14 DAY TRIAL // The gaming industry is constantly evolving, especially in the sales business, where large retail and online stores make shifts in their strategy from time to time.
One of the most infamous practices is GameStop's policy on used games and how it allows players to exchange titles for store credits, which can be used to buy new ones. This practice is severely blamed by companies in the industry, whether they are publishers or even hardware manufacturers.
But this shouldn't happen, at least according to Wedbush Morgan Securities' analyst Michael Pachter, who revealed that this sector of retail was responsible for one third of all game sales each year. If you want some concrete numbers, the market is estimated at $2 billion in the US alone, with over 100 million units of used games being traded each year.
He then made a very elaborate point, on how it actually helped gamers who didn't have enough cash to buy new titles when they appeared. “We think that used game sales benefit new game sales by providing currency to gamers with less disposable income, thereby enabling the purchase of additional games. The vast majority of used games are not traded in until the original new game purchaser has finished playing, typically well beyond the window for a full-retail priced new game sale. Other than the potential impact at holiday (when new game lives are extended beyond the typical two month sell-through pattern), used game sales just don't impact new game purchases very much. To the extent that there is a substitution effect, we estimate that fewer than 5% of new game sales are impacted.”
So, there you have it, gaming companies, it seems that, even though there is a lot of blame around used game sales, they are actually pretty good, especially for people who don't have enough money for a full $60 title, but can trade in an older one that they aren't playing for store credit.
Do you share Pachter's opinion on used games? Or do you think that it actually hurts the industry, by short-circuiting the whole retail chain? Leave us a comment with your point of view.