GameStop Rakes In $2 Billion In Used Game Sales

Keane Ng

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Sep 11, 2008
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GameStop Rakes In $2 Billion In Used Game Sales



The retail juggernaut hauled in a fruitful bounty from its lucrative used games trade in the last year, raking in nearly $2 billion in sales, almost a quarter of the chain's total revenue and a 22.4% increase from last year.

While Wall Street Journal [http://www.escapistmagazine.com/news/view/88728-Circuit-City-Broken][/I]. "Once you have played a game awhile and it loses its value, GameStop is pretty much the only place where you can get something for it, and that's a big deal in this economy."

In the last year used games sales made up nearly a quarter of GameStop's business, accumulating nearly $2 billion in sales. Though that's nowhere near a majority of the company's revenue, business looks to only increase as the recession deepens and money gets more scarce. Most recently, in the nine weeks leading up to January 3, sales of new games and sales have only increased by 19% compared to sales of used games and systems rose by 32%.

And though developers and publishers have been vocal in their criticism of the practice's siphoning of profits that arguably should be going to game makers and not game retailers, consumers don't seem to be paying mnd. "I like the fact that you can trade in games," Michael Reed, a GameStop customer said. Reed had traded in an old NHL game for $5 dollars, which he put toward a new copy of NHL 09 [http://www.easports.com/nhl09/]. Did he get ripped off? Maybe, but to him it's better than nothing: "It's only a couple bucks, but it's a couple bucks I didn't have before."

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FistsOfTinsel

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Jun 23, 2008
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"Though it's nowhere near a majority of the company's revenue..."

Maybe so, but it's almost certainly the majority of the company's profit. Take a look at their 2007 Annual report: http://library.corporate-ir.net/library/13/130/130125/items/295079/2007annualreport.pdf

On page 31 they break down their revenue and gross product, by category. In 2007, used games accounted for 22.4% of the revenue, but 48.7% of the gross profit. Conversely, new software made up 20.8% of the profit. New hardware made a pathetic 6.5%. In fact, with new hardware/software making up 63% of the revenue, but only 27.3% of the profit, you can make a case that the new software business at Gamestop is just there as a loss leader to drive its used games business. The difference becomes even greater when you consider how much money is tied up in inventory for the new products.

It's one thing that's always aggravated me about the so-called "experts" who give financial ratings to Gamestop - they always talk about how the company's profits will be driven by console development cycles (new consoles == more profit), yet they're always wrong.
 

DeadlyYellow

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Jun 18, 2008
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Awww, it just warms the heart to know that underhanded tactics and questionable business ethics still does so well in today's struggling market.
 

HobbesMkii

Hold Me Closer Tony Danza
Jun 7, 2008
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Phsstt... I like how people are knocking GameStop for selling used games and COMPLETELY ignoring the fact the customers actually like it. You know what you could do to cut down on used game sales? Oh, that's right, sell them for less than $60. Alternatively, you could make console games last for longer than 3 months (by giving out more DLC). The replay value of console games is garbage.
 

PlasticPorter

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Aug 27, 2008
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$5 dollars better than nothing?
Keep in mind when you trade in at Gamestop its not just a shitty football game your trading in, its your dignity as well.
 

Frank_Sinatra_

Digs Giant Robots
Dec 30, 2008
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Shit! People please be informed!
"It's only a couple bucks, but it's a couple bucks I didn't have before."
Yeah but you could have had a couple of real dollars more than 5 fake Game Stop dollars.
 

Miral

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Jun 6, 2008
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$5 trade-ins are just nuts. Why would anyone agree to that? Especially if they're being resold at close-to-new prices, which (from what I've heard) they are.