warranty repair creates a community for Apple customers in areas that are not serviced by an Apple company-owned retail store. Simply Mac not only has the ability to provide warranty and non-warranty repair solutions for the devices purchased in Simply Mac stores, but also for all Apple devices, independent of where these were purchased, including those from national retailers. This slide currently shows the existing Apple company-owned retail stores and represents about 250 stores based in the United States.
These are traditionally in large markets, with 52 of these stores in California and about 100 in several of the Northeast states. Of those 252, about 150 of those are in the East Coast states, which leaves a broad open geographic area for companies like Simply Mac to build retail stores. We're working closely with Apple to identify markets that are underserved by current distribution channels. The green dots on this map represent our current 23 Simply Mac stores. The red dots, 70 of those, represent focus markets for us in 2014 and 2015. The additional blue dots, 50 additional dots, represents other markets identified by Apple and Simply Mac for future growth.
As you can see, there are several markets that are currently underserved by Apple Retail and other distribution partners for a complete solution of services offering sales, warranty and non-warranty service repair, and personalized customer trainings. We've also had key discussions with Apple leaders of international markets and are investigating opportunities in those respective countries. In addition to identifying small and medium-sized markets that are underserved and lack an Apple Retail location, both Apple and Simply Mac believe that there are also a number of larger markets that represent a current need for exclusive partners in these markets. Many of these larger cities only have a handful of Apple Retail stores. This graph shows the Kansas City, Missouri market.
Based on the customer demographic that we've leveraged from Apple, GameStop, and our real estate partners, we've also been able to identify areas in these larger cities that would support a new Simply Mac retail location. Our current plan is to build 20 new stores in 2014 and an additional 50 stores in 2015. This strategy will be complementary to the Apple company-owned retail channel. Simply Mac is the only current Apple specialist in the country that has both a defined growth and capital partnership to be able to fund this type of growth. The ability to leverage key strengths of GameStop has been critical to our ability to grow with this type of scale into these new markets.
During the last 8 years, we've worked closely with Apple to develop a company and growth strategy that's focused on the customer experience, represents the strength of the Apple brand, and is complementary to the current Apple Retail stores. Apple supports the growth of Simply Mac for multiple reasons. Let me name three. First, Simply Mac's current growth strategy is complementary to the growth strategy of Apple company-owned retail stores and other partners. Second, Simply Mac provides a complete solution for customers that shop in our retail stores, including access to all of the innovative Apple products and accessories, warranty and non-warranty service repair, and personalized customer trainings. Third, the partnership we now have with AT&T Mobility allows our sales associates to activate these devices in our stores, and during the sales process, address connectivity issues at the point of sale.
In addition to selling and activating connected iPhone and iPad devices on the AT&T network, we're also selling and activating the popular MiFi and wireless home devices and products in our stores. Apple is very aware of the synergies and supports the Simply Mac and GameStop relationship, primarily as a vehicle to support and drive this scalable business model to meet the needs of customers in these small and medium-sized markets. I've spent many days inside of the walls at Apple in Cupertino, working with the sales and distribution channels and teams as we've worked through our growth strategy. Paul and I have also spent considerable time with senior Apple executives in Cupertino, outlining the 2013, 2014, and subsequent year annual growth plans. Apple sees Simply Mac as a scalable solutions partner to their current distribution strategy.
Simply Mac is an advocate of the Apple brand, has a high degree of focus on the customer experience, and offers an exclusive dealer-branded opportunity for customers to purchase and service their favorite Apple products in a local community location. Jason Ellis will now share some exciting details about the operations and growth of Spring Mobile. Jason.
Thank you, Steve. Good afternoon, everyone. Based on the wide array of questions I received last night, I'm very excited to share some information with you about one of the newest companies to the GameStop family, Spring Mobile. Spring Mobile is an exclusive retailer of AT&T products and services. The company was founded in 2001 and has 13 years of profitable wireless industry experience. In the fourth quarter of 2013, Spring Mobile became a wholly owned subsidiary of GameStop. Currently, the business operates 203 retail stores in 20 states and employs over 800 associates in the U.S. Many of our key employees have been with the company since its inception and have continued under the GameStop ownership structure. Spring has enjoyed a long relationship with AT&T, signing our first contract with them in 2002. The company remains headquartered in Salt Lake City, Utah.
These pictures are representative of the exterior branding and interior design of our retail stores. Please note that the stores use the AT&T brand as the primary brand on the exterior. Recently, AT&T has made meaningful investments around store design and the total in-store customer experience. All of the interior design is coordinated with AT&T, and the fixtures are designed to offer all AT&T products and services, including mobile phones, tablets, U-verse television, and Digital Life products, where available. I will share more information about the future retail service opportunities later in the presentation. This slide is representative of the U.S. footprint for Spring Mobile. We have grown this business through both organic white space growth as well as multiple acquisitions. Our success record in both high and low market share areas is something that we are proud of as an organization.
Regardless of the size of the market that we are operating within, AT&T can count on Spring to be a highly productive retail partner. We have some of the industry's best and most highly trained associates helping customers in each of these stores. With their help, Spring Mobile has doubled in size during the last year. With an expanding footprint, we have not come near the potential for the business. There are still 30 states and many communities that could benefit from a local Spring Mobile store. Since this post-paid wireless business is new to the GameStop family, I wanted to share some industry statistics. These should be additive to the information that Paul has already shared about the size of the industry. At the end of 2013, the U.S. device penetration rate was 105% as compared to the U.S. population, having 331 million devices connected to a wireless network.
Based on total subscribers, the largest carriers in the industry are Verizon, AT&T, Sprint, and T-Mobile, respectively. The combined market cap for all four of those companies as of last week was $440 billion. Most of the leading technology companies in the world, including Microsoft, Google, Samsung, and Apple, to name a few, continue to develop consumer products for the wireless industry. Many of these organizations are relying on growth in mobile as they plan their future. The wireless industry has grown through four separate and distinct waves of revenue. The first wave was based on minutes of voice usage. You may recall trying to figure out how many minutes you were going to use per month.
The second revenue wave was text messaging, and similar to voice, you may recall a time when you had to decide how many messages you or your teenager were going to send per month. The third and most recent wave was related to growth in data use from consumers and enterprises. This wave is still growing due to the continued adoption and increased functionality of smartphones. We believe that the next wave, the fourth wave, will be related to various new technologies that will be built and developed and then connected to the wireless network, referred to as connected devices. On the screen are some of the larger categories that we believe will drive growth in the industry beyond the mobile phone category.
We believe that mobile payment, mobile computing, the connected car, home security, and wearable fitness will each be disruptive to current industries and additive to the wireless space. These technologies are not only very exciting, but many will be new to the consumer. The complexity of the products and high level of consumer interest will, in our opinion, drive greater need for retail distribution. We believe that customers will want to experience these products in a friendly retail environment. As these products are developed and launched, we anticipate that they will be heavily marketed by the wireless carriers. The consumer demand for the new products, along with the carrier marketing, will drive consumers to retail for product demonstration and education. This graph is representative of our best estimates of the AT&T-branded retail store landscape. As you can see, there are approximately 4,900 total exclusive AT&T-branded retail stores.
The distribution is broken down into three categories: AT&T corporate locations, which are approximately 2,200, national dealers, approximately 985 locations, and local dealers with 1,679. Spring is a national dealer and is currently AT&T's third-largest dealer in the U.S. Even as the third largest, Spring only represents 4% of the approximate 4,900 total exclusive branded stores, which provides a large opportunity for continued organic and acquisition growth. The exclusive dealer base is highly fragmented, as demonstrated in this graph. Of the remaining 1,679 local dealer locations, 86% of those operators have less than 10 retail locations. Many of these owners are great entrepreneurs that originated in the early cellular phone business but may not have the capital, retail acumen, or desire to make the next industry transition. The continued pressure for reinvestment in store design, employee training, and delivering an extraordinary experience will continue to put pressure on smaller operators.
At the same time, AT&T is working diligently to improve the customer experience inside of all AT&T-branded retail locations. These industry dynamics will continue to create acquisition opportunities for Spring Mobile. We all know that good strategy is only as good as the execution behind it. Putting theory to practice, this is a chart of the activity that we have undertaken since signing a letter of intent to sell the business to GameStop. With GameStop's expertise paired with Spring's operating platform, we have been able to double the size of the business, adding 103 retail locations in just eight months. This isn't just a story about store growth. In all 12 of these acquisitions, we have been able to improve the overall sales productivity of the retail stores. We have also been able to retain key sales employees and grow the culture of our company.
