Good morning, and welcome to the GameStop Corporation's First Quarter 2013 Earnings Conference Call. [Operator Instructions] I would look to remind you that this call is covered by the Safe Harbor disclosure contained in GameStop's public documents and is the property of GameStop. It is not for rebroadcast or use by any other party without the prior written consent of GameStop. At this time, I would like to turn the call over to Paul Raines, Chief Executive Officer of GameStop Corporation. Please go ahead, sir.

Thank you, operator, and welcome to the first quarter earnings call for GameStop. As we begin our call, as always, I want to thank our GameStop, EB Games and Micromania associates around the world for their best-in-class customer service and expertise they provide to our customers. As we prepare for the upcoming new console launches, we are privileged to define the hybrid retailer for the 21st century. Joining me today on our call are Rob Lloyd, Chief Financial Officer; Tony Bartel, President; Mike Mauler, Executive Vice President of International; and Matt Hodges, our Vice President of Investor Relations. Mike Hogan, our Executive Vice President of Strategic Business, is out of the country and unable to join us today. But don't despair, we have all the details of his market model with us. The first quarter played out as expected, with sales impacted by a decline in store traffic, which is largely due to the fact we are entering the final phase of the current console cycle. This trend was partially offset by sales of pre-owned video games and our expanding new digital and mobile businesses. Ongoing strong execution and market share growth allowed us to maximize the console business, and margin expansion and cost controls continue to protect our profitability. In prior quarters, we have outlined our strategy and provided 6 indicators of strength that are a hallmark of GameStop's business model. These factors support our future sustainability and include: one, increased market share and gross margins; two, deep customer relationships; three, digital businesses; four, mobile and pre-owned businesses; five, real estate strength; and six, capital discipline. On all of these dimensions, the first quarter confirmed that we are on track. We increased our market share again this quarter, and gross margins expanded 100 basis points. That means we have…

Thank you, Paul. Good morning. I'd like to begin this morning with some clarity around our capital allocation for the quarter. As we reported, we repurchased just over 1 million shares at an average of $25.07, for a total of $25.5 million. These are the amounts we reported back in March. We operated under a 10b5-1 plan throughout the quarter. There has been no change in our philosophy or our long-term intentions regarding share buybacks. We have $400 million remaining on our current authorization, and we still intend to return 100% of free cash flow to shareholders. Cash on the balance sheet is ample to continue buying back stock, and we have an unused $400 million line of credit. As a reminder, since we began our buyback program in January 2010, we've repurchased 55 million shares, or over 30% of our outstanding shares, at an average price of $20.56, totaling over $1.1 billion. Let me provide some color now on our first quarter results. As we said going into the quarter, we expected the first half of fiscal 2013 to be challenging as this console cycle winds down. Consolidated global sales were $1.87 billion, down 6.8% from last year, with comps down 6.7%. Our revenue and comp results were in line with our expectations. Comps were down 6.9% in the U.S. and down 6.3% internationally. We were pleased with our sell-through of the new titles during the quarter and the growth in our mobile and digital businesses, but the decline in traffic was as we predicted and was felt the most in hardware sales. Our hardware sales declined 31%, in line with our expectations, while the U.S. market declined 36%. New software sales declined only 3.8% compared to a 14.2% decrease in the U.S. market, as we outperformed the market…

Thanks, Rob. This morning, I'm going to update you on our digital and mobile growth, as well as share our perspective on the upcoming console launches. Now that both new consoles have been confirmed for a holiday launch, we can provide more detail on how we are going to maximize the transition to the next generation of gaming. But first, I'll discuss our results. We are pleased with our digital growth, as it continued its strong trend, growing 47.3% over Q1 of last year. Console digital grew 44%, and PC digital grew 54%. Domestic digital growth was 40%, and international growth was 78%. We are reiterating our 2013 annual digital growth projections of between 25% and 35%. Today, nearly every significant new video game is launching the day and date DLC, and our sales associates are doing a great job of preselling this content and selling it on the day of launch. A great example is Take-Two's Bioshock Infinite, where we attached 34% of the 1999 season pass on launch day, and drove our average Bioshock Infinite ticket to the highest levels that we have ever seen on a launch title. Our launch plans continue to evolve, and we are now marketing not only DLC, but also several new game-related items at the time of launch. Most of these items are delivered -- are in stock and in our stores, but we are also offering items that are centrally located and delivered via our web in-store process. We call this approach franchise marketing, and we are working closely with our publishing partners to ensure that gamers have a full menu of purchase options at each launch, beyond just the game and related DLC. Our PC digital download sales grew 155% in Q1, and we completed our global rollout of our…

