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Best Buy Steps Into Used Games Arena With Kiosks
Best Buy Steps Into Used Games Arena With Kiosks
June 23, 2009 | By Leigh Alexander

June 23, 2009 | By Leigh Alexander
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    7 comments
More: Console/PC



Best Buy has begun to test the waters of the used game market by installing kiosks in its stores, beginning with its Dallas and Austin locations. Aside from used game trade-ins, the kiosks allow customers to trade games for store credit.

Lazard Capital Markets analyst Colin Sebastian says that while he predicts an "overhang" on GameStop shares as a result, he sees Best Buy's entry as an expansion on the used game market, rather than a move likely to steal market share from the game giant.

The used game market is attracting increasing interest from retailers -- and justly, as Sebastian estimates its value at $2 to $3 billion and growing.

Big box megachain Wal-Mart also recently began testing used game kiosks in its stores, leasing store space to third-party auto-kiosk company E-play.

The program is beginning with 77 "Video Game Buyback" stations at select locations as part of a limited pilot program present in only 2 percent of Wal-Martís 3,656 total U.S. stores.

But analysts generally agree that new entrants like Amazon and Wal-Mart will only serve to expand the category and not significantly dent GameStop's dominance for the time being.

GameStop controls 21 percent of the U.S. video game market overall, and makes nearly a 50 percent margin on used game sales -- which increased 32 percent over the retailer's last fiscal year.

Notes Sebastian, "While many video game software publishers and console manufacturers view the used exchanges as cannibalizing sales, we note that consumers use a large portion of trade-in credit to purchase new products."


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Comments


Jerome Russ
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@Andre, the problem with that theory is the $20 titles you buy new still has a cut going to the developer. The $20 used title generates zero for the developer. That is where the anger lies.

Josh Harrison
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What I think must be understood is video games are not unlike any other commodity that retains its value, such as automobiles, DVDs, books, etc. Game developers/publishers seem to be the most vocal group, upset that someone chose to buy a used version over a new version. What this overlooks are the benefits of having your product in someone's home, regardless of where it came from. Maybe they bought the used version of your game and were impressed with it enough they are going to pre-order the sequel. DLC revenues are another helpful way to earn money from the used game consumer. The problem lies in predatory practices, such as Gamestop's practice of pushing used versions of newly-released games. Retailers are supposed to be our allies and there's obviously a conflict of interest here, but I hear they are going to stop doing this for new games in their first several weeks of shelf life so that should be some relief. Don't be upset that there is a second-hand market for your game. In fact, if your game has value on the second-hand market, that usually indicates it's a good game and if demand is high for this game then demand will be high for your next game. So rather than stew on the fact that someone who could have bought a new version of your game chose to buy a used version that you saw no revenue from, think of constructive ways to generate revenue (without the consumer feeling nickle and dimed). Add value to games that you can only get when you buy it new, such as free DLC codes or other one-time use services. If your game is valuable enough to the consumer, they wont want to trade it in. Your average consumer is not going to do us any favors and buy the new version of a game just to make us happy and rich. They will buy what they feel delivers them the best value and it's up to us to build that value.

steve roger
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I have no sympathy to the whole, "we don't make money on the used game market" argument. If I buy a new game I gave a cut to the developer and the publisher. When I sell that game most of the time I turn around and invest that money into a new game. The developer and the publisher didn't have to do a thing to in order for me to generate additional cash to buy again.



Secondly, I hate the whole kiosk system that is now being shopped. I think it is really stupid if they do it like Walmart. Gamestop with continue rule the used market because you get to turn your game into instant cash with no stupid machine to delay my transaction.



I know why they are using kiosks. To reduce costs. But that is not a good idea at all. Gamestop is all about service and you get no service with a kiosk.

Fiore Iantosca
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I agree with Steve. Either lower your prices new games, offer more DLC and the likes, or be quiet and deal with it. The reason the used market is huge is because the lesser quality games are not worth spending that much money.



Hate Gamestop, but they definitely provide a service many people enjoy. Happy customers equal returning customers.

gren ideer
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"When I sell that game most of the time I turn around and invest that money into a new game."



@ steve roger



Developer X doesn't care that you invested in a new game from Developer Y. What they care about is that someone else can come to the store and instead of buying a new copy of their game, they can buy a used copy of the one you just sold back. That used copy generates no new revenue for Developer X. If that used copy is sold back and bought again, then you have three people who played your game for the price of one.

Z Z
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...

steve roger
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I can understand how the developer feels, but it just doesn't ring true. Because they get the money directly or indirectly from the sale of their game as a new product and then they get a second helping from the sale of that game as a used product. The money mostly goes straight into the game economy that benefits the developer. The economics of the used games market shows how important used games are to feeding the machine.



I think the lack of re-sale for PC games has actually caused more harm than good. If I was a kid I would rather buy a console game that I could resell and buy the next big thing other than buying a license to play Spore forever.


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