2. 2—CONSUMER ELECTRONICS DAILY MONDAY, NOVEMBER 18, 2013
customers able to buy a PS4 at the store pre-paid a few hours before the midnight launch event and were
told they could leave and return to pick them up once the consoles were allowed to officially go on sale at
12:01 a.m. Friday, he said.
"We didn’t want to waste anybody’s time" by having them wait outside in the cold for nothing,
said Yosco. "We wanted to be transparent" with consumers about the limited amount of units that were
available for walk-in customers, he said.
Customers started lining up outside GameStop’s Union Square store in New York at about 10 a.m.
Thursday, said Yosco. About 100 customers were lined up outside that store, as well as GameStop’s store
on 86th Street and Lexington Avenue, Thursday, when GameStop told them there were fewer than 100
units available for walk-in customers at each of those locations at launch, he said. The larger turnout at
the store on 33rd Street and Broadway can be chalked up largely to that location's being the company's
largest-volume store, he said.
Customers who pre-ordered a PS4 before the launch didn’t have to come to get one at the midnight
launch events, said Yosco, who declined to say how many units were pre-ordered at the stores. But that
didn’t stop Marshal Li, 24, of Brooklyn from attending the midnight launch event at the 33rd Street store.
He and a friend pre-ordered PS4s in June, said Li. His friend was planning to travel to Chicago over the
weekend and didn’t want to leave without having a PS4, so they opted to pick up their units as soon as
they went on sale, said Li.
Several launch games were popular for the PS4 initially, said Yosco. The PS4 exclusive Killzone:
Shadow Fall, published by Sony Computer Entertainment, sold out the first day it became available at the
33rd Street store, but the store received more copies, he said. Other popular PS4 games so far included
the multi-platform Call of Duty: Ghosts from Activision, Madden NFL 25 from Electronic Arts and NBA
2K14 from Take-Two Interactive, he said. There seems to be "something for everybody" at this console
launch, which hasn’t always been the case in the past, he said. It was hard to gauge the attach rate be-
tween each hardware system sold and games or accessories because customers were buying games and
PS4 accessories all week long, ahead of the launch, he said. Some of the customers attending the mid-
night launch events had already bought games and accessories on an earlier day, he said.
Yosco expected there would be walk-in customers looking for a PS4 all day Friday, he said. But it
was likely that the only GameStop stores that would have any units for walk-in customers during normal
business hours that day were those locations that didn’t hold midnight launch events due to restrictions
that prevented them from doing so, he said. Those stores were mainly mall locations, such as its store in
the Manhattan Mall, he said.
There will likely be a similar procedure at GameStop stores for the Xbox One launch this Friday,
which will also include midnight events, said Yosco. It wasn’t clear how many units of Microsoft’s con-
sole GameStop stores would have for walk-in customers, he said, but he expected that information would
be known by Monday.
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3. MONDAY, NOVEMBER 18, 2013 CONSUMER ELECTRONICS DAILY—3
Customer demand for the PS4 and Xbox One was similar at the GameStop stores where Yosco is
district manager, but Sony systems tend to have a "slight edge" at his locations, he told us. "In the past,"
for example, the 33rd Street GameStop store has always been especially popular for PlayStation systems
due to the strong business there from international tourists, he said. Part of the reason for that was PS3
games weren’t region-locked, while the Xbox systems were region-locked, he said. But the Xbox One
isn’t region-locked, so that could affect the trend GameStop sees at the 33rd Street store this console cy-
cle, he said. In general, Sony consoles tend to be more popular at certain GameStop stores while Xbox
systems have been more popular at other stores, he said.
The PS4's $100 cheaper cost than the Xbox One hasn’t had much of an impact on demand for ei-
ther console at his GameStop stores, said Yosco. He didn’t hear any customers saying they planned to
buy the PS4 instead of the Xbox One because of the Sony console's $399 price (vs. the $499 Xbox One),
he said. What will likely determine which system sells better is which game exclusives are available on
each one, he said. "It usually comes down to the games," he said.
Few customers had expressed any concerns about hardware problems with either new console, said
Yosco. He saw published reports that claimed Sony was investigating defective HDMI output ports on a
small number of consoles, he said. SCEA didn’t comment on the issue. Yosco was "anticipating" some
concerns by at least a few customers about hardware, based in part on those reports, as well as the infa-
mous "red ring of death" hardware defect that plagued the Xbox 360 in its early days, he said.
GameStop stores will likely have some PS4 and Xbox One units throughout the holiday season,
predicted Yosco, who said he heard that replenishment is expected to be better this time around than for
prior console launches. He hoped to have units to sell on Black Friday, but told us he didn’t know if
GameStop stores will hold any allocations specifically for that day.
