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GameStop: Discouraging Resales Hurts The Consumer, Too

GameStop: Discouraging Resales Hurts The Consumer, Too Exclusive

November 25, 2008 | By Leigh Alexander

November 25, 2008 | By Leigh Alexander
More: Console/PC, Exclusive

As the industry prepares to face a near-certain economic downturn, many developers and publishers are looking at ways to encourage consumers to buy games new -- and, concurrently, discourage the sale of used games.

One often-cited example is the fact that Nintendo's Wii Speak microphone peripheral comes bundled with a "Wii Download Ticket Number".

This is required to access the corresponding Wii Speak Channel -- although Nintendo is now claiming that it will furnish new Download Tickets for the Channel on request.

In addition, Epic's Mike Capps has been discussing how to fight the secondhand market, suggesting provocatively : "I've talked to some developers who are saying 'If you want to fight the final boss you go online and pay $20, but if you bought the retail version you got it for free'."

But leading game retailer GameStop has made no secret of the role that used game sales play in the success of its business model, especially as economically-crunched consumers get ready for the holiday season. Are these new initiatives creating a point of contention between GameStop and game publishers?

"I think it creates contention not only for us, yes, but also for the consumer," says GameStop CEO Dan DeMatteo -- who recently spoke to Gamasutra about the retailer's holiday outlook and hardware performance in his stores.

"Anything that limits the transferability of a game from consumer to a friend of theirs, to selling it on eBay, to exchanging it and trading it with one of their friends, or selling it back to GameStop -- I think is a bone of contention with the consumer," DeMatteo commented to Gamasutra.

"The consumer has been trained that there is a residual value to their video games," he explains, citing a study conducted for a book about French retailer Micromania -- whose acquisition GameStop just completed.

That study, DeMatteo says, identified the "residual value" of a game purchase to a consumer at about $20.

"Also, we will give out approximately $800 million in credits this year -- trade-in credits that will go toward the purchase of new video games," he adds. "The consumer, oftentimes and especially now, needs that residual value from those games as a trade-in to be able to afford a new video game."

DeMatteo explains that GameStop's trade-in rates always increase concurrently with the sale of new video games. In other words, consumers are accustomed to accounting for the residual value of games they've purchased in the past as dollars that can help buy a new title.

If the consumer is no longer able to value their own purchases that way, DeMatteo concludes, it will "eventually get the consumer upset, as well as GameStop."

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