A Look Inside the Profitability of Used Games

If any doubt remains about how lucrative the used videogame market is, news from a company that specializes in the field should remove such misgivings.

A Maryland-based company called Gamers Factory completed a public stock swap with City Language Exchange in late February, while simultaneously executing a private placement with investors that netted the company $3.9 million. The merged company now operates under the name of Game Trading Technologies and is public, trading under the symbol GMTD on the OTC Bulletin Board.

Armed with the new funds, Game Trading Technologies just acquired more than 320,000 used videogames and accessories from a “national retail firm.”

The company brings a high-tech component to the used videogame business; its “game trading engine” provides up-to-date, real-time market pricing for over 10,000 videogame and consoles. The firm says it has “relationships” with GameStop, Best Buy, Wal-Mart, GameFly, Target, Toys ‘R’ Us, Blockbuster, 7-Eleven, eBay and Costco. These companies also “may use” GTT’s game trading engine.

The ability to go public in such turbulent times should provide some inkling of the company’s profitability and indeed, Game Trading Technologies posted revenues of $36.7 million in 2009, up from a 2008 total of $17.0 million. Net income also skyrocketed in year-over-year results, rising from $325,000 in 2008 to $1.74 million in 2009.

All in all an interesting snapshot of the used game market, especially in light of how tight-lipped GameStop is over revenues it derives from the sector.

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