The PS4 was listed as "sold out" at both GameStop.com and Bestbuy.com Friday afternoon, and
Target.com has it as "unavailable." PS4 availability at Walmart.com wasn’t clear. It listed the console at
$399, but didn't offer a way to order it when we clicked on the SKU. A $517 PS4 bundle was listed as
"out of stock" at Walmart.com, but clicking that SKU brought up a PS4 bundle at $517.96, including a
game and PS4 camera, listed as "in stock." As has become typical at game console launches, eBay listed
several PS4s at vastly inflated prices.
Yosco predicted many customers will visit GameStop stores this Friday to buy either Nintendo’s
new $219.99 3DS XL bundle or one of its new Mario games, all launching that day (CED Nov 14 p11).
But the turnout will be nowhere near as large as that for the PS4 or Xbox One launch, he said. Consumers
are "much more enthusiastic" now for the Wii U, due largely to the major first-party games that Nintendo
started releasing in the back half of this year, he said. The recent price cut likely helped also, he said.
SCEA had distributed 366 tickets to walk-up consumers looking to buy a PS4 at the com-
pany’s New York launch event when we arrived there at about 11:30 p.m. Thursday. It had 444
consoles available for sale there for customers who didn’t pre-order one, said Jennifer Clark, senior
director-product publicity, at the PlayStation Blog Wednesday (CED Nov 15 p5). That meant SCEA
had a unit for everybody in line just before the console went on sale, SCEA spokeswoman Farm
Saechou told us at the event. The company opted to hold the launch event at the hotel instead of a
store largely due to "logistical" reasons, she said. The company had space in several areas of the
hotel to demonstrate the console since Monday last week and third-party developers were also able
to tout their new games there, she said.
4. 4—CONSUMER ELECTRONICS DAILY MONDAY, NOVEMBER 18, 2013
One of the customers waiting to buy a PS4 at the Sony event was James Hampton, 28, of South
Ozone Park, N.Y. He arrived about 15 minutes before we did and received No. 363, he said. "I had noth-
ing to do, so I gave it a shot," he said, telling us he didn’t pre-order a console because he "didn’t think it
was going to sell out that fast." He previously owned a PS3, but about a year ago gave it to a cousin in
Peru, who couldn’t afford to buy one, he said. Hampton didn’t own an Xbox 360 (just an Xbox), but
might buy an Xbox One "in the future," he said. He chose the PS4 due to its lower price and selection of
exclusive games that will be available for it, he said. Hampton wasn’t planning to buy any games or ac-
cessories with the PS4 that night, but may buy 2-3 games and an extra controller during the holiday shop-
ping season, he said.
SCEA is backing the PS4 launch with a "massive" ad campaign with the official tag line
"Greatness Awaits," which it said Friday is featured in retail partnerships, digital banners and TV spots. It
and Taco Bell partnered to give consumers the chance to win a PS4 system every 15 minutes via a "Play
The Future First" campaign that ran Sept. 26-Nov. 10. More than 4,000 consumers won PS4 systems
prior to the Friday launch, said SCEA. More than 20 first- and third-party games combined were available
at the console’s launch, including the exclusives Knack and Killzone: Shadow Fall, it said. More than 30
PS4 games will be available by the end of 2013, it said. — Jeff Berman
9,000-Square-Foot Space
Harman's First U.S. Retail Store Pushing
Do-It-Yourself Demos, Automated Sales Features
Harman opened its first U.S. company store, a 9,000-square-foot showroom, interactive demo
space and retail shop in a former Talbot’s location roughly a block from Sony’s Sony Wonder Technology
Lab and PlayStation Lounge. At a private event at the store Thursday night, Sean Kapoor, Harman vice
president-brand marketing, told us the store will open to the public Nov. 22 and be Harman’s “flagship”
store, if not its first. Harman operates stores in Shanghai, Seoul and Dubai, and a Moscow store is due to
open in February, followed by a store in New Delhi, Kapoor said. Beyond that, Harman will continue to
look at options, he said, and “maybe a couple more in the U.S.” The midtown Manhattan store has a
seven-year lease and will be open daily from 10 a.m.-7 p.m., he said.
Competitors including Bang & Olufsen, Sony and Bose have years on Harman in the company-
branded retail space. Kapoor said the decision to open the first U.S. store now is part of its “omni-channel
marketing strategy.” Harman has been making sure it has the “right products and right experience” for
consumers, Kapoor said. He cited design and engineering awards Harman brands have won recently and
said new websites will launch Monday for the JBL and Harman Kardon brands. Harman is “bringing eve-
rything strategically together piece by piece,” he said.
