Toys R Us, Best Buy, Amazon Entering Used Game Market

March 5, 2009 -

GameStop CEO Dan DeMatteo can't be happy with the news that his firm, which has owned the used game space for years, suddenly has not one, but three major competitors.

Indeed, financial website The Motley Fool reports that the entry of Toys R Us into the used market will hurt GameStop and likely force the retailer to give consumers a better deal - and we're all for that.

On the publishing side, used game sales hater Ben Feder, President of Take-Two Interactive, must be absolutely frothy now that four major retailers - not just one - will be pushing pre-owned copies of GTA IV.

While the news that Toys R Us, Best Buy and Amazon are all - rather suddenly - entering the used game market is terrific for consumers, the timing seems a bit... odd. How do all three happen to get into used games in the same week?

GamePolitics put the question to Entertainment Consumers Association President Hal Halpin, who, in a past life, founded a trade group for game retailers. In other words, he knows the retail side of the business quite well. Here's what Hal told us:

Toys R Us and Best Buy getting into the used games business makes sense because they really serve very different markets than GameStop, demographically speaking. Amazon getting in is especially bright because of their model - they're positioned really well to cut the market wide open.

 

For Toys R Us and Best Buy, it's likely just coincidence [that news of both came this week]. They're victims of the same economic turmoil as everyone else and looking for growth areas. They have examined the used business before, but [then] it was likely too far astray from their core. Now, it's a matter of exploiting high-margin business extensions, of which Used clearly is one.

 

For Amazon, my guess is that it's much more organic a move. I'm excited to see them invest so heavily in games and with gamers. Overall, it'll be really interesting to see how the landscape is changed by the news. And the bottom line is that it's great news for consumers.

Meanwhile, analyst Michael Pachter of Wedbush-Morgan offered his take on the developing situation and agreed that used games are a smart move for Amazon.

It's obviously a great business.
 
Amazon is the only one that matters. The sweet spot of consumers who trade in games are 13 - 18 year-old boys, and they don't typically shop at Toys R Us or Best Buy, but they most definitely frequent Amazon.
 
It seems to me that the Amazon offer is pretty compelling, insofar as there is no cost to ship games to Amazon, and there is an opportunity for gamers to trade in games and purchase other stuff on Amazon.
 
With that said, Amazon's market share of NEW games is only 2 - 3% (around $200 - 300 million annually), and GameStop's USED game business is over $2 billion.  That means it will take a LONG time for Amazon to make a dent in GameStop's business

GP: Going forward, the developer/publisher response will be something to watch. Will a quartet of major retailers selling used games cause the industry to stop rattling their sabers (as they have been doing toward GameStop of late)? Or will it motivate them to fight harder?

FULL DISCLOSURE DEPT: The ECA is the parent company of GamePolitics.

Comments

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

This will definitely help in making new games harder to get hold of and also help in keeping the prices of new games up.

The games companies will stop complaining about it and actually take action, I expect to see a lot more games coming with exclusive one-time only downloadable content.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

What's the logic behind the "used games drive up the price of new games" statement anyway? It flies in the face of basic economics; competition drives prices down, not up.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

A shop sells both new and used games. They allow the used games to go cheaper to keep the new games at high prices longer, as in a game normally drops in price after a certain period of time, but now it is the used games that drop after a certain period whilst allowing the new games to stay at a higher price longer. So for example a used game when the game is first released retails at £35, new version £40, after a few months the used price drops to say £20, but the new version maintains the £40 price. It's helping keep the price of games artificially high and making the new game market seem like a premium market.

They're pretty much separate markets, new and used games, and we are seeing that instead of other companies dropping prices for new games to compete with used games they are offering used games as well. If there's a price war on a game the shop can just reduce the used game whilst maintaining the high price of the new game. I'm starting to see this worrying trend more in the UK now, especially GAME (who used to be EB), they now advertise a lot of "cheap" prices but it actually refers to the used versions and the not the new versions. 

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Except that by keeping the price of games artificially high publishers are pushing more consumers into the secondary market. The lower price point attracts more buyers and, because they're making new games a valuable commodity by keeping the price high, they're also attracting more sellers. The solution to this problem is not to keep prices high; it just makes the problem worse instead of better.

The market is telling publishers that they're pricing games too high. So far the publishers' solution has been to try to shoot the messenger.


Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

It wasn't the publishers that I was talking about, it was the shops. It is the shops that use second hand games to keep the prices of new games artificially high (ie keeping the games at a higher price much longer instead of reducing them).

Of course games are overpriced, and if the publishers were serious about the matter, they would drop the RRP in return for a deal for the shops to sell less of a percentage of second games. Therefore people would be more likely to buy the new games, thus money going to the publishers and developers, instead of a shop taking all the profits from selling a game on many times.