We have an efficient acquisition integration platform. From the acquisition date to complete integration takes less than 120 days. In the last eight months, we have duplicated what previously took us 12 years to build. This is a thrilling part of the opportunity. We plan to continue this roll-up strategy as part of our growth plan in 2014. As we have discussed, the next wave of wireless revenue is quickly approaching. We believe that AT&T is an excellent partner and will continue to be an industry leader in both market share and product innovation. We know that the existing distribution is highly fragmented, which will create further acquisition opportunities. GameStop provides tremendous value in allowing us to scale quickly by leveraging their knowledge in the critical areas of employee development, disciplined capital allocation, real estate store construction, and general retail management.
Spring has 13 years of operating experience in the wireless retail space and can provide an AT&T-like experience in our existing and future retail stores. AT&T views Spring Mobile as an important distribution partner that fits their store growth strategy. We intentionally align around their key sales and customer experience initiatives and consistently deliver high-quality results. We have a proprietary and industry-leading training platform that allows us to create thousands of positive interactions with lifetime customers. It is fair to say that our sales associates are passionate about the industry and advocates of AT&T products and services. As Paul mentioned, I was one of the founders of Spring Mobile in 2001. I have spent most of my adult life riding the various waves of wireless and digesting their impact on retailers. We have been through numerous industry cycles, carrier consolidations, compensation changes, and other obstacles.
The whole ride has been both challenging and thrilling. On the backside of those 13 years, I can honestly say to you that I'm more excited about the future than I am the past. This is an exciting growth opportunity for all of us. Thank you for your time today. Now I'm going to turn the time over to Joe Gorman to discuss the Cricket business.
Thanks, Jason. Good afternoon, everyone. I am very excited to be here to talk about our newest technology brand partnership with Cricket. Cricket is formerly known as Aio Wireless. Looking beyond gaming, one of the largest markets for us to participate in, as you've heard, is the wireless industry of about $185 billion. If you look at the market in terms of subscriber base, we estimate about 25% of the total connections are no contract or prepaid. The ASPs, as you'd imagine, are lower than the postpaid business, but even so, we estimate that the segment within wireless market is greater than $20 billion, which in and of itself is larger than the U.S. video game industry. We expect the total wireless market to grow about 3% over the next few years. We expect the no-contract space of the market to grow between 5% and 7%.
With Cricket, the newest addition to the partnership, we're very excited to be participating in a high-growth segment of wireless. All the usual suspects are players in this segment, and there's still consolidation occurring among the carriers. As you can see, with AT&T's acquisition of Leap Wireless, Cricket is the consumer brand under Leap. AT&T's share of the segment moves to about 17%. Leap had about four and a half million customers at the time of the acquisition. When you consider the fact that the purchase, including debt, was close to $4 billion and the comparative share AT&T has in the postpaid segment, we're very excited about where this brand is headed. Additionally, AT&T's invested nearly $100 billion in the network over the past five years.
They're focused on delivering top consumer experience across their network. We believe we can help them acquire the customers that they're looking for. The stores we operate currently are actually branded Aio . Aio was the no-contract brand AT&T launched last year and was their first big standalone effort in this segment. During the second quarter, GameStop, along with the rest of the legacy Aio dealer community, will be changing over to the new Cricket brand. We believe that coming out of the acquisition, the time is right for us to enter the segment with our partners at AT&T and Cricket. We love running gaming stores, and we have for a long time. Now we also love running wireless stores, and the customers love shopping in them. In the no-contract segment, 86% of the consumers buy through brick-and-mortar retail locations.
We love that traffic. It presents great opportunities for us to apply some of our core service competencies. Customers shop for new devices and come in for new device launches. A portion of these customers actually come back to the stores every month and utilize the brick-and-mortar model to actually pay their bills. This frequency presents opportunities like upgrading devices, upgrading services or rate plans. It also provides opportunities for us to introduce them to premium devices at value pricing through the recommerce program. A brief history of GameStop Mobile. GameStop Mobile is really simply the name we use internally for the division within GameStop. We coined the name in 2011 when we began to test beyond gaming with the iDevice program here in Dallas. It evolved into the recommerce program we now have in all the GameStop stores.
During that time, we also got into tablets and a variety of prepaid handsets in some select stores. The quick AO history is that in May of 2013, during the Spring acquisition, AT&T asked us if we'd be interested in being a dealer in the no-contract space and testing some of the new AO stores in a few markets. In November of 2013, we began to open these stores. Now in Q2, we're participating in converting all of our stores to the new Cricket brand. GameStop currently operates 35 standalone stores in four markets and one store actually in New York City. We've been active in all those markets for just over four months. We are selling AO Cricket service inside of about 100 GameStop stores in Dallas and Los Angeles. This is actually a branded section inside the GameStop stores, adjacent generally to the recommerce phone area.
In these stores, we can activate either a new device or one of our recommerce devices on the Cricket service. The in-store program is very new. We like the early results, and we can see the potential of having this as an ongoing part of our mix. While the current 35-store base is not overwhelming, we did deploy these standalone stores very quickly to become one of the largest dealers in terms of store count in a very short period of time. We spoke a lot this morning about our retail core competencies. Those strengths clearly apply in this brick-and-mortar model. Our real estate team allowed us to analyze and deploy quickly and intelligently. Of course, enabled by our capital position. Adding the new store concepts gives us even more flexibility beyond gaming with the stores portfolio.
In fact, when we opened the West Coast market, we converted one of the GameStop stores in Palmdale, California, over to an AO, where we had two GameStop stores in close proximity. We just opened a new store in Irving, Texas, last week that was previously a GameStop location. As we grow the Technology Brands and the technology stores, we will always look at options for white space builds or conversions of existing GameStop stores where it makes sense. Buy, sell, trade. Buy, sell, trade of electronics, specifically phones, which began in the GameStop stores a few years ago, is even more relevant in this model. This customer is clearly in the market for a new device or service when they walk through our doors. Our recommerce phone program in the Cricket stores offers great devices at value pricing, as you saw this morning in the store.
It also makes new devices more affordable by giving the customer credit for their old phone through the trade program. Although it is fairly new, we really like the results of this program in the Cricket stores. Recently, we are seeing upwards of 30% penetration on the sales of recommerce devices in these standalone stores. We have another PowerUp slide. PowerUp Rewards has been an effective tool in the core business, we are also using it in the new stores. This slide shows an example of the PowerUp base around two of the AO/Cricket stores locally. PUR has been powerful for driving traffic and having successful grand openings for us. In fact, the four markets we just opened in Los Angeles, Cleveland, Seattle, and Dallas, we messaged nearly 1 million members in those cities. On the right, you see an example of another email to our members.
Clearly, it can be used in a variety of ways for promotions, new device launches, and things like that. It is a very exciting program that we are fortunate to be able to take advantage of with the new Technology Brands. When you combine the network, advertising commitment, and expertise, device and rate plans of AT&T with our core competencies of operating stores with great service, smart, rapid new store deployment, training, and store management experience, we think the partnership is a great fit and we are really looking forward to growing with AT&T in this space. I have been involved with the original AO team, we call them the legacy AO team, in Atlanta since we began the discussions of us being a dealer for them. We felt from the beginning like we shared a DNA for growth and a passion for the business, and especially for the new brand.
Keep in mind, Cricket today has a tremendous opportunity to grow since they are only in approximately half of the major U.S. markets. We are looking forward to participating and bringing our unique value to the fast-growing space. Thanks. At this time, I will bring up our CFO, Rob Lloyd.
All right. Thank you, Joe. Good afternoon. I hope you guys are holding up okay. We've got about two, three hours of mind-blowing financial slides, and then we'll let you out of here. We're going to start by spending just a couple of minutes reviewing what's happened to our business since 2008. We've talked a lot about fiscal 2013 on our call on March 27th, so I'll keep this brief. As you can see from this slide, the top line of our business has increased slightly since 2008, about 3%. If you add the digital receipts that aren't reported as GAAP revenues, we showed an 8% increase from 2008 to 2013. Meanwhile, as Paul and Tony mentioned, the physical games market declined 39% since 2008. Hopefully, you're very familiar now with the many ways in which we've protected our business during the last cycle.
Our EPS has grown a total of 25% since 2008 on the strength of our buyback program. This slide sheds a little bit more light on our buyback program and our capital allocation. We announced the capital allocation plan and began buying back stock heavily at the beginning of 2010. Since then, we've bought back nearly $1.4 billion, over a third of the company. If you had invested with us along the way, you'd be up about 80%. In 2010 and 2011, we retired our remaining debt of $450 million. After retiring debt at the beginning of 2012, we initiated a dividend and have raised the payout three times from an initial quarterly rate of $0.15 per share to $0.33 per share now. We made acquisitions in digital gaming in 2010 and 2011 and made acquisitions outside of gaming with Spring Mobile and Simply Mac in 2013.