Thanks, Tony. Good morning, everyone. In the first quarter, our international same-store sales declined 6.3%, but the results varied by segment, with our top-performing segment being Australia/New Zealand, which significantly outperformed the other markets with an 8% same-store sales increase and a $3 million improvement to operating earnings versus prior year. The decline in overall sales was partially offset by a 120-point increase in gross margin percent, driven by a 300-basis-point improvement in pre-owned margins and continued advancements in our globally integrated vendor relationships. GameStop's global merchandising teams, in cooperation with our publishing partners, are now developing franchise marketing plans and exclusive content on key new releases as much as 12 months in advance of the product launches. These stronger and better-coordinated relationships help us bring customers more global exclusives and unique content on new releases than ever before, resulting in improved margins and greater sales on key titles. Compelling examples include Q1's Gears of War: Judgment exclusive Marcus skin for Microsoft, and the upcoming Assassin's Creed: Black Flag Buccaneer edition. These exciting offerings are what our customers have come to expect from GameStop. This global collaboration is also playing a significant role in working with Sony and Microsoft well in advance of the next-generation of consoles, as we develop powerful launch promotions and rapidly expand our reservation and first-to-know list for the PS4 and Xbox One. In the first quarter, our investments in technology and improved vendor collaboration increased international digital sales 80% versus Q1 2012 with constant currency. This was driven by strong growth in console DLC; a global partnership with Steam, now selling Steam Wallet in all markets; and the initiation of digital Game Informer subscription sales in Italy, Spain, Scandinavia Germany and Austria. International e-commerce sales realized their ninth consecutive quarter of double-digit growth and, in…

I believe we're ready for questions, operator.

[Operator Instructions] We'll take our first question from Arvind Bhatia with Sterne Agee. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: I want to ask a question on mobile. You're maintaining your full year guidance, but your first quarter came in stronger, looks like everywhere. Just wondered if you can maybe provide some more color on what's happening in mobile and the incremental success that you might be seeing there?

Let me say one thing about it, and Tony can probably take it. I think that what's interesting, Arvind, as you know, for many years, we've been in the buy-sell-trade business on video games. And we've said for years that in spite of all of our work on marketing and so forth, there's only about 40% trade awareness in consumers. And so every day, our biggest mission on buy-sell-trade is to create awareness. I think what you're starting to see now is this mobile business, which was unknown to us 1.5 years ago, is starting to resonate with consumers, and it's a great solution for disposing of your electronic devices. Tony, you want to add something to that?

Sure. The only thing that I would add is, clearly, we were rolling out in Q1 of last year, which is why we had such a significant increase in the first quarter. But we do continue to expect it to be a strong growth driver, and we're confirming our 30% to 40% target, which is very strong growth for the back half of the year.

And you know the outlook for launches of electronics, smartphones and tablets for the rest of this year is very, very exciting. The problem is it's a little unknown when those dates will be and so forth, but we are positioned really to gain a lot of traction with that. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: Well apply that back into new console launches, and I think, Tony, you talked about subsidizing these new consoles with trade-in, et cetera. Maybe tie that into the mobile strategy and how maybe you're working with Sony and Microsoft on some of the programs there.