I think it's clear that there will be more of a push towards downloads (whether they be one-time exclusive downloads for new game purchases, or making money from downloads to recoup money lost on the resale of games, or even full downloads). This would give ultimate power to the publishers over how content is sold and we as consumers will be stuck with their rigid systems (ie DRM).

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

How much of a margin do you think stores have on new games?  They're keeping the price high so they don't lose money on every new copy sold.  Sure, they've got some room to reduce the price on new games, but not enough to compete with used games on price.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

But it's the publishers who set the initial MSRP and it's that price that makes games such a commodity when they're new to the market. It's that price that ultimately drives the used game market.

I agree that publishers are moving towards digital distribution as a way to cut out the used (and rental) markets but I think that in the long run this will be a mistake. Publishers don't want to cut prices now when they're facing stiff competition from the used game market, they're certainly not going to want to when it's gone. They may just have to price people out of the market and watch their sales drop before they figure it out.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Some are already starting to figure it out.  For instance, Valve noted an increase in sales of 3000% (yes, three thousand) of Left 4 Dead during it's half-price weekend (over a regular weekend I believe - I haven't been able to find anywhere that says exactly what that 3000% is compared to though).

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Toys R Us has a chance here but they will screw it up.

During our test run all prices and used trade ins were run by a 3rd party.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Best Buy's entry isn't so sudden.  Back in the summer they started a trial trade-in/used game program in Future Shop locations in Calgary and started rolling it out to all of their Future Shop locations in October (still ongoing, apparantly).  So really it's more like expanding the program into the US in their main retail locations.

On that note, I wonder if we'll see the Toys 'R Us and Amazon programs expand to Canada if the trials go well.  I won't hold my breath on the Amazon program moving north though, considering how limited Amazon.ca is compared to Amazon.com.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Wow, since when hasn't Amazon sold used things???

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Amazon as in the company Amazon has never delt in used merchandise. That was all the third party sellers doing that.

What this means is that Amazon will give you the option of buying your games directly instead of you having to post them and hope someone buys them.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

i hope they do it with every games ever made and not just the current gen like gamestop and possibly toys' r us and best buy.

http://www.magicinkgaming.com/

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

I suspect that Amazon would be more willing to deal with older generations of consoles and their games, but not likely.

That is one of the reasons why I like shopping at local shops. They have games from every console ever made. Most of the time anyway.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

I am sooooooo excited by this news I just HAD to tell someone how excited I am.  This absolutely makes my week.  I may have to get back into gaming again. 

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Used games isn't really new for Amazon as third party sellers been selling used gemes for a while with Amazon getting at lease 4% commission from each sell. The only real difference i see is that they are adopting Gamestop's play and trade tactics and doing the used selling themself.

 

http://www.magicinkgaming.com/

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

What dimension are you from? Last time I look at the rates for selling on Amazon, they took a Whopping 15% of all game transactions. Most everything you sell on Amazon has a 15% transaction commission, very few under that. But they do give you 100% of the shipping cost to use how you see fit. I have paid the $3.99 for shipping and the package came to me with $1.50 shipping on it.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Actually the fees can be closer to 20% at times for video game sales - I've been selling on Amazon for roughly a year now and that generally how much I lose per sale give or take a little bit.

Then again things seem to sell at higher amounts on Amazon over Ebay, and they don't charge you to put an item up, so I'm rather happy with things on there.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

I must of confused the seller fee with there affiliation program commison

http://www.magicinkgaming.com/

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Because of Blu Ray I am not afraid of buying used games anymore. :)  I can't wait to see what PS3 games they have in sale. Also did Hollywood ever cry over pre owned movies???

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

They did but it was before the whole Intellectual Property revolution. When they were crying people were much more "Hey, I bought this VHS, if I want to sell it to someone else that's my business."

Now there's all these concerns about IP and copying etc. They'd be making a much bigger stink if used movies only became viable NOW because there are legit concerns about people copying DVD's that are much more realistic than back at the dawn of VCR's.

I know the MPAA did raise all hell about home VCR's, they wanted assurances they would NOT be sold with a record function.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

If they did it did not make as much of a splash as the gaming industry. Plus Hollywood has movie theatres and HBO to make more money off of there movies while gaming does not.

http://www.magicinkgaming.com/

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

It probably also helps that DVDs sell at $20 instead of $60. A lot more people will go to the trouble of trading in a game for $20 then they will trading in a DVD for $3.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Given that there's still a large chunk of consumers who don't connect their consoles to the internet, about 10 million Xbox 360's, probably similar numbers on the PS3 and even larger numbers of Wiis, the platform holders can't go fully digital yet. With increased secondary market competition bringing down used prices this might finally get publishers to adjust their pricing, which is something the industry needs.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Until unrestricted inernet access is possible going fully digital is a bad idea.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

And given ISPs (US) are talking about MAKING it restricted, it's not going to happen for a while.