As we've discussed today, you'll see us leverage some of our core competencies in those retail concepts to contribute to our growth over the next few years. We also reduced our CapEx annually from 2010 through 2013, a total of about 36%, as we reduced our store count and implemented a sales transfer process using our PowerUp Rewards platform. Thinking back to the comments I gave during our Investor Day three years ago, we laid out a roadmap to 2014. We've fallen short of the revenue and the earnings targets we laid out given the struggles of the last console cycle. However, if you recall, I made the comment that we could generate $2 billion in free cash flow over the four-year period from 2011 through 2014. How are we doing on that target?
We've generated $1.56 billion through the first three years, and with the $450 million-$500 million in free cash flow we project for 2014, we fully expect to exceed that $2 billion. What did we do with that $1.56 billion in free cash flow? 75% of it went directly back to shareholders in the form of buybacks and dividends. 16% was used to pay off the last $250 million of our senior notes back in 2011. Lastly, we used 7% for strategic acquisitions. Turning to the guidance we gave on our call last month, we guided that sales would increase between 7%-10% for the first quarter and 8%-14% for the year. These increases are driven primarily by Xbox One and PlayStation 4 hardware, but we see growth in each of our sales categories.
We project that same-store sales will increase a little less than revenues due to Technology Brands stores not being included in our comp calculations. Our full-year sales growth of 8%-14% is a little below the market model growth of 10%-15%. Remember that the market model covers new digital and physical console gaming only. Our planned growth in those categories is offset by forecasted declines in handhelds and lower growth in sales in the other category. Our operating margins are forecast to be 5%-5.5% for the first quarter, compared to 4.7% in the first quarter of last year. For the full year, we expect operating margins to range from 6.5%-7%, compared to 6.3% in 2013.
Net income for the first quarter should range from $64 million-$70 million, which is growth of 17%-28% over the $54.6 million in Q1 of last year. For the full year, we project net income growth to increase between 12% and 22%. During our Q4 earnings call, we made some effort to point out that we have given guidance on share count based on buybacks done to date as of the date of that call. Our share count is still considerably higher than consensus. EPS for the first quarter is expected to range from $0.55-$0.60, which is a range of increase of between 19% and 30% over the $0.46 we earned in Q1 last year. For the full year, EPS is projected to increase between 13% and 23% over the $3.01 we earned in fiscal 2013.
This slide shows the primary drivers of the increase in EPS from 2013. The $3.55 we depict here is the midpoint of our guidance. No magic to that number. As you can see, growth in the video game business is the primary driver, while our investments in Technology Brands are also accretive. Lastly, you can see the effect of the buybacks we did in 2013 and up until we gave guidance in March. Again, this does not assume any buybacks going forward. During our earnings call, I described two changes that impacted our gross margin and SG&A. One was in how we classified cooperative advertising funds we received from vendors and loyalty costs, and the other was the modification of our sales categories. You may be asking how to model margins by category going forward. This slide gives the projected margin ranges we expect for each of our sales categories.
Hardware will range from 8%-11%, which is higher than historical rates due to the classification change in co-op. Software, ranging from 20%-23% margin, also reflects the co-op change. As we discussed on the earnings call, pre-owned and value should range from 42%-48%. Accessories should range from 37%-39%, digital from 60%-70%, and other from 33%-37%. We expect mobile and consumer electronics to range from 18%-24%. However, given how new the Technology Brands businesses are to GameStop and the growth we see there, we will clarify guidance on this category if this margin band proves too low. At the end of the day, when we look at quarter-to-quarter margins, there's more anticipated movement due to the mix of sales than due to where we classify co-op and loyalty costs.
I think this might be the slide some of you have been waiting for. In 2014, we expect to close 2% of the video game store base and add between 300 and 400 stores to our Technology Brands business. This slide shows where we expect that store growth to come from within the Spring Mobile, Simply Mac, and Cricket brands. As you can see, we expect between 200 and 250 new stores in Spring Mobile. That growth will come through acquisitions of smaller dealers and through opening new white space stores. Adding these numbers up, you can easily see that Spring Mobile could be over 400 stores by the end of 2014. Jason is actively working toward that as his goal. We've targeted 20 openings for Simply Mac and could augment these through an acquisition or two. We've targeted between 100 and 150 openings for Cricket.
With the Cricket acquisition now complete by AT&T and our stores being rebranded to Cricket, as you heard Joe discuss, the roadmap for growing this business becomes much clearer. We've also given you some clarity on this slide about the per unit economics for the Technology Brands stores compared to the typical GameStop store. Revenues for Spring Mobile stores run lower than a GameStop store and fluctuate based on the nature of the programs which AT&T runs. When AT&T runs a program like Next, our revenues may be impacted, but our gross profit dollars are generally not impacted. Store contribution for a Spring Mobile store is slightly less than a GameStop in dollars, but the operating margins are comparable, if not higher. The stores are larger than GameStop stores but cost less to build because a portion of each store build-out is paid for by AT&T.
Simply Mac stores do considerably more revenues than a GameStop store, with a range for new stores from two to three million, but with a tighter gross margin structure. Simply Mac has mature stores which perform at a much higher sales and profitability level than those shown here. As we grow the store count and expand geographically, we're using a model built with conservative assumptions. These stores are approximately twice the size of a GameStop store and cost more to build. In Simply Mac's case, a portion of the build-out is funded by Apple. A mature Cricket store is projected to do approximately half the revenues of a typical GameStop store, with mature contribution of $50,000-$70,000. Build-outs are less than a GameStop, and again, are funded in part by AT&T.
We used historical operating data for Spring Mobile and for Simply Mac stores with comparable volume to build this slide and to build our internal pro forma and IRR models for each store. Due to the new business models for Cricket stores, we used estimates developed by AT&T and refined by us to build an IRR model for new Cricket stores. In every case, for both white space stores and acquisitions, the pro forma IRR exceeds our hurdle rates. As we look at the economics of the stores, the key competency that GameStop can bring to the table to increase profitability and drive the returns is the buy-sell trade model, which is not yet much of a factor in any of these businesses. For fiscal 2014, we expect our Technology Brands stores to generate revenues ranging from $375 million-$425 million.
We project that we could have over 1,000 Technology Brands stores by the end of 2016. We believe that this new segment can exceed $1 billion in revenues by the end of 2016, with a contribution of approximately $75 million in operating income. It's conceivable that Technology Brands could be 10% or so of revenues and operating income in 2016. For 2014, we see the following uses of our estimate of $450 million-$500 million in free cash flow. We expect that over $150 million will be committed to the payment of dividends at $1.32 per share. The exact amount depends upon share buybacks. Our dividend currently yields over 3%. We project that the acquisitions we make in support of the Technology Brands' growth will total between $50 million and $100 million. The remainder of our free cash flow generation will get put into buybacks.
We expect to increase our capital expenditures from $125 million in fiscal 2013 to approximately $160 million. The increase will be driven by opening new Spring Mobile, Simply Mac, and Cricket stores and providing infrastructure for those businesses. Our investments in the U.S. and international video game business will remain comparable, and as we open fewer stores, the spend will shift to technology investment and store remodels to optimize customer experience as we lead this new console cycle. As we evaluate investment in the Technology Brands businesses, we want to make sure that we're driving a higher return for shareholders than simply operating the video game stores as we had in the past and returning all the cash to shareholders in the form of buybacks. We've created long-term projections both with and without investment in growth in Technology Brands stores.
We evaluated the future return on invested capital and modeled the future stock prices using a free cash flow to equity model and a dividend discount model. In each case, investing in Technology Brands stores drove a higher ROIC and a 20%-30% higher stock price than operating video game-only stores. In summary, GameStop is increasing value as we continue to dominate the video games business and move into new areas beyond gaming. As a retailer, we have positive metrics compared to other retail peers, with higher projected net income and EPS growth while we trade with a 25% PE discount. There's obviously room for growth in our PE, and our growth through diversification should answer the questions surrounding our terminal value. We believe combining positive trends with the core competencies we can extend into other retail categories will lead to continued strong and growing cash flow.
We've got one year left on the $2 billion cash flow target we gave three years ago. As we look ahead to 2015-2018, we believe we can repeat that $2 billion in cash flow and add some growth to it. As we see opportunities to invest in the growth of the business, we will do so. Beyond those transformational opportunities, we will continue to return cash to shareholders through our commitment to the dividend at $1.32 per share this year and through buybacks. I'll turn it back over to Paul for his concluding remarks.
