GameStop eyes lucrative 18 month hardware cycle
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."