 

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

This story is about Amazon buying your used video games and covering your shipping costs.  It not about downloading games. 

scokeny

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

This is good since Gamestop is the only player in town right now.

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

Gamestop is not even competing in the online video game buyback market.  They are just buying from their brick and motar store since they closed tradestop.com.  Now what Amazon is pursuing isnt anything new either.  I have been selling my games online for years to mx123.com.  They pay buy check (no trade in) buy all titles, and cover the shipping for selling to them. 

Nothing new here.  But its nice to see another competitor to increase the market buy prices. 

scokeny

Re: Toys R Us, Best Buy, Amazon Entering Used Game Market

"...will hurt GameStop and likely force the retailer to give consumers a better deal - and we're all for that"

Definitly. It's about time.

 
Forgot your password?
Username :
Password :

Poll

Have you visited a video game arcade in the last year?:

Shout box

You're not permitted to post shouts.
SeanBI wrote up a post detailing my thoughts on this Mojang/Bukkit stuff, feel free to chime in if you wish. http://goo.gl/OFJJIE08/23/2014 - 12:24am
Matthew Wilsonfirst, that crap is wrong. second, isnt this the 3rd time he has quit?08/22/2014 - 12:11pm
Zenhttp://levelsave.com/phil-fish-polytron-doxxed-phil-fish-quits-gaming-sells-fez-polytron/ , https://pbs.twimg.com/media/Bvnhvz5IIAAAVc5.png:large08/22/2014 - 12:03pm
ZenHere are some links to the story and images. http://playeressence.com/polytron-and-phil-fish-hacked-tons-of-personal-info-leaked/ , https://pbs.twimg.com/media/Bvnx8sQCIAAwumB.jpg:large , https://pbs.twimg.com/media/Bvnj_zmCUAAlYWm.jpg:large08/22/2014 - 12:02pm
ZenSo...Phil Fish was apparently hacked on both his Twitter and the Polytron site along with all of his personal information has been given out in a zip file. He has since closed his Twitter and stated that Polytron and the Fez IP are for sale. He wants out.08/22/2014 - 12:01pm
Papa MidnightThe Verge says the sequel to Flappy Bird is nearly impossible. http://www.theverge.com/2014/8/21/6053297/swing-copters-flappy-bird-sequel08/21/2014 - 12:22pm
SleakerPC-Gamer wrote an article on what's going on with the Minecraft stuff: http://www.pcgamer.com/2014/08/21/minecraft-bukkit-team-lead-tries-to-end-development-but-mojang-steps-in/08/21/2014 - 11:55am
SleakerEVE had a high-profile ban today: http://massively.joystiq.com/2014/08/20/eve-online-lottery-site-somer-blink-shutting-down/#continued08/21/2014 - 10:26am
SleakerBut where have all the Ethics gone?08/21/2014 - 9:08am
Sleaker@EZK - one of the bigger things is that since Mojang has owned Bukkit for 2 years now, people contributing to the project have basically been doing work for them pro-bono. On top of never formalizing support. They hid the fact probably to prevent support08/21/2014 - 9:07am
SleakerIf you've played on a server with mods/plugins, you've almost for sure played on a Bukkit-based server.08/21/2014 - 8:56am
SleakerHere's Bukkit's explanation attempt at shutting down due to EULA changes: http://forums.bukkit.org/threads/bukkit-its-time-to-say.305106/08/21/2014 - 8:55am
SleakerEZK - it's the largest server mod for MC, in actuality without it minecraft for sure would not have been as popular (#1 game now).08/21/2014 - 8:54am
SleakerTo the point that it seems they have completely lost what it means to be for-community, and having transparency. Along with dumping restrictive EULA's onto people.08/21/2014 - 8:53am
E. Zachary KnightWhat is Bukkit and why should I care?08/21/2014 - 8:53am
SleakerMinecraft community exploded again today. Apparently Mojang owns all of Bukkit, and never put out a statement saying as such 2 years ago when they acquired them. I have to say, their transition from indie has been rough.08/21/2014 - 8:52am
james_fudgeThere aren't many left in America08/21/2014 - 1:50am
MechaTama31I sure have. Dorky's barcade in Tacoma, WA.08/20/2014 - 5:56pm
Matthew WilsonI have not been to a arcade in years. I know arcades are still big in japan.08/20/2014 - 5:38pm
Sleaker@AE - Ah no it's called GroundKontrol - I was just referring to it as a Bar-Arcade.08/20/2014 - 4:39pm
 

Be Heard - Contact Your Politician