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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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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-Marts 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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