Absolutely. Well, we -- that's absolutely true that we are working with both Microsoft and Sony to make these consoles most affordable. And as I shared, we will be the retailer where these new consoles and the new games that come along with them will be the most affordable because of our buy-sell-trade strategy. Just to remind everyone, we have over $1 billion worth of trade credits that come in every single year. 70% of those get applied back into new games. And just to put that into perspective, about 17% of all new games and digital content that is sold at GameStop is funded by trade credits. So these are an incredible source of funding of currency that helps to sell new games, and that's why you see our market share go up 470 basis points, that combined with the loyalty program as well. In addition to the $1 billion of trade credits that we get from games, we also now are starting to generate over $100 million of trade credits that comes in from these mobile devices or from tablets and MP3 players and smartphones. That's a whole another source of currency that we have unlocked just as we're coming into this new generation.

The interesting thing, Arvind, and you know this because you followed us quite a bit, but I think we've said on a couple of calls ago, there are 24 million consoles in our PowerUp Rewards members homes in the United States. So if you think about those 24 million consoles and you can model a trade price on those, whatever trade price you want to put on them, $50, $70, $100, if you model that, you see that the amount of trade currency that Tony is talking about is far bigger than anybody's marketing budget. So the question we always put out to publishers and manufacturers and console makers and now, smartphones and tablet manufacturers is, how much of that trade currency do you want for your device? Because if you'll support it in all kinds of different ways, we can activate that currency. So it's pretty exciting to think about a console launch. There's never been this much trade currency available.

And so we are working very closely with not only the platform holders, but all of the publishers as well, to make sure that there is a seamless transfer to the next generation.

We'll take our next question from Mike Olson with Piper Jaffray.

I guess, somewhat along those lines, is there anything you can tell us about how you anticipate buying, selling and playing used games will or will not change with the Xbox One? Maybe said another way, at this point, do you anticipate a change in how gamers will be able to interact with used games on the Xbox One versus kind of how gamers are able to buy, sell and play used games today?

Yes, Tony, can answer that.

Mike, yes, this is -- figured that question would come up. Definitely, Xbox has said that they do support the trade-in resale games at retail, and that they want to handle communications from this point forward on that. I think what is important to note is that all 3 of the platforms that have launched, all 3 of the consoles that launched have now come back and they say, "I realize the value of the buy-sell-trade model," and they have built that into their new consoles moving forward. So we anticipate that we are going to be able to leverage that like we leverage it on the consoles today, to make not only those consoles, but the new games, the new deals, see all these other ancillary products that we sell, more affordable by running the buy-sell-trade model in the future.

Yes, here ahead of E3, Mike, it's a tight communications process. But what exciting to us is we're a different company than we were on the last console launch, and our ability to bring that $1 billion of trade credits in, in lots and lots of new and unique ways, is pretty compelling.

Clearly, platform holders understand the value of that $1 billion-plus worth of trade credits, and they've enabled that in all 3 of the new platforms that have launched.

But other than that, Microsoft owns communication.

Great, that's helpful. And if I might sneak in one more. You gave some interesting data on how the used market will continue to grow as we move through the next-gen transition. And along those lines, you're probably approaching, I guess, a tidal wave of kind of used hardware and software coming later this year, as gamers kind of sell used to apply to next-gen. Logistically, how do you guys deal with that? Is there like an uptick in expenses related to this as far as increasing headcount or other resources that you need? Or what's been your experience in the past with these cycles.

Rob will give you some inventory remarks on that. But I will tell you, we like the word tidal wave of inventory, right, Tony?

And we have a very flexible labor model to deal with that.

Yes, we have, Mike -- and I think you've been there, I'm not sure. We have a 200,000-square-foot facility here in Grapevine. We're very different on this. We have over 1,000 employees who work in our refurbishment. It's a very high-tech center, so we have a lot of capacity to process and refurbish technology products. And that's one of the things that makes us unique. But Rob, you want to talk about sort of inventory and how you see it and expenses around this?

Sure. As Paul said, we've got the refurb capability to deal with this. We've been through a couple of console cycles with some pretty extensive refurb capacity, so we're used to that. As Tony said, we've got a flexible model in the store to deal with it. So we're anxious for those days to get here, frankly.

You know Rob shared with you some pretty compelling data, the inventory growth that this console cycle will bring, the fact that it correlates highly, it create awareness between new software and pre-owned. And this is all in our DNA, and we've done it many times before. So it's an exciting opportunity, and there are no other retailers on the planet who are prepared for this kind of opportunity.