All right. Thank you, Rob. Not quite two hours of financial models. Very good. Before we head into the question and answer section that will be coming up, you will have an opportunity to get all of the speakers and leaders up here, and we can have a discussion or anything that is on your mind. I want to share some key investor takeaways from this meeting with you. As we see them, these are the investor takeaways. First, we intend to maximize our leadership position in video gaming to drive sales and profits through the new cycle. We understand clearly that we are in the sweet spot of the industry. We are the number one player, and we are intensely focused on winning this cycle. Second, we have made smart acquisitions and added executive talent that allows us to grow consumer electronics and mobile revenues and profits through Technology Brands.
We will leverage buy-sell trade, PowerUp Rewards, and our other skills to enhance profitability in those businesses. Our models show, as you heard Rob say, that entering these businesses is accretive and will drive higher returns and shareholder value in the future. Third, we will continue to drive shareholder return and maintain capital discipline. We have demonstrated that to you for several years and expect to continue. Fourth, we will grow the terminal value of GameStop through diversification. Although we are confident in the long-term viability of our evolving physical and digital gaming business, we also recognize that some investors struggle to assign a terminal value to that segment. By leveraging our skills into Technology Brands, we will create incremental, diversified profit streams in new categories and will unlock terminal value and enhance the attractiveness of GameStop as an investment.
With that, I would like to invite the speakers to the stage, and we will do some Q&A.
She has got somewhere. I will do this one.
We need to get you a mic. You don't want one?
Yeah.
Yep, go right ahead.
Hi, it's Brian Nagel from Oppenheimer. A question, I guess a bigger picture question on the mobile rollout. It's clearly tied primarily to AT&T. Maybe just the decision of why to partner with AT&T, if there's any color you can give on the financial relationship you have with AT&T, and why them over some other carrier. Thanks.
It's a great question. Maybe I'll start off on how this got started, and then Jason can tell us a little bit about his deep roots at AT&T. We've studied the wireless space. One of the challenges you have in that space in retail is multi-carrier puts a lot of pressure on you. A. Your associates don't understand the variety of plans. The rewards and incentives are reduced in many ways if you're not exclusive. We had the opportunity and a relationship that existed already with AT&T through our technology activities. We are a major customer of AT&T. When the time came and we were able to meet Jason and his team, we saw a tremendous opportunity to be exclusive and really have a broad-based relationship across prepaid, postpaid, and some other technology initiatives.
Jason will tell you how he sees maybe AT&T in the scheme of things with other carriers.
Yeah, absolutely. In the space, really, AT&T and Verizon are clearly the two market share leaders. AT&T has 32% share in the U.S., over 100 million customers today. The real opportunities for us for a large growth was between Verizon and AT&T. We already have an embedded relationship with AT&T for over 10 years, and we also think that if you go out and look at the Verizon distribution, we think that they've penetrated more of these markets than AT&T, and there's a greater opportunity for us to continue with AT&T.
This question for Steve, in particular on Simply Mac.
Sounds like Arvind. Where are you, Arvind? There you are. Yes.
I know Apple on average does about $50 million per store, and I remember when GameStop first bought the 49.9%, the eight stores were doing about $40 million, if I remember correctly. Just trying to understand the range of revenue that your stores might be doing. I saw the $2 million-$3 million per store projections. Just is that conservative, or is that more realistic based on the new data that you have now?
Before Steve gets started, let me just point out, Rob, I don't think we disclosed the volume what Simply Mac was doing at the time.
We said in terms of our modeling of the 20 new stores, $2 million-$3 million, I did state that was a conservative model and that we have stores that do considerably higher volumes today.
Steve, maybe you want to tell them about why, if you've been to Salt Lake City, you'll know why Simply Mac is dominant there. You want to talk about what you've done in Utah?
Yeah. When we started Simply Mac eight years ago, that was done through an acquisition of a single store in Orem, Utah, that had been a legacy Apple dealer for a long period of time. The trust, when you think about making large purchases, many times at Apple, they'll talk about a computer being the third-largest purchase that customers make, which that relationship of trust becomes very critical. Customers are going to buy a house, they're going to buy a car, and then they're going to buy a computer. It's a $2,000-$3,000 device that's very meaningful. The trusted relationship you have with a legacy business is very vital. What we're seeing
Is the longer that our stores are open, the more customers, obviously, we have coming in, and that the price point of those devices, it's critical to build that trust with consumers. The longer that our stores are open, typically we'll see an escalating ramp in revenue. As Rob said, the new stores, we forecasted those very conservatively. Yes.
Hi, Michael Foss from Brown Advisory. I have three related questions. When you were talking about CapEx for your new tech brands, is that incremental to the M&A cost of acquiring those stores? Or is the $60,000, let's say with Spring, meant to be what you would pay per store in an acquisition? Related to that would be the new store growth for 2014. Is most of that via acquisition, or is that kind of new leases, new sites that you found? I guess third and overarching is why grow this part of the business so fast? You haven't owned any of these brands for very long, and right out of the box, you're more than doubling the store base.
Yeah. Before Rob starts, since we're not on a conference call, you can ask all the questions you want. You don't have to ask them all at once. We'll give you time to Hodges isn't selecting you on the phone system. Yeah, go ahead, Rob.
In terms of the incremental CapEx of the $35 million-$40 million in support of Technology Brands, that's for the component of the growth that we see coming from opening white space stores. I outlined the $50 million-$100 million of use of free cash flow, which would be for the acquisition strategy that we outlined, primarily on the Spring Mobile side. In terms of exactly what store count might come from white space versus acquisitions, I'm not sure we're ready to disclose that. As you can imagine, as we're moving through an environment in which Jason did 12 deals for 100 stores in a span of about five months, the numbers could move around on us a little bit.
Clearly, as we move through the year, we will give directional guidance on how those things are coming to pass and how you might think differently if the shift happens there.
The third question is an interesting one. Why the velocity? Why grow so fast? I think our position is that we've always been a company that's driven a high rate of change, particularly when the console business was declining as fast as it did from 2008 to 2012. The opportunities that have presented themselves, we see as unique. The opportunity for a partnership with Apple and AT&T, we see it as a unique opportunity. The competitor set, we see as uniquely in a situation of real weakness and restructuring and inflection points going on. Those are all the reasons. The other good news, we have a couple of our board members here, Daniel DeMatteo, our Chairman and founder is in the room, as is Shane Kim.
The other great advantage we have is we have a board that's tremendously aligned with our strategy and pushing us to be aggressive about some of this transformation. Those are the reasons.
What have you been paying for the stores you've acquired at Spring so far? For the 100 stores you bought, has that been disclosed how much you paid for that?
No, we haven't disclosed that.
Well, in part, it would've been included in the numbers that were in our 10-K in terms of use of cash last year. Some of it actually happened in 2014, hasn't been disclosed yet. You'll be able to get some measure of that as we progress through the quarters and see the numbers reported in the 10-Q and on our calls. I'd prefer not to say what it is that we might be paying for these stores as it's a component of how Jason can negotiate them.
Thanks.
Right here. Oh, yeah. Right here.
Just a quick follow-up question to that last question. You basically showed on that growth slide, excluding the GameStop stores, I believe, a 6-month to 2-year payback on the different mobile store rollouts. Can you give us a sense as to how proven those metrics are in terms of each of the 3 divisions' existing experience, as well as maybe the failure rate of some of those new concept stores? Thank you.
I think the easiest one to point to in terms of success is what Jason has done with Spring Mobile. Generally, as he's acquiring stores, their existing operations, and that brings with them an EBITDA. So far, we've found that his performance, when he goes and sources an opportunity, we typically know that there is the potential for him to drive the productivity higher than the small dealer may be currently doing. As Jason mentioned, some of these dealers may not have the appetite for operating in the new way that AT&T wants to. We've been very pleased with the performance so far. We're very pleased with the performance of the Simply Mac stores that Steve has opened, again, with a proven and known model against which we can measure the ramp and the productivity. Things on the Cricket side are a bit newer.
As Joe said, the oldest store we have opened in November, and so it's very early for us to state whether or not I wouldn't say there are any failures there. We are tracking to where we want to be, but again, it's very early.
The other thing to remember is at our shop, one of the debates is how do these compare to GameStop? We're always comparing these to the GameStop returns. As you know, the GameStop returns are tremendously successful stores, very high sales per sq ft, among the highest in retail. The thing to keep in mind is these stores are in brand-new markets that are additive to everything we're doing. It's all net new sales for us. When you start thinking about the models, they don't have to be GameStop models to be successful. Dave?
Thank you. Two questions. One, what are the longer-term synergies between the Spring Mobile and the Cricket stores, if any? Would they ever be combined locations at some point in time? Secondly, with all the, what seems to be better sales momentum overseas with the international stores, is there a chance to close the gap with either margin with those stores versus domestic stores?
