Best Buy picked an opportune time to confirm that the retailer will in fact be getting back into the used games market. With GameStop shares down 8.3% in recent trading and over 15% in the past 12 months, Best Buy is looking to edge them out.
On Tuesday, the big box hi-fi retailer will be selling used games in various stores, with the intent to sell used games in all stores by late summer. Best Buy plans on acquiring these games by allowing consumers to trade games for Best Buy gift cards.
As for Best Buy addressing GameStop’s dominance in the used games market? “I think that’s a difficult barrier to overcome,” said Tony Wible, an analyst with Jammey Montgomery Scott. He cites GameStop’s loyalty program as an effective strategy for GameStop to retain costumers, even adding that GameStop caters more towards the serious gaming crowd, helping the company retain the top position in the market.
Michael Pachter doesn’t see any hope for Best Buy either as “the average guy who trades in games [are] young and need the money. These guys don’t shop at Best Buy because they don’t have the money.” However, Pachter does warn that should Best Buy become successful, GameStop could lose about 10 percent of its market share over the next two to three years.
With Wal-Mart announcing the new Game Trade program, the big box retailers are once again checking the viability of the business. This is not the first time that both of these retailers tried their hands at the used games business, but this time they have assured a stronger push into marketing and sustainment.
This news also shows off a strong push by Best Buy to expand into even more of the overall gaming market territory. The news of a new gaming magazine have helped show that Best Buy is exploring several options to get consumers spending.
Wible gives a strong warning though; he believes that there's only room for two major players in the market and GameStop is more than likely going to be one of them.
1 Comments
June 16, 2010
The used digital software and hardware market is huge and expanding rapidly. Studies have shown that the average household contains $3,600 worth of digital entertainment products (iPods, iPhones, cameras, etc.) and these retailers want to turn that money into store credit. Look for a growing company called Game Trading Technologies, Inc. (OTC: GMTD) to be an major up-and-coming player in this market. Pre-owned software and hardware pricing engines, distribution channels and becoming the exit strategy for all the big box retailer trade-in make them a company to watch. Game Trading Technologies had $36MM in revenues in 2009, $11MM already in 1st quarter 2010. Pre-owned market just starting to take off and will eventually include DVD's (Toys R Us already accepting trade-ins for store credit), and all generations and manufacturers of items similar and including to iPods, iPhones, MP3's, iTouchs, iPads. For more info, visit www.gtti.com.