Our next question comes from Seth Sigman with Credit Suisse. Seth Sigman - Crédit Suisse AG, Research Division: First, a question on the Wii U. Paul, there's some quotes out there from you today saying, basically, let's not write these guys off just yet. I mean, what are your updated thoughts on the Wii U? Is there anything in the pipeline that you think will really start to stimulate demand for that console?

Yes. Yes, Thanks, Seth. I think what I've said about Wii U is there is a tendency in the business to kind of move onto the next hot thing, and we certainly seem to have a wealth of hot things coming. But my point here is there is a very large installed base of Nintendo consumers and gamers out there. We know them very well. We see their transactions in store every day. And while the Wii U has tailed off, as we've said on previous calls, I still play Mario and there's still activity around them. I believe our partners at Nintendo have lots of innovation and creative content that will be coming in the future in the market. Other than that, I have to let them handle that. But my point on that is that Nintendo is a very successful franchise. And I think a lot of the folks who want to write them off, right, Tony, it's really not going away anytime soon.

I see that they are going -- I'm sure that they're going to come out with their powerful IP, I have no doubt. They haven't announced a lot of that, but there's no doubt that they will. I also know that there is an awareness opportunity to talk about the very unique and innovative gameplay on the GamePad. So those 2 things, I'm sure, will happen later on this year, if Nintendo does what they do so well. Seth Sigman - Crédit Suisse AG, Research Division: Got it. Okay. And Rob, on the full year guidance, you took up the low end by $0.15. Can you just elaborate on what the assumptions were that may have changed at the low end?

Well, primarily, it's the results of the first quarter, so some beat of the $0.46 over what we gave as a first quarter low end. And then it's firm knowledge around the second console. Going into the release back in March, obviously, as a partner to Microsoft, we had some information that we weren't able to share. And so we had to provide the wide range that we did with knowledge of the one console that was out there. And then the high end of the range, obviously, we talked about, if there is a second, then the $3.15. So that's really it. It's the results from Q1 and the certain knowledge that a second console is coming. Seth Sigman - Crédit Suisse AG, Research Division: Got it. Okay. And one more for you, Rob, a question on SG&A. It looks like it was a little bit higher this quarter, up $9 million versus last year, despite lower sales, fewer stores. I mean, what drove that increase? And I know you're planning for flat for the year, but can you maybe walk us through how you get there?

Now the timing of expenses throughout the year can vary from year-to-year and the timing of marketing programs and things like that. So there really isn't too much to be read into that. I think the guidance that we gave, that we expect it to be flat year-over-year, is what you should rely on as you're working your models.

Our next question comes from Edward Williams with BMO Capital Markets.

A couple of questions. Mike, if we can go into the international markets, just a little bit of detail. What I'm kind of curious about is the differences that you're really seeing with regards to the adoption of used now and digital. You articulated some of it in your prepared remarks. But if you can go a little bit deeper into how that shopper is engaging with GameStop's products on the digital side, as well as on the used side?

Ready, Mike?

Okay, sure. Yes, I think we're starting to see -- we've talked on a few other calls that, in some of the major initiatives, rolling it out internationally for complexity and other reasons kind of follow the U.S. by about 6 months. And I think we're really starting to see that pick up now with -- consumers are internationally engaged with digital. I think the implementation of our loyalty programs, as that rolls out, helps with that. So we saw digital sales increase in the first quarter, like I said, 80%. And we're just rolling out Steam Wallet now, where we had that in the U.S. last year. So there's a variety of initiatives that are driving those high numbers. From a used perspective, Paul mentioned refurbishment. At the beginning of the last console cycle, our refurbishment capabilities internationally were very, very limited. And now you can see in the markets, the capabilities are really the same in the U.S. And that's driven the margin improvements, so that now U.S. used margin -- or excuse me, international used margin is very similar to the U.S. We've got the refurbishment capabilities, and the penetration is very similar as well. So we're in a much different place than we were 6, 7 years ago.

