Dive Brief:

• GameStop late Thursday reported an expectation-busting Q1 report: Net income in the quarter was $73.8 million or $.68 per share, beating the average estimate by $.09. Q1 revenue was $2.06 billion, an increase of 3.5% that beat estimates by $50 million.

• The company said it expects full-year earnings between $3.63 and $3.83 per share.

• GameStop CFO Robert Lloyd said the company is pushing to sell more digital games and non-gaming items and that in five years, half of the retailer’s revenue would “come from something other than physical video gaming.”

Dive Insight:

As sales of digital games have surged, plenty of observers and investors have been bracing for GameStop to begin to disappear the way Blockbuster did. But so far the retailer has successfully pivoted by mixing up its merchandise, getting into digital sales itself, and providing customer service that keeps people going to its stores.

Streaming hasn’t hit gaming quite yet the way it has for movies and entertainment, but Lloyd says the retailer is keeping an eye on that, too. The company attempted, but eventually shut down, a streaming service last year. 

"We're giving customers what they want,” Lloyd told CNBC. “For us that means that we recognize that there is a growing digital component to the video game business and that video games are cyclical. So, in terms of digital, we expect to do about a billion dollars in digital sales in the next year. In terms of the business being cyclical, we know we need to diversify. We have about 550 stores now selling AT&T and Apple products and services and we'll grow that store count by about 200 in the next three months.”