Sure. Let's start maybe, Mike and Rob will do the international question. I think Spring and Cricket synergies, I think it's a little early for that. Those are two very different models. These guys will tell you, on the Cricket side, Joe's business, we really just have our toe in the water. All we have there is a very large prepaid market that's exciting, and we sell a ton of pre-owned phones. The Spring model is very well-defined. It is true, Jason, maybe you can comment on this, that the movement with the next plan is towards sort of more of a no-contract-like situation. I can't say we see an integration opportunity there. You guys want to comment on that?
Yeah. I think that if we just look up to our carrier partner, AT&T has these divisions that are completely segmented. Cricket has its own brand, it has its own leadership team, its own president, its own distribution strategy. They've segmented the market completely differently. We'll take their lead on how they want to talk to customers since it's their brand that we're using on the exterior of the stores. I think for the foreseeable future, we will continue to have an AT&T-branded store and a Cricket-branded store.
Great. Mike, you and Rob want to talk about international?
Sure. We can answer that question. Internationally, it's hard to lump it all together. From a store contribution perspective, we have some markets where the stores are actually more profitable than the U.S. and some markets where they're less profitable. One of our most profitable markets in the world is France, for example, with Micromania. One of the critical factors, I would say at this point, I talked a little bit about in my presentation, from a best practice perspective, when it comes to digital, when it comes to used and refurbishment, internationally, we're on par now where we are in the U.S. One of the factors that affects the operating earnings by country is really the infrastructure required or the critical mass of each country.
You might have a market like France, where the profitability and the operating margin is the same as the U.S. or maybe even higher, and you'll have other smaller countries where you still require the same infrastructure. While the stores are as profitable, your bottom-line result is a little less so.
For all our efforts, Mike has now been able to do what thousands of years of history have not done, which is integrate all the Europeans, right, into one store support center. We're struggling as well. Yes, sir.
Hi, John Taylor with Arcadia.
Hey, John.
I got three questions. One, could you talk about, I like Rob's slide up there with all the data on there, revenue per employee assumptions for each of the four kind of columns, maybe, for the number of employees per store, so we can calculate that. That's the first question. The second is, I'm a little unclear on the economics of the Spring business as service contracts come in. You're selling something that has month-to-month revenue generated. How do you deal with that? Maybe, could you break down the revenues of one of those stores for us, contracts versus new handsets versus pre-owned handsets, kind of any rough guidance on that?
The third question is, as you try to integrate the new store concepts with the PowerUp program and the loyalty thing, not the PowerUp, but the loyalty program, what % of the customer base do you think is going to be overlapping there? Thank you.
Great. Let's start. Number of employees per store, guys.
I'm going to let Jason and Steve answer that question.
What do you think?
Yeah, no, in our mobile phone stores, we have about 850 associates across 200 stores, where we're going to be roughly four to four and a half associates per store today. In our newer stores, there are more associates than there are in some of the legacy stores because we're building a slightly bigger footprint, and we're seeing a little more traffic in those retail stores. I would say the new stores are five to seven, the old stores are roughly four.
Steve, how about you?
Yeah. At Simply Mac, we have sales associates, then we have certified repair technicians. We typically will have one repair technician, then a couple of certified trainers. On the Simply Mac, our employees per store ranges anywhere from six to 12 in some of our larger stores, so it's maybe a little bit more.
Joe.
On the Cricket side, we have a store manager in every store and five to seven associates on average. In the larger volume stores like New York City, we'll have maybe 10 or so. Our model is a little different. The traffic patterns are predefined in the space because they're consumer. We tend to have a lot of part-time help aside from the management staff.
On the economics, I don't think we're ready to disclose sort of the mix, but maybe what we'll ask Jason to do is just talk them through what are the pieces of the business. There's handset sales.
Absolutely. We have a handful of different revenue items. We get handset sales, so we collect revenue at the point of sale from handsets. We get revenue from selling a contract, so commissionable revenue from AT&T. The nature of the business is that we have an ongoing revenue stream based on the subscriber base that we've signed up with AT&T. We also have accessory sales transactions that happen inside the retail stores.
Great. Maybe Mike Hogan on PowerUp.
Sure. I'll at least give you a couple of numbers that were up here. I think the first one that's relevant was the, I think it was 105% penetration. Theoretically, everybody, right, is in the market. Second number is that it was 72% or so of PowerUp members own a smartphone. We already know that there's a very high overlap in terms of what's called addressable market. The third number is probably that number Jason gave of AT&T's market share in the low to mid-30s somewhere. The real question is, given that with PowerUp, almost everyone we can address is theoretically in the market for wireless, and given that today AT&T has about a third of that, how much of that other two-thirds can we push over?
The second thing is, on average, you saw that number there was around 96,000 people. That was for a Simply Mac store. If we can identify somewhere between 50,000 and 100,000 people per store within a radius of that store, that's a huge number in terms of if you think about the average number of transactions a store goes. The point is we only have to move the needle a couple of points with PowerUp Rewards, and we've got essentially our entire audience that we could address as it relates to wireless.
Down here. Michael? Or who's up? Sorry.
Joe Feldman from Telsey Advisory.
Hey, Joe.
Hi. Actually, before I go to my main question, I wanted to follow up on what you were just saying. Do you guys worry about overloading the customer with all the promotion? If you have your PowerUp Rewards members and all of a sudden you're going to try to cross-pollinate across your mobile brands, how will you know when it's too much or the pushback?
It's a great question, Mike. Thank you.
Yeah, sure. That's a fair question, and I think when we show you all of these things we're doing, it would be a mistake to conclude that every single we offer, we show goes to every consumer. CRM has been a big part of what we're doing, and we use this concept called next best step for each customer. Think of it as essentially a giant matrix that says for each person, for each consumer, what's the best next step? For example, if you are a customer who comes regularly to GameStop, but you've never traded in a game, and we can demonstrate to you based upon your library that you have huge value, it might be much more important for us to message you about trading than it would be, for example, to message you about our recommerce device or another promotion.
We have very pretty strict standards in terms of the number of messages that will go to any given consumer in a given time period, and there's essentially a priority order that ticks off. We actually are also managing for each consumer their open rate and their response rate to that. If you indicate to us that you want more, you will get more, and if you indicate by your behavior that you want less, then we'll only give you the most important offers.
Mike has a pretty important role as a gatekeeper because, right, Tony, if every bad week when Tony and I are talking about what we want to do with PowerUp, if he did all of them, we'd be in trouble.
We don't have bad weeks.
Well, we have aggressive weeks on PowerUp, right? Yes.
The other question I wanted to ask just about the video game business.
All right.
This cycle, it's certainly a little different than the last cycle. You had both major manufacturers launch at the same time. We're seeing the older generation decelerate a little quicker. I know you guys have adjusted the model. You've told us the new growth rates, how does this play out over the next few years? I guess, can you talk about some of the puts and takes?
Sure
in this business and where you're most concerned? Will this just be a short burst because you have a lot right up front?
Sure. Tony will take that one.
Well, I think first, we see tremendous uptake. Remember, the way that we changed the market model was to update 2013 because of the now 12 million has now come out. We obviously saw that coming in. We adjusted both 2013 and 2014 up based on what we saw coming in consumer demand. Mike showed a chart earlier that 65% of PowerUp Rewards members still say they're going to go out and purchase this. A lot of things have changed with us too. We didn't have PowerUp Rewards last time we launched this. We have a lot more knowledge right now, and everything that we're seeing is that there's tremendous demand. There's a lot of stores right now you cannot go out and get a PS4 in our stores.
We can probably send you one today off of web in store. There's still tremendous demand and there's been less supply for that product. Xbox One, we've had a little bit stronger supply. We do have those in almost all of our stores. I'm not going to say that I have a crystal ball and I can totally predict what the future's going to be. Definitely from the start, what we're seeing is a very strong uptake of those products. What we're also seeing, which I think is going to make it more sticky, is we are seeing both of them this time have a strong ecosystem, which was not the case before. You had Xbox Live, which was an incredibly strong ecosystem that was right with the Xbox 360.
As we reported earlier, on the PS4, we're selling a lot of PlayStation Plus, and that's where that 1.0 digital attach rate, a lot of that came from that PlayStation Plus. I think what you're going to see is both of these consoles now, you have more of a two-horse race than I think you've ever had, where you have good consoles, and obviously PS4 has gotten off to a different start than it did last time. You also have ecosystems that are behind them, and I think it's going to be a really good race for it, and that's going to benefit the consumer and I think benefit us.
It's interesting to us that no one is disputing that the hardware is selling through, but only a year ago, we would get asked all the time, "Will the consoles ever sell? What could be possibly new in a console? Why would anyone want a new console? What is there possibly you could have that's new?" Yet here we are, outselling it Again, Nordic and so forth.