Harman’s plan for the New York store is to demonstrate all segments of its brands covering the
home, portable, car and pro audio segments. The store will have a dedicated area for car after-market
products but none of its factory car systems, since each car system is custom-tuned to a particular vehicle,
Kapoor said. At the event, Harman was demonstrating sound systems outside the store in an SRT Viper, a
Ferrari and Mercedes SL500.
5. MONDAY, NOVEMBER 18, 2013 CONSUMER ELECTRONICS DAILY—5
The store will have a professional audio area with a mixing console that Harman will make avail-
able to the company's production team customers in New York and it will “even encourage musicians to
come in and use the facilities,” Kapoor said. The stage area features JBL professional speakers and light-
ing from Martin Professional, a Danish company that Harman acquired earlier this year. The store's lower
level will include a high-end home theater and “proper two-channel listening room” where consumers can
listen to products, Kapoor said. Any installation services arising out of a sale at the store will be referred
to “partner installers,” he said.
While Harman’s JBL, Harman Kardon, AKG, Mark Levinson, Infinity, Lexicon and Revel brands
will be demoed in store, cross-brand bundling isn’t currently part of the strategy, Kapoor said. “We’re
trying to stay holistic to brands,” he said, but the store will hold offers and promotions “from time to
time.” Social media is “core” to the store’s purpose to further the Harman name, and will be used for pro-
motions and sweepstakes, Kapoor said. Harman is currently holding a promotion for a Maroon 5 concert
in New York that’s tied to the Super Bowl in February, he said.
Hands-on activity spaces are key to the Harman store concept. “We want consumers to get to
know our brands intimately, not just through simple advertising or media,” Kapoor said. The typical retail
store today has headphones “sitting in a box” or there’s a point-of-sale kiosk “with some lame music in
it,” he said. “We wanted to create an experience and do something that’s different.” For the launch party,
only the headphone demo section was built to accommodate a guest list of 300, but additional sections
will be built over the next week for soundbars, portable music systems and receivers, Kapoor said. The
“loose fixtures” will be movable “so we can do merchandising in a flexible way,” he said. An enclosed
sound cube offers a place for customers to do A-B comparisons with competitive products. The room had
Beats headphones and a sound system Thursday.
The “sound spider” structure at the store entrance has nine embedded touch-screens on a table with
each positioned beneath a set of headphones. From the demo stations, customers can select tracks by tap-
ping on cover art, get more information about Harman and can call up a “sound concierge,” an automated
program that recommends products based on certain criteria. Someone can specify, for instance, that
she’s looking to spend $50 on headphones for running. The concierge will recommend a product and di-
rect customers to the section in the store where they can find the item. That’s a nod to the shopping envi-
ronment today where “nobody wants to talk to anybody anymore,” Kapoor said. Employee count for the
store is 25, including a management team of three. At any given time, 12-15 people will be available to
assist customers, he said. — Rebecca Day
Investor Suit
Emerson Girds for Grande Holdings Trial
A suit alleging Emerson Radio acted as an “alter ego” to enable parent Grande Holdings to transfer
assets, at the heart of an investor suit outside the U.S., is scheduled for trial in early December, according
to court records.
Fred Kayne and Milton Okun sued former Emerson Chairman Christopher Ho, who was a top ex-
ecutive at Grande, in U.S. District Court, Los Angeles, in 2011, alleging that Emerson and Ho interfered
6. 6—CONSUMER ELECTRONICS DAILY MONDAY, NOVEMBER 18, 2013
with their ability to collect a $60 million judgment against Grande, the suit said. Judge John Kronstadt
granted a motion earlier this year dismissing a federal Racketeer Influenced and Corrupt Organizations
claim against Emerson. And earlier this month, Kronstadt set the stage for the trial by rejecting Ho’s ar-
gument that Kayne lacked standing to pursue alter ego allegations and that the claim didn’t provide a basis
for damages awards.
Kayne’s and Okun's allegations are “not as Ho contends a fraudulent conveyance alter ego claim,”
Kronstadt said in a nine-page decision. “The plaintiffs have always alleged, as part of their alter ego claim,
that defendants stripped assets from Grande in order to avoid the payment of the Grande judgment.”
The suit was filed as Kayne and Okun sought to enforce a $47 million judgment against Grande
that has since increased to $60 million with interest. Kayne’s federal suit partly stemmed from an action
investors filed against Grande subsidiary MTC Electronics Technologies. Ho’s interest in Grande wasn’t
disclosed until a liquidator for Akai Holdings sought an injunction over his assets several years ago, the
suit said.