I think, Ed, if you listened to our remarks, we've been trying to signal that we are more globally integrated than on previous cycles. And the reason we like making that point is a lot of hard work has gone on around the world, both here and around the world, to take the innovation we've created here and roll it out, or learn from the integration in the international markets and bring it here. And I think the international team here gets a lot of credit with our technology and merchandising teams here for that. There is no other retailer, I think, maybe the food guys, but I'm not -- I don't know of another retailer that has leveraged best practices in the way that we're doing. And of course, the macro issues around the cycle have masked it, but the fact that Mike and I can go to -- we were in Italy in February, and we can see digital content represented in a way that's similar to what we do in the U.S. And we can go to our publishers and negotiate global exclusives around Bioshock, it's very powerful for us. And I think that as you think about the next cycle, it's really an interesting thing of what we can leverage. By the way, digital content sounds cooler in Italy, [Italian] sounds better, right, than digital content. But it exists around the world at GameStop. And I think it's an unusual situation that we're in, where we can leverage those practices.

Australia is a great example of that, where they follow the U.S. by about a year on their loyalty program. And within a year and a few months, they managed to sign up 2 million customers that are just as passionate as the customers here and just into digital and just into buying recommerce. And that's 8% of the Australian population. And as we continue to roll out these programs, we'll see similar results, I think, in some of the other markets.

We'll take our next question from Tony Wible with Janney Capital Markets.

It's actually Murali Sankar in for Tony. I had 2 questions, one, sort of going back to the Xbox One reveal and one on used. In terms of the Xbox, it raised obviously a number of questions on what they're planning in terms of daily Internet connection and the scenarios on how they support used, and you've made some comments on that as well already. I was wondering whether you've had a chance to see any of the early reactions from some of your customers on these controversial points, and how you think those will impact the cycle and GameStop.

Wow, that's -- thank you, Murali. That's obviously lots of excitement. Right, Tony? Tony could tell you the excitement around the first-to-know is awesome. Other than excitement and commentary from the community -- we get lots of commentary, but really, we have to let our partners lead on that. Right, Tony?

Sure. I mean, Microsoft is leading the publication. There are lots of rumors out there. I think the most important factor is that nearly 250,000 people have just signed up, within not even 48 hours, for the first-to-know list, so I think there's tremendous demand. And I have no doubt that we're obviously going to -- we already have millions on these lists, and I have no doubt that they're just going to continue to grow. I, for one, am very interested in what they're going to say at E3 because I think that the gaming-centric portion of the Xbox One is going to be revealed.

The cool thing for us is that we're an advocate for the gaming community. We got 30 million gamers around the world who are connected to us in a real tangible way, and we're all about gaming. The Xbox One is massively innovative. It's going to be exciting, so we're excited about it.

And just for instance, we went out to our PowerUp Rewards customers before they even knew about the PS4 and the Xbox One. We said, "What interest level do you have?" Over 50% of these people said, "I want to buy one," without even knowing what was out there. So we just -- we anticipate that there will be tremendous consumer demand as more and more details are revealed.

I think it's going to be an exciting process.

Great. And just following up on used. Obviously, that's been a huge driver for the success at GameStop. Are you concerned about new or, I guess, recurring entrants into that space? I'm particularly talking about Best Buy, who seemed to hint that they would sort of enter into things like refurbishment as well, as part of their new strategy under their new CEO?

Yes, we followed those announcements of our competitors. It's very interesting. This is not the first time we've faced competitors in the buy-sell-trade business. I mean, I can remember many, many announcements before in a variety of ways and formats and approaches. I think the point that I made on a few calls ago, was that there's a few things about this business you have to understand. A, it is far more complex than anyone understands; b, GameStop is a far more challenging competitor than we get credit for. So I would say we follow events closely. We are continuously investing in buy-sell-trade, all the barriers to entry like pawnshop laws. And we're building our ecosystem bigger than it's ever been. So we are clear that we have to earn the right with our consumers every day, but we have a massive advantage in this business that people will see.

We'll take our next question from David Magee with SunTrust.

