Just after big box retailer Target unveiled its entry to the used games retail space, U.S. electronics and software chain Best Buy said Thursday that this weekend it will begin accepting used game trade-ins starting with 600 stores nationwide in exchange for store credit.
The ramp-up follows a long period of testing for Best Buy. Word that the company would test out used games emerged in 2005, as the retailer looked to take a piece of the lucrative used game market from leading specialist retailer GameStop. The company plans to eventually expand to more than the initial 600 stores.
Best Buy will begin buying used games on Sunday, August 29, and customers will be able to buy used games from stores "soon," presumably after the retailer builds up sufficient inventory.
The company said it will accept an initial line of "over 100" titles, and for regularly-rotating "select" titles (as highlighted in the company's weekend flyer), the company will offer a $20 Best Buy gift card in addition to trade-in value.
Best Buy currently accepts trade-ins on its website, where customers send games to the company free of charge, and receive a gift card 7-14 days later. The retailer said the trade-in values at stores and online will be identical.
For video game retailers, GameStop is the one to beat in the used game market. For the quarter ended May 1, the company reported $570.8 million in gross profit -- 48 percent of that came from used video game hardware and software. GameStop additionally offers gamers cash for trade-in, as well as store credit.
Target said this week that while it's starting with Northern California, it plans to expand its own program to 850 stores. In a recent GameStop earnings call, execs with the company said that rivals with trade-in programs located adjacent to GameStop stores did not visibly impact used game sales at those locations, although company CEO Paul Raines stressed "we take them seriously; we watch them closely."
All I know is this whole used game thing is getting pretty crazy. Once they saw GameStop's balance sheets and profit margins they all wanted in on that pie. We shall see how it all turn out in the long run. I can see used game prices being driven down in some serious ways though for everyone concerned in the long term if this gets serious.
Here is some light reading for those who are interested. If kind of has to do with what we are talking about in all these articles about used games and digital distribution.
Sony's Hirai: we're over 10 years away from disc-less PlayStation
I used to work for a Used retailer in AZ and one thing they were hearing complaints about is you couldn't bring xbox games, or nes, snes, sega games to trade. The corporates only want new next gen titles. Luckily the store I worked for had a knack for the old classics so we did just fine with both but, man so many people pissed that they spent 100 - 400 on this stuff and now some corporation tells them sorry can't take it.
The prices all suck. If you're smart enough to shop around and not use Gamestop to trade-in games, you're smart enough to ditch your stuff on ebay or craigslist and pocket the profit that corporations make off used games.
The only niche I see for best buy is if they offer the same prices as gamestop and bonus trade-in value deals and then people decided to trade in at best buy instead of gamestop because best buy has a better selection of merchandise than Gamestop (for obvious reasons).
The real question is why only games are seeing this model. Borders doesn't generate most of its profits from used books, for instance. I think the short shelf life and low number of total SKUs helps out a lot, as a specialty store like Gamestop can fit 2 versions of every recent game onto a small number of shelves.
Maybe the collapse of the used games market? Or just a huge war?
Sony's Hirai: we're over 10 years away from disc-less PlayStation
http://arstechnica.com/gaming/news/2010/08/sonys-hirai-more-than-10-years-away-f
rom-digital-playstation.ars
http://www.theinquirer.net/inquirer/news/1595446/blu-ray-licensing-ca rtel-starts
-operation
Guess that's business.
The only niche I see for best buy is if they offer the same prices as gamestop and bonus trade-in value deals and then people decided to trade in at best buy instead of gamestop because best buy has a better selection of merchandise than Gamestop (for obvious reasons).
This is how IMO.
1. Competition means prices will drop a little in used games.
2. More people will wait to buy used instead of buying new.
3. Developer gets nothing from used games.
Best Buy already makes more off of a new game sale than the developer does anyway.
www.floogin.com
The margin that retailers have on software sales is pretty low. When I was a software buyer for a major retailer our markup was around 10%.