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.