In Europe, what we've seen, we still have countries where we're taking reservations. For example, in Germany right now, we have thousands of reservations, and we're still waiting for PS4s. In this case, the market share we have on the hardware side in some markets has exceeded actually 50% on the new consoles. What we're seeing from the customers is just incredible excitement. The attach rates on software, digital, and accessories are better than we expected, and it looks like it's going to have legs. It doesn't seem to be something that's going to slow down anytime soon.
Michael.
Michael Pachter from Wedbush. Does your Spring Mobile contract with AT&T and your GameStop Mobile contract with Cricket preclude you from dealing with other carriers? As a corporation, can GameStop, once they develop this expertise, expand and start being Verizon resellers or Sprint resellers?
Yeah, we don't have any interest in doing that at the current time. We've made long-term agreements with AT&T that we'll be an exclusive provider for the foreseeable future. I will tell you-
No, I don't mean in the same stores. Could you open a Verizon store? Are you contractually allowed to do it, or are you contractually precluded?
I would say we wouldn't have any interest in doing that, Michael. It would violate the spirit of what we're trying to do. I would say no. Our contracts would not. Here's the thing about this. I've been asked a lot, and I've read some of the work that's been done, why would you get into a business that others are struggling in? We've studied a lot of these retailers, and honestly, we were the last uncommitted footprint in America, when you think about it, that had the potential. The benefits of exclusivity far outweigh the multi-channel games that are played, and it plays out. When you get inside and under the covers of these relationships, the pricing, the benefits, the added incentives, the new services you can sell like Jason sells Digital Life. He's selling that home Digital Life product in a bunch of his stores.
In many cases, if you're a multi-carrier, you can't get access to some of that stuff. We see exclusivity for GameStop as really the right solution, and it's turned out that we've created now a prepaid business, and who knows what else we'll do.
Can you talk about real estate for the mobile effort for both prepaid, postpaid? It seems to me that we're pretty saturated in the U.S. in mobile locations, maybe not prepaid. Are you talking about more acquisition, rollup, and conversion of existing mobile carrier stores, or are you talking about a blend of brand-new real estate? How are you guys approaching it?
Maybe Jason, you and Joe can talk to this. Marc Summey's here in the audience. Where you at, Marc? He's our Senior Vice President of real estate, and he can give us maybe a comment on real estate. I would say, though, generally, Michael, what's interesting to us is this AT&T opportunity is an interesting mix of acquisition, and it brings white space with it. You acquire some stores, Jason will acquire some stores, and that'll give him a presence in, say, now the Northeast we just arrived. White space opportunities pop up that we didn't know about. Maybe you want to comment on that?
Yeah, no, I think that it's a great question, and we're seeing a fine balance of both. While it seems like the carriers may be over-distributed, that's in fact not the case. In fact, some of the very best stores that we have are stores that we opened, new organic growth stores last year. AT&T has a real sophisticated data set of where their consumers are and where they're shopping. GameStop also has a very sophisticated data set of where the best real estate is, so we're able to spend a lot of time with them and match up where we should be putting retail stores. I'd also say that the landscape in the carrier environment is changing some.
The way that the new Jump! and Next programs, these device financing contracts, remember that they're driving customers to upgrade a device annually instead of every other year, which effectively doubles the store traffic. The existing store footprint may not be able to hold that volume of traffic. We're also able to identify where there's existing high-volume stores that may need overflow just based on the industry dynamic that's changing today.
Marc, can you comment? I don't know if we can get Marc a microphone. Just what do you hear from landlords when you go looking for real estate? Marc probably, of all our executive team, is spending the most time with Jason, Steve, and Joe early on. What are you hearing about mobile space from landlords?
Well, the opportunities really seem to be endless at this point. I think it's important to note also with AT&T, as we're leading with acquisitions, part of that analysis in that acquisition is the white space opportunities around the acquisition. As we go to developers, say, up in the Northeast or even in the mall space, we're finding tremendous opportunity for AT&T. Now, you might say that there's a cellphone store on every corner, I would tell you that there's not an AT&T store on every corner. We feel like there's great opportunity out there.
The other thing that's. He showed a slide of four waves of wireless, it's a little bit of what's happening to Steve and Joe, that the amount of connected devices is the big bet here. Mike and I were in Atlanta seeing what sort of is coming. When you think about the amount of connected devices, they're going to be distributed in stores, and they're going to require a consultative sale. While there may be a lot of stores, there may not be enough service to handle all that demand. We'll see. Yes, Ross.
When you showed the new tech brand stores, you included both acquisitions in the slide as well as organic. If we're just looking at the brand-new stores, can you answer a couple of questions on that? How long do you expect it to take a brand-new store to mature in each of the brands? How long to get to standalone breakeven, what % of target revenue do they get to get breakeven in?
Part of the follow-through on this is, will these stores have a higher comp than the rest of the chain because they take a few years to mature?
Yeah. Maybe we'll let Rob see what he's comfortable with. I do think The success of our stores are predicated, in many cases, by the launch of new Apple devices. If there are lots of new devices or technology stacked together, our stores are profitable quicker because it generates tremendous demand. Our stores have typically, they'll ramp in a five to seven-month period pretty well, and then are really mature after about the first 12 months.
Joe?
Yeah. I think on the Cricket side, we're really new at it. We've only been operating in the markets for a few months. It's probably a little early for us to forecast. I think combine that with the completion of the acquisition's probably going to bring a lot of change in the whole space altogether. I think we're a little early on the Cricket side.
Joe's still trying to figure out what the name of the store is. It's like, "Cricket.
Daily battle.
Right. Daily battle. Over here. Okay. Yes.
Paul, a couple of questions. One, on the video game side, could you just talk about what kinds of trends you've been seeing in terms of full video game downloads on the new platforms, what kind of implications for used demand you think increased availability of DLC will have? Then just one question on the wireless side. With the shift to the new financing of the phones, can you just talk about buy-sell trade and the frequency of used, the frequency with which consumers will be trading in their phones?
Okay, Tony, you want to take that piece?
Sure. On the digital side, we've been selling full game digital downloads for, I think, 3 years now. It's a very small part of our business and our publisher's business as well. We're open to the idea of selling them. We sell them in our stores. Many of them are day and date, so we can sell them when the customer wants it. If the customer wants it in that factor, then we offer it. They understand they lose the benefit of the $20 residual value that I talked about earlier if they go down that route, and it's typically priced at the same level. We don't see that as a huge part of the digital business right now. On the other side, downloadable content has basically become a staple.
GTA V being really the only lone glaring exception last year, if you're going to launch a game, it used to be, about 3 years ago it was, you don't launch a game and launch DLC along with the game. Now it's just the opposite. If you have a great game, you launch DLC at the time that you launch the game. What we know is that when our associates are walking the lines at launch, that's the best time and the highest attach rate of selling downloadable content. We've seen that really accelerate. We shared it as a best practice among the industry, which is something we do on a regular basis, and most people have taken that up. DLC continues to be very strong. Digital game downloads, games are getting larger.
We'll see how that trend kind of takes off, if it takes off, we're going to be there to sell.
Yeah. Jason, want to talk about the impact of Next on trades or frequency of trade-up?
You bet. Part of the Next device financing programs require a trade when you come back in to take advantage of the upgrade. This platform is relatively new. We've only been selling these contracts in our stores for about five months, and they really didn't have a lot of marketing or take until the very early part of this year. We, in fact, are not yet on the backside of a device trade for a Next plan. We haven't seen an annualized contract yet. Currently, we're trading all of our devices. Through the normal postpaid business, we do offer trades of all mobile devices in our retail stores, and those trades do come back through GameStop.
The trade of phones is interesting to us because as we mentioned in our remarks, we were early on in that trade of phones, and at the time was taking trades. It's good in that it has legitimized the buy-sell trade model, and you see competitors entering it. Anytime more people enter buy-sell trade Yep.
Hey, guys. It's Mike Olson from Piper.
Hey, Mike.
I think pre-owned grew 20% in the first couple of years of the last cycle, and guidance for this year doesn't suggest that kind of pre-owned growth, but more just a suggestion of growth for pre-owned. Other than the fact that you were growing stores during the kind of onset of the last cycle, what are the other differences that you would suggest kind of exist versus the last cycle that would prevent that kind of-
Sure
20% pre-owned growth?
Sure.
Thanks.
You want to take that one?
I think initially, it's tough to discount the factor of what our growth rate was back in those days. Mike showed the slide that had 8% growth in pre-owned comps in the year following the 360 launch and 15% growth in the year following the Wii and PlayStation 3 launches. The difference between that and the overall, I think the numbers we've given in the past 20% and 27% of pre-owned growth in the first couple of years, that's a factor of the store count increases. I think when you look at those comp growths of 8% and 15%
In line with where we are today, with very little store growth on the video game side. I think that our pre-owned growth estimates are in line with that.
