Game Retailers Make Money On The Margins

This week's Escapist deals entirely with the business of selling games, and the article A Marginal Business details how EB and Gamestop make their money. From the article: "'Used games are keeping the entire ship afloat,' a vice-president of marketing for Electronics Boutique tells me. 'EB and GameStop make basically no money from new product.' No money from new product? But everybody knows the retailers are the real profiteers of the interactive entertainment industry, brutally extracting marketing development funds and ruthlessly returning product in the name of the all-mighty dollar. Right?"

Comments

Exactly right: Used games == money

[thesandtiger]

I was at a Gamestop the other day and saw someone come in to sell some games. Not 10 minutes later, 2 of those used games got resold to other customers at a pretty good margin.

Initial sale: call it 49.99 (of which...? is profit?)
Buy it back used, currently popular title: -$25
Sell it used: $45
Buy it back re-used: $-15
Sell it re-used: $35
Buy it back re-re-used: -$5
Sell it re-re-used: $20

Off of that life-cycle for one game, they can easily make $55 bucks off of one game that had a maximum retail price of $50 bucks.

Because used game sales are so attractive, they offer incentives for people to buy and sell used games - I have one of those membership cards, and I get %10 off of the price of used games as well as a %10 bonus to the trade in value when I sell games, and also they'll let me bring a used game back for a full refund if I do so within a week of purchase, no questions asked.

Even better, they have huge leeway with what they can charge for the games - I tend to get pretty good deals when I haggle a little.

Win win for the retailer and consumer, in my opinion.