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Best Buy Canada Moves Into the Used Game Market
Bamelin
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Registered User regular
Best Buy Canada is testing the sale of used video games in some of its Future Shop stores in Calgary, in what the company said is a prelude to a nationwide program.
Six Calgary area retailers will be accepting used games for trade-in and will be selling those titles, provided the games are for the five latest gaming consoles, the XBOX 360, PlayStation 3, PlayStation Portable, Nintendo Wii and Nintendo DS.
The move puts Best Buy in competition with the EB Games chain, a fixture in many shopping malls. EB Games is owned by U.S.-based GameStop Corp.
Future Shop said used games can be exchanged for in-store credit towards other previously-owned games. When the program rolls out nationally to Future Shop's 133 stores — a move expected by late summer — used games can be traded in for in-store credit for other items as well, the company said in a press release.
The sale of used video games has remained a delicate issue for large retailers and game developers, since game developers do not see money from the resale of a game. As a result, major retailers have mostly stayed away from the practice.
But GameStop has had success with it. The company reported used video game sales accounted for $416 million US in worldwide sales in the first quarter of 2008, or about 23 per cent of total sales. The company reported used video game sales of $326 million US during the first quarter of 2007.
http://www.cbc.ca/technology/story/2008/06/17/bestbuy-used-video.html
Basically Best Buy Canada decided to "test market" the used game model at their sister stores Future Shop. Future Shop is owned and operated by Best Buy, and has the same sort of big box set up as Best Buy.
The test market started at six stores in Calgary (article linked above is from June). Just yesterday I was in a Future Shop in Toronto, and guess what? I guess the program was successful because it's now been expanded to stores in Toronto (my guess is that it's gone nation wide).
It's a very common practice for US retailers to "test market" a new business model in Canada first, to see if it works, before they implement it down in the United States.
I'm posting this mainly because I think that if Best Buy in the US DOES move into the used game market it's going to bring the whole issue of "used sales cutting into publisher/developer profits" to a head. DLC, and leasing game liscenses through activiation keys ... this could very well be the future of console games.
I wonder how publishers and developers are going to react if (personally I think "When") Best Buy enters into the used market down in the States.
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EA are calling it a reward for buying new.
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The fact that it's moved from the original test market in Calgary says alot though ... trade in credit at Future Shop is alot better than trade in credit at EB Games.
Formula they are using is:
Price of used games divided by 2 minus 10%
So if the used game is 40 dollars, then divide that by 2 = 20 - 2 dollars (10 percent) = $18 trade in credit. Thing is, because they are so new in the market they are offering substantially better rates on older games that EB/Gamestop will give squat for.
I trade in games all the time, so this is good news for me. EB games has always had terrible Trade in rates/used game prices, but with new competition it will drive the trade in rates up, and the cost of used games down.
Also, Bamelin, have you heard about goozex?
Yes I have. My problem is that I prefer not to buy used. I sell used all the time for credit, but I don't like buying used.
Or push it towards digitial distribution
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Have they moved away from this yet? Even GameStop doesn't limit your trade-in credit to used games so far as I am aware of. Plus the choice to use said credit for, say, a new hard drive should you need it is a much better incentive to use Future Shop instead of EB Games.
Not that I've traded in a single game since I bought a Gamecube to a retail store. Goozex is my new found love.
My fear is that despite the fact that they currently offer more than Gamestop for trade-in, is that they pretty much standardize on it so we don't even see competition.
The industry couldn't survive without used sales to segment the market.
People wouldn't buy consoles if EVERY game was $60.
I think that's a mistake on the article's part. When I called Futureshop they said it was "in store credit" period. As in credit good for anything at Futureshop.
They said the same thing about used records in the 60s. And 70s. And 80s. And 90s. Spoit is dead on, it was digital distribution (albeit over illegal P2P) that killed physical album sales, and the same thing will happen to boxed video games someday.
That being said, I'm not sure what's so special about video games as an artistic or entertainment medium that they shouldn't be resellable like paintings, albums, movies, books, instruments, or any other amusing plaything. This notion of selling a "license to use" a thing rather than selling the physical thing to use (like a vinyl album or video game cartridge) has never sat well with me. I don't like the idea of there being rules about how I can use something that I paid for and own, but evidently this is a minority position.
Yeah, there's a lot of this going around. Gears has it, Rock Band 2 has it with the 20 downloadable songs, and NBA Live 09 has it with that roster update thinger. I think this strategy really will work for them. If I have a choice of used and paying 20 bucks for that roster update thing or new, I'll go new all the time (this is for live 09), unless Gametsop starts charging more than 20 bucks less than the new game, which just wont' happen.
This also hurts Gamestop's model in another way. If I'm buying new for a code that'll get me extra stuff, I'm not going to buy at Gamestop sometimes, as they gut some new games, and I wouldn't be able to trust the code hasn't been taken. Then again this is for when there's only one out. Things like Gears of War 2 and Rock Band 2 really don't have this little downside to them, as I'm sure gamestop'll have enough to not gut your copy.
Gamestop makes next to nothing off of new games, so it doesn't really hurt them.
I think what he meant was that the codes are only usuable once, so there's a disincentive to buy the used one for whatever marginal discount GS is offering, and instead go for the new version, which has a lower margin than used
Precisely.
If you buy a game like Rock Band 2 for $60, and GS has it used for $50, yet the new one includes $20 worth of DLC for free, why buy the $50 one? GS would have to lower it to $40 to make the dollars and cents seem worth it. Yet since it is also used, perhaps $30-$35 to make sense to people with brains. This means trade-in would have to be less than that as well, which means people would be less willing to trade it in.
All this means GS gets less money if the first-buyer bonuses are well known and worth it. - AKA, developers putting it on the front of the case. I could see many angry customers going back to gamestop asking for a proper code (or any code since they probably wouldn't be inside the case) to get the advertised freebies.
Steam ID : rwb36, Twitter : Werezompire,
None of the three closest to me do.
The in-store credit is available for use for anything in the store. It'll be placed on a gaming themed card, but it's just a gift card. Go wild and crazy.
The trade-in rates, from what I've seen, are more generous than EB. Unlike EB, pre-order stock is ordered separately from main stock, so the reason to pre-order is because you either want the absolutely certainty it'll be there (above and beyond the 90% certainty it'll be there) or you want the free toy. Pre-orders can also be done online with $0 down (and cancelled at any time) and... starting soon you can pre-order online and pick up in store.
Basically there were some meetings where people bitched about what they hated about the used gaming/pre-order market and they decided to do the opposite of that.
As for used gaming killing the industry - that seems a little over the top. I mean, as long as used gaming stores aren't offering a 100% buyback if you return a game in the first week...
Yeah.
If it wasn't for used games, my collection would be substantially smaller and I would be unable to replace those titles that just stop working. ICO for instance. My first copy stopped working one day, luckily I found a used copy at EB. Not only that, but most of the games I had as a child for my NES, SNES and Genesis were bought at a pawn shop or traded in for another game at the same pawn shop. Used games are good!
Also, there are a lot of games that I simply refuse to buy at retail price. Why would I pay $60+ for a game that is only 8 hours long? That's insanity. Now, a used copy of the same game going for $20-30 is far more reasonable.
If anything, piracy is going to sink the games industry, not used games.
That was his first point.
His second one was that he wouldn't even buy the new games at GS because of gutting, and maybe the code fell out, or was stolen off the shelf.
The thing is, GS doesn't make almost anything on new games, so it really only hurts them the one way, not both.