Paul, right over here.
Colin Sebastian from Baird. Two quick questions. One, if we continue to see this accelerated shift to next-gen products and the ongoing significant declines in the old generation, is there any risk to the used margins given the concentration of software among fewer titles, as just that transition takes place? Secondly, if there are hardware price cuts this year, how would that change your market model?
Sure. Rob, you want to start us off on-
I'll answer the question about the margins and let either Mike or Tony answer the question about the heavy impact of price cuts. We don't necessarily see the adoption of next-gen within the pre-owned side of the business and what's happening on the previous gen as an impactor to the margin rate on pre-owned. We're pretty confident in our pre-owned margin rates.
It really fundamentally comes down to who do we think's buying the pre-owned, and our position has always been it's an expanded market customer. It's an opening price point customer who is brought into gaming because of the opportunity for value. Even now, I would say these guys, we talk about this every week. Once consoles launched, a new set of customers came in, and it's amazing because they're in the store looking for value because they know that the high-end stuff is being sold to other people. There is this expansion of GameStop's audience that happens when you have a console launch. That's why we want to take advantage of that in the value section of adding products so that we can take advantage of all that increased traffic.
The market model did, Colin, assume some price cuts in it. We built those into it. Obviously, if you had price cuts, you would extend the life of current gen further.
Over here. We haven't had anybody over here, I think.
Hi, Sean Wagner with Longbow Research. Rob had mentioned that the forecast that you had given the last major investor day, you've fallen short of that with the guidance for 2014. Along those lines, there was a target for $1.5 billion in digital receipts. I'm just wondering what parts of that have fallen short of expectations or outperformed expectations, and do you think that we'll ever get to that $1.5 billion?
Yeah, Rob can take that. Just one comment on the falling short. The entire industry fell short. In fact, the industry fell short of every model I think that was produced by people in this room. The industry far underperformed, I think, what many of us thought. You guys want to take that?
I'll talk about the digital for a minute. I think obviously digital is going to continue to be a growth at 26% growth CAGR, and it will continue to grow. Eventually, we think we'll exceed $1 billion. I would say as we got into the category, we saw a couple of things. One, valuations were incredibly high. Predictability of final results was lower than what we had seen. I think what we did was very prudent and what we say that we'll always do, that if we can't find a great opportunity for the cash, we'll return it to shareholders. The main area that we fell short of that target was in the investments that we anticipated making. As we stepped in, and Paul, how many, we looked at probably 700 companies, I would say, at some point.
Yeah. Hundreds.
Hundreds of companies, spent a lot of time on the West Coast and simply found the predictability just was not there for us to feel comfortable investing. In terms of what has worked really well, downloadable content at that point was a very nascent business. Downloadable content now is a business that we dominate and really had to push hard to get that made a significant investment internally that has turned out incredibly well. That's an example of something that was very predictable, had a very controllable investment, and we went into it and made that Kongregate. As I said in the fourth quarter, doubled its revenues yet again. Kongregate's been a great investment for us. Again, something that was more predictable and fairly priced.
Yeah, I think what would be interesting work to do, and Mike, I don't know if your market model team has done this, but what would be interesting to see is where the shortfalls were. I can recall social gaming forecasts that were out of sight, and of course, we've all seen that that didn't unfold the way. I can remember some browser game forecasts that we looked at that were out of sight. Many of the categories that were forecast to have these enormous sales levels really didn't pan out. Now today, we see enormous forecasts, for example, on mobile gaming. We have a market model that has great forecasts on mobile gaming. Now unfortunately, many of these forecasts are with companies that don't disclose with complete transparency because they're private, et cetera.
It's hard on the digital side to really get a feel for what's really growing. I think what Tony's saying is we got into this and we did make some acquisitions, and they weren't all great. Most of them were great, but there were categories that you looked at that when you got to the table, the real numbers wound up being very different from what we thought they'd be. Yeah.
Just on the wireless side, Spring and Cricket. I don't know the revenue model down to a T, but maybe you could help us understand some of the sensitivities in the model. If your carrier partners were to get very price aggressive, or if there were to be a heightened level of churn in the end market, how does that affect your business, if at all?
I will mention, we've studied a lot of great analyst work. I don't want to say a name because it'd be one of the firms that's here, and I don't want to diss the other guys, there is some great analyst work that models exactly the churn impacts and so forth. What can you share?
I guess what I can share is the greatest sensitivity to us is sales volume. It's the number of transactions, which is why it's imperative that we feel like we picked a partner like AT&T, who is a market leader. We also think that the future revenue wave that's coming, we did an incredible amount of research, and we think that it's also imperative that we find a partner that's the most innovative around bringing in those new innovations to the retail stores. I think if you look online, you'll find publicly disclosed that AT&T has been an innovator in that category. It's really around transaction volume and market share for us, and we really feel like we've picked the right partner with AT&T.
There are some pretty sophisticated models, though you're exactly right. The churn, the impact of these new plans. I do think, though, we can't let that go amiss. Go look at what AT&T's doing with Digital Life, all publicly disclosed home security products, connected IP devices in the home. Look at what they're doing on automotive. It's extraordinary how aggressive they're being, and it positions us very well to be a major partner there. Ross?
Returning to the full game download question from before. Let's just theoretically assume that it became a more meaningful part of the industry. If that happened, clearly there's other retailers who won't participate much in it.
Yep.
There's console makers and publishers who will participate more into trying to go direct. Realistically, what do you guys think your market share could be if it became meaningful and you put a real effort into it?
You want to take that, Tony?
Yeah. I would say that if we put a real effort into it, I think we'd have a very strong market share in that business. I think the question is one of economics to the consumer that has to be answered in many ways. It has to be answered in terms of disk size. It has to be answered in terms of residual value. It has to be answered in terms of how big of a pipe do they actually have. It's easy. Most of you live in a place where you have access to very fast internet. That's not necessarily the case everywhere. There are a lot of factors that are there. Today, like I shared on our digital goods, 70% of our digital goods are bought with non-credit card. We're going to compete.
There is a whole category out there of people who don't want to put a credit card out there online, do want to come in and buy digital content from a GameStop. I think we compete very well as to predictability of market share.
It's hard. If we could get data on our market share of DLC, Tony gets these numbers, and Mike gives me these. They give me these numbers from our launch. Our share of DLC is very strong. There isn't real transparent data around that. You could easily go and link that to what your potential is on full game download because the dynamics are the same. You would sell it at launch, you would provide trade credits, you would give PowerUp Rewards points, you would help curate it. I think the danger zone here is the perception that somehow we don't like that business. We like it. It's not a big business. Five years ago, we weren't in it. Today, we do DLC every launch. Every title out has a DLC item. We could launch it, and we've launched digital copies of things as well.
It just hasn't been a big business, but it could be interesting. Tony. Tony Wible had a good question.
Thanks. A few questions. A straightforward, easy one is the 65% that you indicated had purchased an intent for a next-gen system. Is that the old survey prior to launch?
No, actually, it's not. We update that a couple times a year. Tony was mentioning earlier when we look at forecasted demand, each quarter we update that. We look at is, how strong was the demand prior, what did that translate into actual sales, and what's the future demand? The last time we updated that, I believe, was January or February of this year.
Okay. The second thing is I was hoping you could talk a little bit about the competitive landscape around wireless. There's a lot of things happening. I believe the government's going to be selling some spectrum. It might be earmarked to smaller players. You got some speculative stuff about Comcast maybe having a Wi-Fi product. You have mergers that have created new entities, Dish. How do you see that market evolving, and how would it affect Spring?
You take that?
Sure. The current competitive landscape is, like we talked about, over 200 million U.S. consumers have chosen Verizon and AT&T as their lead products. We really believe that the technology platform will be agnostic in the next 18 to 24 months. Today you're going to hear a lot of talk about who has more coverage. You're going to hear more coverage as one claim. You'll hear the fastest network as another claim. It seems like everybody takes a claim. We really believe that everybody's headed down this LTE path, the next iteration, maybe voice over LTE. At some point, the technology platforms themselves and the coverage that you all would experience with a wireless product will be similar. What that will then come down to, we believe, is the personal in-store interaction, the distribution model, the product innovation. These products are very sticky.
Many of you are probably on a mobile share value plan now. You probably are not just using your device, but maybe a tablet or multiple devices, family devices, all on a single plan. They may or may not all end at the same contract end date. It's not an easy thing to do to move. We think consumers will become more and more brand loyal to their carrier partner. We also think that they'll use that brand loyalty when they choose where to shop.
