GameStop: Profit Margins Rise on Used Games as Economy Sinks

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Without any major promotions, retailer GameStop has recently seen an increase in the amount of games being traded in, a feat it attributes to the sluggish US economy.

"Because of the economic condition, we did not have to be as promotional on the buy side of games, because it just seems like we were naturally getting consumers trading [games in]," COO Dan Matteo said today, according to Edge Online. "That's why our margins are slightly better than they were in the second quarter last year."

In exchange for used games, GameStop offers in-store credit that's generally around 30% of the title's worth, with the game then sold for about $5 less than a new copy. In other words, the retailer buys low and sells high.

The used game market has been an extremely lucrative source of profit for GameStop. Despite accounting for 26.1% of the company's total sales in Q2 2008, used games sales made up 49.7%, some $234M, of its quarterly profit.

High profit margins on used games have long represented a sore spot for some publisher and developers, as they do not see a kickback from used games.

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From The Chatty
  • reply
    August 21, 2008 1:18 PM

    As much as I hate this system, I must say that getting some value back (not always the value I think I deserve but whatever ><) on old games has helped me purchase NEW games.

    • reply
      August 21, 2008 1:21 PM

      You'd do better to resell it on eBay or trade for something else on places like Goozex or CAG. I know it's still a knock against the publisher/developer but it isn't lining the pockets of shareholders, it's just helping your fellow gamer.

      • Ebu legacy 10 years
        reply
        August 21, 2008 10:15 PM

        The ratio of extra work to returned money makes that not as good a deal as you think.

        If you make $5 extra but it takes more than 10 minutes of your time (not even counting shipping) then you have not come out ahead.

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