EmailPrint
back buttonBack to Tech Blog homepage

Used games = used gamers, says GameStop rival

March 27, 2009 3:49am
by Chris Nuttall

Visiting the local GameStop on San Francisco’s Powell Street has aspects of going to a pawn shop and an under-the-counter porn store rather than the expected video-game retail experience.

Every wall of the store seems covered in second-hand titles traded in by gamers, new shrink-wrapped ones are hard to spot. Anyone wanting a brand new game generally needs to go and ask for it at the counter. Staff then look underneath or go in the back to try to locate the rare item.

It’s a situation that can infuriate publishers, who want their new titles given adequate promotion in stores and are not seeing any revenues from second-hand sales. Many would prefer to see gaming switch to online downloads or streaming, in order to eliminate the disk-based market.

GameStop’s second-hand-store look is logical if you look at its profit margins of around 50 per cent for used games compared to as little as 7 per cent for new games. It has more than 90 per cent of the used-games market and reported on Thursday used sales of $2bn in its fiscal year to January 31, amounting to 23 per cent of total revenues.

Its few challengers include Game Crazy, Best Buy, Toys ‘r Us and an online service launched by Amazon this month.

Another online service, Switchgames.com, launched in open beta this year and has been promoting itself at this week’s Game Developers Conference in San Francisco.

The gamers that use it feel ripped off by GameStop, it argues.

“GameStop charges $55 for Fallout 3 used, for example - $5 less than what [the game] sells for new, but if you want to sell it to GameStop, it’s only going to give you $17,” says Kai Bond, co-founder of Switch Games.

The start-up allows users to list games they own and are willing to trade, while entering a wishlist of ones they want. It matches them with others, enabling free direct swaps among its members.

It makes money with premium features - such as charging $6.95 per game if the users want it to act as an intermediary, ensuring the transaction is fairly represented and completed by both sides.

There are social elements and eBay-type trust mechanisms added - everyone has a gamer profile page and can earn badges and be rated on their performance.

Buying and selling also takes place and SwitchGames even hopes to reward publishers.

“Sellers will be able to say I want to donate say 5 per cent or 10 per cent of the price of this used title to the people that made the game. We will hold that money in escrow and cut them a cheque once a quarter for what’s donated,” says Mr Bond.

Tags: , ,

March 27, 2009 3:49am in Games | Comment

EmailPrint