Earlier today, both Best Buy and Target confirmed their plans to get into the trade-in/used games business. GameStop continues to have a stranglehold on the used games sector, and that's likely to continue, but if a well-known electronics chain like Best Buy has a fair amount of success with its used program, it could actually change the dynamics of the publisher-retailer relationship in the long run, Sterne Agee analyst Arvind Bhatia believes.
"Ultimately, if Best Buy does become successful in the used games business, it may even be a positive to the extent it reduces push back from publishers towards used games," he commented.
Initially, we were thrown off by his statement. After all, how could this be a positive? Publishers absolutely hate used games and are doing everything they can with online pass programs to deter gamers from buying used. And this Best Buy program might be hated even more than GameStop's. "In fact, publishers will probably hate it even more since BBY's store credit could be spent on anything whereas GME's credit is at least staying within the video games category," Bhatia explained.
That said, if Best Buy can succeed, publishers might have little choice but to come up with a solution to satisfy their needs and their retail partners. "Given GME's 25% market share (and rising) in new games and Best Buy's 15%+ new market share, I am wondering if it will become harder for publishers to push back retailers representing 40%+ of their sales in the U.S. versus when it was only GME. Could this prompt publishers to find win-win solutions with retailers? Possibly. At least until the disk business is alive," Bhatia said.
4 Comments
August 27, 2010
Uhhh...wut now?
August 27, 2010
So by making the problem EXTREMELY bad, Best Buy is helping the industry by forcing them to find a solution.
Interesting logic!
Next up, Best Buy forces the industry to solve the piracy problem by providing BitTorrent links on their website..
August 28, 2010
I think the answer is best addressed by first realizing that the game industry does a terrible job monetizing its back catalogs? With only a handful of SKUs getting released as "Greatest Hits", most titles only have short release window.
What we we need to do take a rigorous look at developing new window opportunities and developing appropriate retail pricing. I think a big step is to look at the value proposition of buying used games vs. new games at various times throughout the product's life cycle. If we consider value prop, the reality is, the older the game (including games from the last console generation) the better the value to the customer.
More often then not, publishers in the video game industry lack a 'long tail' vision of a game's potential life cycle. There is hope, and a model to follow. Both the film and music industries are able to leverage the 'long tail' and are able to sell products for long periods, in many cases over decades.
August 28, 2010
I think this will actually accelerate the zeal of the publishers. One reason is if as the article is pointing out the retail businesses have a nice slice of the new business are involved. Now say for instance instead of you going to GME to buy a nice used game of Halo Reach for $54 used instead of $59 new. Must of the time once your there you say I may as well get it new if I'm only saving$4. But now you can go to Best buy, and get it used for $39. Not only are you going to get it at best buy. But some of you are also going stop buying new at all. And wait for it to be used, even more so than you do now. Right now $4 dollars is not a significant incentive for most people especially on a AAA title! But now saving $20 is! That means a big drop in demand for new games (which will mean death to some medium, and small publishers. After all if I can get a AAA title for $39 why would I pay new dollars for a mere A title? With that reality the new price of A titles will drop even faster!
Next time the husband trades in Madden, he can't use the excuse it can only be spent in this store honey. The money will be wasted if I don't get something honey bunches. So instead of it being for the next Madden it may be credit for a kitchen appliance! And the publishers will be just like the married man (whipped!)