Ho, who had been Emerson’s chairman since 2006, decided earlier this year not to seek re-election.
Emerson’s board has since voted to increase the number of directors to 10 from seven, and four new mem-
bers were elected including John Batchelor, a senior managing director at FTI Consulting, a firm ap-
pointed by the High Court in Hong Kong in 2011 to liquidate Grande. Other new members were Gregory
Hunt, chief financial officer at Apollo Investment Corp.; Mark Manski, founder of Mark Manski LLC;
and Roderick Sutton, chairman of FTI Consulting’s Asia Pacific region. As part of the shutdown of
Grande, Vincent Fok and Sutton, who were appointed liquidators, are to sell off the 15.2 million Emerson
shares Grande controlled, although the timing hasn’t been set, Emerson said. As of Oct. 14, Fok, in his
role as liquidator, owned 56.2 percent of Emerson, with independent investor Lloyd Miller controlling 9.2
percent of the company.
Meanwhile, Emerson’s fiscal Q2 net income narrowed to $388,000 from $1.9 million a year earlier
as sales plunged to $18.3 million from $34.7 million, the company said. Emerson’s product revenue
shrank to $17.2 million from $32.2 million, while that from licensing slipped to $1 million from $2.4 mil-
lion, the company said. Emerson’s Q2 housewares product sales fell to $14.6 million from $31.3 million
a year ago, due largely to Walmart's dropping two microwave ovens it previously carried. The micro-
waves generated $11.9 million in sales in the year-earlier quarter, Emerson said. Emerson’s Q2 audio
sales declined to $600,000 from $1 million a year ago on a downturn in portable products and clock ra-
dios, the company said. The decrease in licensing was due to a $1.3 million drop in revenue from Emer-
son’s agreement with Funai. While Funai had exceeded its annual minimum royalty payment in Q2 of
fiscal 2013, it fell short in the same period this year, Emerson said. Funai sells Emerson brand video
products through Walmart. Emerson, whose pact with Funai extends through March 31, 2015, carries a
$3.75 million minimum annual royalty payment, the company said. — Mark Seavy
‘GTA V’ Still No. 1 Game
Microsoft Sold 166,000 Xbox 360s in U.S. Last Month, Overtaking PS3
The Xbox 360 returned to the top of the home videogame console sales chart in the U.S. last
month, but the 3DS remained the best-selling videogame system for the sixth straight month when factor-
ing in handheld systems, according to NPD’s latest videogame sales data. The PS3 outsold the 360 and
7. MONDAY, NOVEMBER 18, 2013 CONSUMER ELECTRONICS DAILY—7
Wii U in September as the Microsoft console’s reign as the country’s top-selling home console ended after
32 straight months (CED Oct 21 p6).
About 166,000 Xbox 360s were sold in the U.S. Oct. 6-Nov. 2, said Microsoft, citing NPD’s data.
That allowed the 360 to maintain its lead as the No. 1 console of 2013, said Microsoft. Total retail spend-
ing on the 360 platform reached $283 million last month, including hardware, software and accessories,
and that was the most for any console in the U.S., said Microsoft.
But the 3DS far outsold the 360, moving more than 452,000 units last month in the U.S., said Nin-
tendo of America (NOA), citing NPD’s data. That was double the number of 3DS systems sold in Sep-
tember and "the most units [of] any portable" videogame system or home console sold in any month this
year, said NOA. The growth was driven by strong demand for the Nintendo game titles Pokemon X and
Pokemon Y, as well as the launch of the 2DS, which the company added to the 3DS product line in Octo-
ber, it said.
The Pokemon titles combined to sell more than 1.7 million units last month, making October
the biggest month for 3DS software all year, said NOA. Total 3DS first-party software sales
reached more than 2 million copies in the month, the most since the report for December 2011,
which included sales of Super Mario 3D Land and Mario Kart 7, it said. Pokemon X was the
month’s No. 2 videogame, while Pokemon Y was No. 3, said NPD. The only title that beat them was
Take-Two Interactive’s Grand Theft Auto V for the 360 and PS3, again No. 1 in its second month,
said NPD. Just under 1.1 million copies of that game were sold last month in the U.S., said NPD
analyst Liam Callahan.
Nintendo on Friday didn’t say how many Wii U and Wii systems were sold last month, while Sony
Computer Entertainment America didn’t say how many PS3s, PS Vitas and PSPs were sold. NPD stopped
providing sales data for each system to reporters a while ago.