Just a couple of questions. One, the figure you had referenced earlier about the adoption rate that you anticipate for the new consoles, you said 80% to 85%. I'm curious what period of time are you thinking about there.

Rob?

Well, that would be during that '14, '15 -- well, late '13, '14, '15 time frame.

Okay. And then on the used business, what is your assumption that you baked in as far as the margins over the balance of the year?

Pre-owned video game business, so not talking about the recommerce side of the mobile business, you can expect that to continue in the range of the 46 to 49 that we've talked about for years now.

Okay. And then lastly, given the growth that you're anticipating with the business and the sector over the next few years, would that warrant anymore stores domestically to handle that business?

That's a big question, David, we debate around here a lot. I think real estate -- I've called out -- we've called out real estate strength as one of our great strengths. We've very fortunate. Our founders build the company that was extremely flexible, and I think they did that because they had seen inflexible real estate in the past. So we've said before, we have huge flexibility in our real estate. One of the big debates we have around here is how much business can we do in these stores in a new console cycle. On the one hand, PowerUp Rewards has allowed us to consolidate in a very unique way, and we've shared that with you. 40% to 60% of the transfers gets you 20% to 30% store contribution growth. So we can continue to do that and we can continue to consolidate. We're also selling digital content and mobile content that doesn't require as much space. At the same time, we want to maintain our dominance. So I think the question around real estate, we will stick with our guidance of a net 2% decline, but we are looking hard at real estate. We're also looking hard at different formats. It's not clear that we require the same kind of format in the future, so we're always experimenting and testing new ideas. Rob, you want talk about real estate a little bit?

Just to say that we continue to remain focused on what the appropriate size of our real estate portfolio is and making sure that we're maximizing the profitability coming out of that. We think we're in great shape for the console launches. We've been able to continue to increase market share. But one of the questions that we have when we look at closing stores is what -- how much of that share we're willing to give up. Obviously, net-net, we've gained share during the past 3 years and we've closed over 500 stores, I think it is. So we continue to remain focused on it and will in the future.

One thing we should discuss, guys, I'm not sure we've given it enough time, and I'll let Tony sort of take you through it. But we have created something we call web in-store. And I know a lot of retailers have web in-store, but the really unique thing we have is our stores are small, our service level is very high, and our gaming consumer really likes the related merchandise there. But Tony, why don't you share some thoughts on web in-store because that's another factor in this, David, in terms of how many stores.

Sure. The beauty of web in-store is that we don't have that inventory in our store, but we actually either have it centralized or, in many cases, we actually just drop-ship it from another vendor and never actually take possession of it. So what we are learning to do is being able -- like I talked about in the franchise marketing effort, is we can market things that are too big for our stores, that are very unique. It helps our inventory position because we don't have to send it out in the U.S. to 4,400 stores. We can keep it centrally located, and we can get it to the customer very, very quickly. So our associates are incredible salespeople. And now they have a whole another weapon at their disposal. We can represent it in our stores, but then deliver it to a customer. It also helps us from an inventory perspective. If we're light on inventory, particularly, say, in our pre-owned segment, where we have -- let's say that we have a game that's really hot in the pre-owned segment, it allows us to be able to keep that centrally and deliver it to the customers who want it on a store-by-store basis.

And Mike is working on figuring out how to do that around the world. And I think this time next year, we're going to be talking a lot about web in-store.

And we have time for 2 more questions. Our next question comes from Anthony Chukumba with BB&T Capital Markets. Anthony C. Chukumba - BB&T Capital Markets, Research Division: I had 2 questions on the Xbox One. I'll just start with my first one. It seems like, just based on the reveal, that Microsoft is really positioning this as more than just gaming console but also sort of like, I don't know, call it a living room entertainment hub. How do you think about that, as an opportunity or maybe potentially a threat for GameStop, given the fact that they're emphasizing more of the sort of living room integration features?

