Everyone knows that one of the big segments driving GameStop's business is the used games market. New game sales can go up or down, but it seems that GameStop can always rely on people trading in titles and buying used ones. In fact, GameStop generates about half of its profits from used games.
Last year, both Wal-mart and Best Buy decided to test the used waters too. The used game kiosks were provided by a company called E-play. Today, however, E-play suspended its operations, and consequently, both of the big box retailers have decided not to bother with the used business for now.
Analysts have repeatedly stated that the used games test at retailers like Wal-mart would basically have zero impact on GameStop. Moreover, the kiosks didn't seem to be generating much business. Sterne Agee analyst Arvind Bhatia said they were "underwhelming." He added that the kiosks at Wal-mart and Best Buy locations have been turned off and will be "removed from the locations over the next few weeks."
Naturally, this latest development is being viewed as a positive for GameStop, not that the leading video games retailer needed any help. It's possible that Wal-mart and/or Best Buy could find another vendor to test used games again, but as Bhatia notes, "it is clear the used games business is not an easy one to execute" and it hasn't worked out very well for the big box stores thus far.
3 Comments
February 1, 2010
Amazon.com has a Trade-In program that has been running a little longer than these kiosks and they still seem to be going strong.
February 2, 2010
Helps too when the participating company actually cares and promotes people to do it vs. a lackluster attempt at throwing a machine in the store.
February 3, 2010
thraka, most people want money for their trade-in's right away. Plus, Amazon requires you to provide your own box to mail the games in.
This is a shame, I never got to try this out as neither store expanded this test program to New York.