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Interview: Best Buy, Target Unfazed By GameStop Used Game Dominance
by Kris Graft [PC, Console/PC, Exclusive]
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August 30, 2010
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GameStop may dominate the used video game market, but top big box retailers Best Buy and Target tell Gamasutra that they are both confident that there's still plenty of the pre-owned business to go around.
Asked if Best Buy had missed the boat on used games in light of GameStop's years of experience and substantial market lead, Best Buy merchant director of gaming David Benson said in an email, "No, our commitment to creating an improved gaming experience begins with giving customers easy and exciting ways to connect with the games they love."
Benson said Best Buy has been operating a "successful" online video game trade-in program for about a year, and the company recently concluded a "successful test" of an in-store trade-in kiosk model. "Based on these positive experiences, the time was right to expand the offering chain-wide," he said.
Last week, Best Buy announced that it would roll out its in-store video game trade-in program at 600 stores nationwide, starting August 29, with more participating locations to follow. Last week, Target also said that it would start accepting used games for store credit.
At this point, neither retailer is actually selling games that consumers trade in, although Best Buy, which is using a third party assist in refurbishment and distribution, said it would start selling them "soon." Target will sell the games to a secondary market or recycle unwanted games.
Being more specific, Target spokesperson Janna Fischer said in an email to Gamasutra following its trade-in announcement, "To be clear, Target isn't in the used game business" and has not announced a plan to sell used games. [UPDATE: A commenter notes that Target's website reveals that its trade-in partner is Nextworth for all used electronics and games.]
Fischer added, "That being said, we will continue to keep close watch on the competitive landscape of the video game industry as a whole and will look for new ways to engage with and provide value to the gaming audience." She said the company is "very satisfied" with its video game business currently.
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.
One other major retailer looking to expand into used video games is $400 billion-plus sales per year Walmart, which buys and sells used games on its wesbsite and last year began leasing vestibule space to a third-party video game trade-in kiosk company.
GameStop executives have pointed out that competing retailers with video game trade-in programs located adjacent to GameStop stores haven't had an impact on the market leader's business. The company has said that its small stores and largely gamer staff offer a personal feel and knowledge base that keeps customers coming back.
Benson said he couldn't comment on how much used game market share he hopes Best Buy will capture, but he was optimistic of further game growth at the retailer. "We are very excited about having a larger presence in the used-game market, and trade-in is the first step in our expansion of gaming at Best Buy."
For the quarter ended in May this year, Best Buy reported $10.8 billion in sales, up 7 percent year-on-year. Thirteen percent of those sales came from entertainment software, which includes CDs, DVDs and video game hardware and software. Comparable store sales in that segment was down 13 percent year-on-year.
Benson added that Best Buy will soon implement interactive touch screens at stores, to preview and preorder new titles and also continue distribution of the company's new @Gamer magazine.
"Trade-In, combined with the anticipated arrival of new interactive gaming experiences later this year and strategic investments into our future digital capabilities that will enable consumers to buy digital content and downloads, allow us to continue to provide gamers innovative ways to connect with current and future gaming titles," said Benson.
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The job lotter survives by the cash cost they pay to Target is smaller than what Target gives in a store credit voucher. Target gets an amount of cash from the job lotter, plus the sales go on the books when the voucher is redeemed ---- and even today, no one spends just the amount of the voucher/gift card.
It does appear however, that target (and best buy) will require games be in full resale condition (i.e. good quality disks, case and manual).