Total U.S. videogame hardware sales fell 8 percent year-over-year last month, to $171.7 million,
said NPD. "The success of the 3DS helped lift portable hardware sales" last month, which marked the
first time portable hardware sales grew in the U.S. since February 2012, when the PS Vita launched, said
Callahan. The portable hardware sales growth "helped partly offset the decline" of console hardware
sales, he said. It was the smallest year-over-year decline this year, excluding January, which included an
extra week of reporting, he said. Game hardware sales are expected to get a major lift in November be-
hind the PS4 and Xbox One launches in the U.S.
Total U.S. videogame industry sales across all products in the physical retail channel grew 5
percent last month year-over-year to $791.1 million, said NPD. It was the third straight month in
which total videogame sector retail sales grew, said Callahan. Videogame software sales grew 12 per-
cent in the same channel to $482.5 million. Factoring in PC games, total U.S. game software sales in
the physical retail channel grew 10 percent to $495.1 million, said NPD. The dollars cited by NPD
were only about 50 percent of the total money that U.S. consumers spent on games last month, said
Callahan. When factoring in NPD’s preliminary estimate for other physical channel sales including
used games and rentals at $89 million, and its estimate for digital game sales at $491 million, Callahan
projected that U.S. consumers spent just over $1.3 billion on the sector last month. Digital game sales
take into account full game and add-on content downloads including microtransactions, subscriptions,
mobile apps and social network games, he said.
8. 8—CONSUMER ELECTRONICS DAILY MONDAY, NOVEMBER 18, 2013
Total U.S. videogame accessory sales inched up 1 percent to $136.9 million last month, said
NPD. The growth was helped by a more than 70 percent increase in sales of interactive gaming toys
that includes combined sales of Disney Infinity and Activision’s Skylanders products, said Callahan.
It was also the strongest October ever for videogame point and subscription cards, helped by a 12 per-
cent increase in average prices that he said indicates consumers are "becoming more comfortable pur-
chasing higher denominations of point cards and that they are purchasing subscription cards for longer
time periods." — Jeff Berman
Computing
Intel is opening pop-up stores for the holiday season in New York (Nov. 23), Chicago (Nov. 25)
and Los Angeles (Nov. 26), where consumers can get hands-on experience with Intel-based PCs and tab-
lets and then make a purchase online, a company spokeswoman told us. Intel chose this year to hold the
events because of the “new generation of devices” that might not be familiar to consumers, she said.
Stores will be staffed by Intel employees who can explain the technology and steer shoppers toward pur-
chases that are right for them, she said. The stores will not carry inventory, she said, but consumers can
order products online at the pop-up stores. She said there are plans for deals and promotions inside the
stores and “maybe simultaneously with other retailers,” but she wouldn’t expand. Intel will partner with
local recyclers and make a donation in cash or electronics to local schools for products, including small
electronics, PCs and printers, that consumers bring in for recycling, she said. The pop-up stores will
morph throughout the day to showcase a range of products and use cases, starting in the mornings as a
“community hub” where visitors can have coffee, she said. The stores will expand in the afternoon to be-
come a “tech showcase” and then evolve into an “entertainment hot spot” at night. Activities will include
Friday night movies, game nights, holiday activities for kids, evening concerts and a speaker series, she
said. Programming at the spaces will change daily, giving consumers “a reason to come back and see
something different,” she said. Intel isn’t disclosing partner companies or SKUs prior to store opening,
nor would the company comment on whether the pop-up stores are a test run for permanent Intel stores.
Pop-up stores, ranging from 2,000 to 4,000 square feet, will be open 8 a.m.-10 p.m., Monday-Saturday,
and 10 a.m.-10 p.m. on Sunday, through Jan. 25. — RD
Retail
Office Depot received $35 million cash stemming from its 20 percent stake in Boise Cascade
Holdings, the company said. Office Depot inherited the Boise investment in merging with OfficeMax,
which was acquired by Boise, which adopted the OfficeMax name, in 2004, and spun off the paper
products business four years later. The $35 million was part of a $174 million distribution that Boise
made as part of a secondary stock offering of eight million shares of Boise Cascade Co. Boise Cas-
cade Holdings owns 7.8 million shares of Boise Cascade Co., while Office Depot has 1.6 million.
Meanwhile, new Office Depot CEO Roland Smith received 1.1 million shares of the combined chain,
Office Depot said in an SEC filing.
Broadband
Alpha House, Amazon’s answer to Netflix’s original political series House of Cards, was
set to debut Friday night in a limited binge-viewing release of three episodes, Amazon said Friday.
