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How Gamestop will make money off customers who don't buy anything

Signage is displayed as a customer browses at a GameStop Corp. store in West Hollywood, California.
Patrick T. Fallon | Bloomberg | Getty Images
Signage is displayed as a customer browses at a GameStop Corp. store in West Hollywood, California.

GameStop has figured out how to make money off potential customers — even if they do nothing other than wander around the store for a bit.

The video game retailer is working with advertising and technology company Playwire Media to place commercials on GameStop TV, its in-house television network that airs inside its locations. Playwire will find brands that want to reach the gamer demographic, and work with them to create ads that fit with the programming.

"GameStop TV provides a distribution channel that hits gamers at a mass scale," said Jayson Dubin, CEO of Playwire. "What's new and what's exciting here is it's a way to hit a large amount of retailers at once."

Video game enthusiasts are no longer a niche category. Sixty-three percent of American households have at least one person who plays video games three or more hours a week, according to the Entertainment Software Association. The average gamer is 35 years old, and has been playing video games for 13 years. Notably, women 18 or older make up a larger portion of the gamer base than boys 18 and younger.

For GameStop, the partnership will provide it with a way to make money on customers whether or not they buy anything, since the TVs will show commercials to everyone. The company has been producing its own programming in Dallas since 2008 — mostly game reviews and previews — but has yet to leverage it as an advertising opportunity.

With more than 3,950 retail locations and over 35 million loyalty club PowerUp Rewards members who frequent the store in person, GameStop is seeing the video as a way to add "incremental" revenue, said Eric Oria, senior director of marketing and strategy at GameStop.

"In a world where a lot of entertainment retailers have been impacted, gaming is unique," Oria said. "We still have great traffic coming in. Employees do a great job connecting with customers."

Nonstore retailers have seen a double-digit boost in sales, but physical retail sales are also seeing an increase. Year over year, retail store sales were up 3.6 percent from November 2015, according to the latest numbers from the U.S. Census Bureau.

It's also a win for Playwire, which gets to expand its digital media roots to include TV advertising. The firm, which specializes in gaming and entertainment, started out as an online video advertiser. It has since branched out to real-world branded events at trade shows like E3, but this is the first time it has signed a TV advertising deal.