GameStop: "We Wouldn't Be Here" Without Used Sales

[Andy Chalk]

GameStop: "We Wouldn't Be Here" Without Used Sales

GameStop's [http://www.gamestop.com] Niall Lawlor says the company actually doesn't like being in the used videogame business but without it, it'd be out of business completely.

Arguments over the ethics of the used game trade have been raging for ages and show no sign of abating. It's common knowledge that retailers earn a much greater profit margin from the sale of pre-owned videogames than they do from new, but according to Lawlor, the managing director of GameStop Nordic, it's not just about making more money, it's a matter of survival.

"We discovered the used business was a way of preserving our margins. We don't like being in the used business, it's very difficult to manage," Lawlor said at the 2010 Develop Conference [http://www.develop-conference.com/], currently underway in Brighton. "If we hadn't got the used business we wouldn't be here."

But he emphasized that GameStop is still a positive force in the industry. "We like to think GameStop evangelizes the business," he added. "We're still opening more stores, we're still pushing the industry. We have to be in it otherwise, if you take a look at our margins you'd realize we need to be in used."

His argument didn't sway InstantAction [http://www.instantaction.com/] CEO Louis Castle, though. He described GameStop's participation in used game sales as "parasitic" and predicted that in the end, it would do more harm than good. "While you're preserving some margins, used is accelerating changes," Castle said. "I can see the train wreck, it's coming. Pretty soon everyone is losing money. Used is accelerating the decline of profitability for publishers. The oxygen is being sucked out of the room."

Source: GamesIndustry [http://www.gamesindustry.biz/articles/gamestop-without-second-hand-sales-we-wouldnt-be-here]


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[Assassin Xaero]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

 

[thenumberthirteen]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Or used cars? The used car market is huge and few people buy them new as they can be so expensive.

 

[JacobyPAX]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Because the game companies feel that they are "losing" sales to used games.

 

[Assassin Xaero]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Or used cars? The used car market is huge and few people buy them new as they can be so expensive.

With new cars, don't they lose about half their value when you drive them off the lot or something insane like that?

 

[thenumberthirteen]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Or used cars? The used car market is huge and few people buy them new as they can be so expensive.

With new cars, don't they lose about half their value when you drive them off the lot or something insane like that?

Have you ever traded in a game? Just try to get at least half what you paid for it within a week of release. Particularly if it's not a blockbuster title. You don't see the car manufacturers disabling a gear if you don't buy a car new.

 

[Treblaine]

Castle said. "I can see the train wreck, it's coming. Pretty soon everyone is losing money. Used is accelerating the decline of profitability for publishers. The oxygen is being sucked out of the room."

Hmmm... PC gaming has virtually no pre-owned market.... ooooh, so smug

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Because:
(1) games are expensive to make
(2) they sell for a high price and (importantly) in comparatively low numbers
(3) but the game developers/publishers get only a small cut of the final retail price

That makes pre-owned a different dynamic. Also, most people don't buy pre-owned DVDs and CDs since the unit cost is so low people are not desperate to find a cheaper option (on pre-owned) and DVD and CD a higher cut of the retail price goes to the publishers anyway. (oh and movies and songs make most of their money NOT from retail sales but others like cinema releases and concerts and so on).

 

[mjc0961]

What? You mean without the used game sales with which GameStop screws over customers, they wouldn't be around to screw over customers on new game sales either?

You think GameStop just wouldn't be around because of all the customer screwing they do.

 

[Unrulyhandbag]

Get stuffed.
Stop attacking legitimate business and do something to encourage customers.

It's like ford and GM crying about the massive used market for cars, there's not a damn thing you can do about it well you could try but your customers will hate you for it and some other company will sell none crippled products just to get your customers.

It seems the games industry forms it opinion on how well something has done within the first month anyway and most used copies are bought a couple of months if not years down the line.

How about offering something to used customers, you know DLC might be the solution if it had something substantial enough to be an incentive. Or how making digital purchasing less of a pain, If getting it directly from publishers is easier and cheaper than going to a shop then that would work too.

Or look at the long term market and keep all your games for sale on-line indefinitely you know my dungeon Keeper 2 disc is pretty worn out these days and I'd love to buy another but the only way I stand a chance is hoping I find a reasonable human being with a copy on ebay.

(bugger...DK2 is actually bad example as Mastertronic are selling it for £8 inc postage)

Or another idea... How about releasing a game exclusive to a service like onlive (no bitching now it actually does work) for a low rental type price the first month or three then release a boxed\download copy that includes an expansion after that. This would give a cinema type release and a purely on-line system could run on almost any hardware so the potential market is pretty huge. After that DLC could be used to encourage used game buyers to spend money with you.

 

[poiuppx]

Bah. I'm one of the few folks on these forums it seems who willingly supports GameStop and buys from them somewhat regularly. Or at least, I'm one of the only ones who admits to it. I like that the number and spread of them has helped increase gaming's visibility, and keeps the physical media side alive. Trust me, for all the bluster, a gaming world without GameStop would be a much smaller one. And that's not really something game companies want to see happen.

 

[GodKlown]

"Without used games sales, Gamestop wouldn't be here." Hmmm, must be Obvious Day at Camp Stupid. In other related news, fish swim under the water because without water, the fish wouldn't be here.

So if used game sales are viewed as "piracy" by developers, why haven't they attempted to file a suit against Gamestop and similar stores and demanded a piece of the action? Or better yet, file an injunction against said companies to desist the action of selling used games? Or sue people on Ebay for selling used games?

 

[Assassin Xaero]

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Or used cars? The used car market is huge and few people buy them new as they can be so expensive.

With new cars, don't they lose about half their value when you drive them off the lot or something insane like that?

Have you ever traded in a game? Just try to get at least half what you paid for it within a week of release. Particularly if it's not a blockbuster title. You don't see the car manufacturers disabling a gear if you don't buy a car new.

Actually, I did get about $20-25 for Resistance Retribution or something once...

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

its overshadowing real games. unlike buying new, the money doenst go to the devs, just the retailer. this is the reason why developers are adding DRM to try to kill used game sales. in essence, they view it as PIRACY because you bought the RIGHT to USE the cd. you dont own the CD nor the right to SELL the cd.

Same with CDs. You are paying for the rights to listen to it...

 

[velcthulhu]

I might actually support used sale bans, if it would make Gamestop go out of business. Still, reselling things is kind of a fundamental capitalist principal.

I don't see what the big deal is about used games? How are they any different from used CD's or used DVD's?

Or used cars? The used car market is huge and few people buy them new as they can be so expensive.

It is actually different from cars, in that you don't "finish" using a car. A car provides a continuous benefit, which you give up when you sell it (same for a music CD, assuming you didn't just rip it to your computer and immediately resell it). With a game, or at least a single player one, once you resell it you were probably done with it anyway. Of course, the same is true of books and movies, and I haven't seen the book publishers complaining yet. (although production costs for books are much, much lower than for games).
Really, it boils down to cutting-edge graphics being way more expensive than the demand for them can actually support, and game companies being too set in their ways to figure out the problem with their business model.