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GameStop pre-owned sales secure against Amazon

Second hand sales market expected to grow due to declining economy, says report

GameStop is not under threat from Amazon's entry into the pre-owned games market, according to a report, which says the economic downturn has created a growing demand for the cheaper retail option.

The report by the videogames market research firm Electronic Entertainment Design and Research, suggests that GameStop is unlikely to see an impact on its core business due to the activities of the online retail giant.

"Based upon our research, we believe Amazon's used program will be both successful and profitable," the report read.

"We also believe that most of Amazon's new business will come from the expansion of the used videogame software market rather than from stealing market share from competitors like GameStop, Game Rush, EBay, or Game Crazy."

GameStop is expected to retain its dominant position in the market with core gamers, due to the practice of consumers trading in one game for another on the spot for "instant gratification", which Amazon is currently unable to provide.

The faltering economy was credited with creating greater demand in the trade-in market as consumers look to cut costs. The practice becomes increasingly appealing to stores during the tough economic environment, as gross margins on the sale of pre-owned games is said to hit 50 per cent, compared to just 20 per cent for new titles, according to the study.

This will come as bad news to many of the games industry's most vocal figures, such as David Braben and Andrew Eades, who have spoken out against second hand sales as damaging to the industry.

"The unfortunate truth for videogame publishers and developers is that retailers are in the driver's seat," the report read.

"With retailer's commanding control of the videogame retail environment, there is little that publishers or developers can do to curtail the sale of used videogames in the short-term."

Amazon announced its new pre-owned games service earlier this month, prompting a two-day crash in GameStop's share price by 20 per cent.

GameStop's share price closed up 2.21 per cent, or USD 0.54, at USD 24.95.

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James Lee