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Report: GameStop earns 50% margin on used product

Pre-owned sales account for over 42 per cent of total gross profit

GameStop's pre-owned sales business nets the company USD 0.48 for every USD 1 earned - a margin of nearly 50 per cent, according to analyst Matt Matthews.

Matthews compared the margin on used games to that of new hardware, at 6 per cent, and new software, at 21 per cent.

While new product generates high levels of revenue, pre-owned sales generate more profit due to reduced costs, he explained to Gamasutra.

GameStop's net sales hit USD 8.8 billion in 2008, 2.8 times the USD 3.1 billion recorded in 2005. During the same period, profit on used products grew to USD 974.5 million, accounting for 42.9 per cent of the retailer's total gross profit.

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James Lee