For instance, because you have so many devices connected and possibly a wearable device, a car, whatever that might be in the future, you may not go someplace where somebody may adjust your rate plan that you don't have a lot of brand confidence in, and that's why we feel great about being able to use that AT&T brand on the outside of the store.
PowerUp Rewards won't hurt either. One comment, let me add a comment to this. When we first started working with these guys, Jason and Brett Bradshaw, who runs stores for him, who does an outstanding job, they sent me a book, "Wireless Revolution," right?
Yeah.
I recommend, if you want to understand this business, there's a book called the "Wireless Revolution." It was written, I don't know when, 2000 or 1999, what I learned from this was in the original spectrum auctions that the FCC had, half the spectrum was designated to the incumbent Ma Bells, Baby Bells, and half was given to entrepreneurs, and it was a free-for-all, Wild West, great fortunes were made. Huge amounts of leverage were put into this to try to buy by people like Craig McCaw. One of our board members, Tom Kelly, was the CEO of Nextel and worked with Craig McCaw, and he will tell you that it was a land grab. The thing that dawned on us, all of us, as we started working on this is that this wireless business, the share of wallet has gone one way since 1980.
It's gone one way. You're spending more on connectivity every day, every year. There'll be dips, every day, they're adding more services. When you think about our business and you contemplate Digital Life and connected cars and consoles and the connectivity they require, to us, it seems like there's no certainties in life, but it's certainly an interesting bet to make that the share of wallet will keep growing. And if we can augment that with great service, powerful rewards, buy-sell trade, et cetera, to us, it seems that it's a very interesting segment. It's a very interesting book if you want to read about the wireless business.
One final question here is, do you guys charge for the iPhone repair that you're doing at Simply Mac? If so, is that something that can be exported to the GameStop store footprint?
Great question. Steve?
There's a couple of different ways that we service the iPhone. If the iPhone is under warranty, we provide that service at no charge to the customer pursuant to the AppleCare or the AppleCare protection plan for iPhone or if the phone's just under the original one-year manufacturer warranty. We also provide non-warranty service repair, which we do charge the customer for, which is similarly priced to what you'd find in an Apple retail store.
As far as doing it in a GameStop store, I would love to do it. Bruce Kulp is here, who runs our ROC. You guys met him. I'd love to do that in the ROC. I'd be scared to do it in his store, right, Tony?
We'll keep it at the ROC.
Yeah, we might have Super Mario playing on it or something. You never know.
Paul, my timekeeper tells me we've got time for about two more.
Two more. All right. Be here. Yes, Barry.
Yeah, Paul, I just wanted to refer back to the slide that you put up when you showed retail transformations. I think it was Williams-Sonoma and VF Corp.
Yes.
When you studied them, what were the one or two seminal takeaways for you in terms of the sort of guideposts that you're going to look to as you enact this? If you were to take the number of failed retail transformations and compare it to the number of successes, it probably outnumbers it ten to one.
Right.
Presumably, you studied those negative case studies as well. Were there any?
Yeah
common takeaways there as well?
I think, and it's not just me, right, this is the entire team. Remember that GameStop is a company that faced a 39% decline in our market. We have a board and we have a management team that's aligned around transformation. Why? Because survival is a great motivator. Our burning platform was this console business is going to go through a severe cycle. That helps clear the mind a little bit, I like to say. As far as what did we study, what are the hallmarks, characteristics, I would say, and I would ask Michael Hogan or Tony or Mike or Rob, anybody to comment, competencies that are transferable, I think is important. Williams-Sonoma, if you look at what they do with multi-channel and design, the ability to merchandise offshore sourcing, these are interesting things.
Real estate for us is a huge competency, maybe not so much for them. VF Corporation, I think there's an intellectual curiosity, if you look at their case, that they were not satisfied to only own the manufacturing or the brand. They actually integrate forward with a series of well-timed acquisitions. I guess I look for profiting and growth from the core as signs that you've got potential for success. The other thing I would say is aligned management teams generally make good decisions around growth. I think, by the way, I've been looking for the opportunity to say this, I think it's the most tenured management team in electronics retail at this point, right? We've been together four to five years. Our board supports us. We're very aligned, and we have a great process. We kick around with our founder and our board.
I think that's a sign of an aligned team. When you talk about failures, if you look at all of the spectacular flame outs of transformations, many times there's not alignment on the team. There's one faction that wants it one way and another faction that wants it another way. Usually, there's good reasons for that conflict, and you see when that falls apart. Second item, I would say debt. Leverage in transformation, to me, feels like a bad thing. If you look at what we're doing, it's very efficient. Rob gave you some capital numbers. We're basically replacing GameStop CapEx with Technology Brands CapEx to continue growth. We're not taking big risks. Candidly, if you try to understand what is the core of this business, the secret sauce of this business that we inherited from Daniel DeMatteo and Richard Fontaine, it's buy-sell trade.
Everywhere we can leverage buy-sell trade is going to be a good thing for us. Yes, we're good at merchandising and real estate, but buy-sell trade, that's at the core. There's buy-sell trade implications for all of these. What else, guys? What else would you add on that?
I would add or maybe just amplify a couple of points. I think one is, particularly if you compare it to some of the things that have happened in digital over the last four or five years. Sometimes what people want to do is sit in a room and say, "What's hot, what's growing? Let's make a big bet on it, maybe it'll work." I think we're taking kind of an opposite approach. One is, we're pretty religious about this whole competency thing. Yeah, we want to know, is it a big category, is it going to grow? What we really want to know is, can we make the case that we're bringing something transferable to that category, regardless of how fast it's growing. The other thing I think is a sort of approve before you move.
I know on the one hand, depending on your perspective, it might look like we're moving really fast in some of these categories, that every single category that we're in, we spent time studying the category. We believe that there's a case for growth and size in the category. We've got a very good case that we bring transferable competencies. We've acquired an existing business that already has a success model and leadership. What we're really doing, in most cases, is scaling a business that's already proven itself to be successful.
Now I want to amplify what Mike said, which was, it seems like we're really moving fast, but we're moving fast in execution. We spent months and months looking at what are our real core competencies, looking at all the different types of categories we could invest in, and putting those two things together to find the best match. While the planning process was long and thorough, now we have everything set where we really can execute quick.
Yeah, I think we see ourselves as stewards of the enterprise. Maybe it comes from the fact that we're in this digital category that is so frequently named as a disintermediation candidate. Maybe that's what causes it, we see ourselves as stewards of an enterprise that we must continue to dig and find insights. I think that's how we got there. One more. We've got time for one more, Matt.
Just a quick follow-up on the PowerUp Rewards program. It's a huge lever in just about every one of these businesses that you're in today. 27 million. Where do you think the ceiling is on that in terms of membership base? As a follow-up to the 65% believe they'll upgrade to the new-gen consoles, that's roughly 20 million. Based on your intelligence, what percentage of the other 7 million have already upgraded?
Mike, do you want to share the ceiling on PowerUp?
Sure. First of all, obviously, we clearly agree with you. We think it's a strategic asset, and we think we have a long way to go before we will have fully mined all the capabilities within PowerUp. Where it's north of 70% of sales right now is when we think about it, the program will continue to grow. I'm probably less concerned about just the growth in numbers and more understanding how we can be a deeper part of people's lives. Yeah, we'll add however many more millions of members, but what I'm really interested in doing is increasingly building the depth of that relationship so that the relationship that we have within the GameStop ecosystem today will extend to the other businesses. It may not be called PowerUp Rewards, but behind the curtain, everything will be the same.
We'll know you as a customer regardless of what store you're in and your behavior, and ultimately, what I'd like to be able to do is only present you with opportunities that you think make a lot of sense for you and which take advantage of the unique value proposition. Your points, your trade credits, and even the things that you haven't traded yet. You can get an offer to come to a Simply Mac or a Spring Mobile or whatever. Your second question was about the research about how many are still purchasing and how many have purchased. What have we said?
We can say another $7 million.
We don't know.
We don't know.
We don't know.
Right.
We know how many have converted with us, but we haven't disclosed that.
We've said a few times, what's interesting to us is, we used to talk about this, right, Tony? People said, "Well, console gaming is over" and so forth. We always said, "It's not that, it's the lack of innovation in the category that has slowed it down. As soon as innovation returns, there will be demand." Innovation has returned with new consoles. There is demand. Fair to say so. The consumer is looking for innovation. The beauty of what we're doing now, we believe, is that we're tied to innovation in a bunch of cool categories. We're tied in a way that's very unique. We think that's going to be very productive. Matt, with that, I guess I will close the session. Thank you very much for attending. Please let us know if we can help you in any way.