Anthony, I'll start this off, and the guys can kick in. First of all, I would say for GameStop, we don't look at anything as a threat. Everything is an opportunity. We've been told there are so many threats in our lives in the past few years, I think we would be -- if we worried about threats, we'd be in trouble. We turn everything into an opportunity. So one thing I will say on the Xbox One, and I'll let these guys add to that, is we have in the past sold media property, right, digital content. We've sold movies in our stores digitally. It's not been a frequent idea, but it certainly could be. Consumers see our store as an entertainment destination. And our technology that we use for DLC, right, Tony, can be used for lots of stuff.

Absolutely. And I would say that we love complexity, because we are the only people who are able to go in with our associates and the training that we do, we are the only people that can go in and sort out that complexity. So what I see is tremendous power in both of these consoles, in the PS4 and the Xbox One, and it's going to take a very educated sales associate to help the consumer differentiate between the 2, because there are definitely distinct differences. And our folks are very uniquely positioned, and we will provide them with the best training in the industry to be able to help the consumer with that decision. And like Paul said, a lot of it is about getting people to know. It's about discoverability. And what we can do in our stores now is digital content can be easily discovered, as we've shown in our sale of DLC. So we will actually work with Microsoft and we'll work with Sony as they come out with, I guess what you'll call, non-gaming entertainment properties. We'll be selling those in our store.

And our PowerUp community around the world will participate.

And people will pay for it with trade currency. We love the complexity. Anthony C. Chukumba - BB&T Capital Markets, Research Division: Got it. That's helpful, and then second related question. So I guess that the Xbox One is not going to be backward compatible. I mean, how do you think about that once again? Is it an opportunity? Is it a threat? I mean, how do you sort of think about that? Particularly, since it looks like the PlayStation 4 will be backward compatible.

Yes, I think we got -- the manufacturers have answered these questions. I think if you listen to Rob's remarks on the pre-owned business, we're doing a lot of modeling around pre-owned and historical. I think that the viability of the prior consoles continuing into the future is pretty exciting. Right, Rob? I mean, the numbers would tell you that there's a huge installed base, and we can continue selling pre-owned inventory in games for those old devices. So I think it's an opportunity, fair to say, guys?

Yes, definitely. If you think back to the PlayStation 3, the first version was backward compatible. The Xbox 360 came out with backward compatibility for certain of the bigger blockbuster games, but that's about it. So it was limited. And the behavior we saw with the consumers at that time was that many of them just want to take everything they had and go ahead and trade it in. They're ready to move on and play the new games on the new consoles. And so we expect that behavior to continue. We expect this to drive a lot of trade volume, and we're very excited about the opportunity that gives us to sell the new products as well.

And what will also happen is you'll see a wave of old PS3s coming in as customers trade those in for the new console. We refurbish those old PS3s, and we allow in a whole new set of customers, right now, that can't afford a new PS3, to be able to buy the refurbished PS3. And now you have more customers out there buying software.

That's right. That's exactly right.

And we'll take our last question from Bill Armstrong with CL King & Associates. William R. Armstrong - CL King & Associates, Inc., Research Division: Some more on the Xbox One. It sounds like Microsoft might have some features that would allow them to charge customers who are using used games on the box. If that were the case, how would that affect your business in terms of how you price on the buy and sell side of used games, your margins and any implications for volume of used games?

Boy, that's a big question. Bill, we've got to let Microsoft take the lead, so we're not really going to delve into that. We have a long history of selling used games in all kinds of ways, and we will be very successful on taking $1 billion of trade currency. So we've got -- E3 is coming up, and I think everybody has got to let Microsoft lead the communication on that. Okay, I think we're at the end. So thanks, everyone, for being on the call. I think you can tell these are exciting times for GameStop. We've had some challenging times in this category, and we are really excited about what is about to happen in this business. We know that we have a lot of work to do, particularly in the second quarter. We have a lot of work to do between now and the console launches at holiday, where we believe we will use our buy-sell-trade credits of the 24 million consoles that are in homes today to drive unparalleled market share and excitement with our gaming community. We will continue to grow new businesses and control costs to position us throughout the summer. We look forward to seeing all of you at E3 and to bringing console innovation to the gaming community. Thank you very much.

And that concludes today's teleconference. Thank you for your participation.