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Retail

GameStop eyes lucrative 18 month hardware cycle

Tue 15 Nov 2011 3:58pm GMT / 10:58am EST / 7:58am PST
Retail

Retailer taps into $8 billion unused mobile tech market to enhance second hand offerings

US retail giant GameStop isn't waiting for the traditional console lifecycle to come around again - instead it sees smartphones and tablets as hardware central to its second hand business.

While a new generation of home games consoles have been released roughly every five years, smartphones and tablet releases are updated much quicker, with mobile technology improved every 12-18 months.

"We've seen research that says there's about $8 billion worth of used smartphones, iPod Touches, iPods and even tablets that are in people's homes that they're not using because they've bought the next model," Mike Mauler, executive vice president of GameStop told GamesIndustry.biz.

Nowhere has a faster cycle than tablets and smartphones and so you've got that tremendous value out there that people have in their homes that they're not using

Mike Mauler, GameStop

"The interesting thing with the buy-sell-trade model is it works when there's a constant cycle. And nowhere has a faster cycle than tablets and smartphones and so you've got that tremendous value out there that people have in their homes that they're not using.

"And in this economy it's a huge source, being able to take that to credit, maybe buy a console, maybe buy a new version of the iPod or iPad. So it's a tremendous opportunity with cycles being 12 or 18 months where you really have a continuous process of people buying the next version and trading in the previous thing they've bought."

It's a second hand sales model that has suited video game software historically, but in the current generation where hardware manufacturers have been able to update services digitally - and add motion control peripherals - has not been as healthy for retailers of console hardware.

However, Mauler said he sees tablet and smartphone sales as another addition to the second hand market, not a replacement for ageing hardware or a smaller number of triple-A software releases.

"I think it enhances the process, I wouldn't call it a replacement," he said. "Our trade-ins continue to grow year over year, we have not seen a decline in our used business or our trades. So this will just add to that rather than replace."

8 Comments

Andrew Goodchild
Studying development

1,249 405 0.3
Whilst a lot of places do take second hand phones, I wonder how big the market for gamestop is. Firstly, most phones at the end of a two year contract are in a rough state after 2 years in the pocket. IPhones have a fixed battery which is also likely a bit crappy after 2 years, mine definitely is.
Secondly, if I am going to trade in my phone, I will probably do it to buy a new phone, so a phone shop is a more obvious port of call.

Posted:2 years ago

#1

Klaus Preisinger
Freelance Writing

1,104 1,073 1.0
Since GameStop buy back, mark up and then resell, they could squeeze more money from the average unit than companies selling once while complaining about bad profit margins. *cough* non Apple stores carrying Apple products *cough*.

Gamestop could probably sell a PC as if it was a console, provided they wanted to. They do have Impulse after all.

Posted:2 years ago

#2
Tablets maybe - but I can't see this working well for phones. People need a contract, which usually comes with the latest and greatest phone "for free" (or close). Someone would have to be pretty keen to buy a 2nd-hand phone, off contract, as a gaming device...

Posted:2 years ago

#3

Mike Wells
Writer

61 28 0.5
Sounds like just another games retailer scrabbling around for a strategy and positive PR in the face of the inevitable decline of their current core business.

Posted:2 years ago

#4

Christopher Bowen
Editor in Chief

420 581 1.4
I love how people are surprised about this. "They're GameStop! Their business is video games!"

Wrong. Their business is business. If prostitution were legal and not socially scorned, GameStop would be offering preorders on Koreans. All this is is a shift in what they think is the next step to keep their profit margins high and shareholders happy. That's it.

Posted:2 years ago

#5

Rafael Brown
Lead Designer

22 0 0.0
@Chris Bowen - Why Koreans? Why not a prostitution pre-order on overweight game journalists if you want to be humorous? I hope you're aware that you sound rather racist with your Koreans comment. You make it sound like they'd be the logical group to go to as a commodity for prostitution commercialization. That just sounds kinda ... wrong, and racist. I understand your general sentiment and don't disagree with Game stop as a cutthroat business, but please don't single out ethnic groups for inclusion in your proposed aftermarket prostitution scheme.

Posted:2 years ago

#6

Crystal Steltenpohl
Writer

2 0 0.0
I'm pretty sure he just picked a random group of people, Rafael. Just because someone uses an example doesn't mean s/he is racist. Take a chill pill.

Also note that making fun of someone's weight while telling him not to single out groups of people makes you look like a hypocrite.

Posted:2 years ago

#7

Christopher Bowen
Editor in Chief

420 581 1.4
Rafael - 1) I basically picked a group. Like the way I'd say "preorders on PSP UMDs".

2) If you want to be a prick about it, and say I'm racist? No, I'm well informed of actual statistics. http://www.polarisproject.org/human-traf...

Posted:2 years ago

#8

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