Is Game becoming a secondhand shop?

Game shop

Game is the biggest specialist retailer of video games in Europe, they have over 1,300 high street stores in ten countries. Their accounting year end is 31 January and for the year ending in 2008 their secondhand sales were £257 million. For the year ending in 2009 it was £353 million. And now, for the quiet first half  (the second half year is obviously a whole lot busier) of the current financial year £177 million. This means that secondhand games have grown to be a full quarter of their total revenue of £690.8 million for the first half.

Game’s management say that selling secondhand is far more profitable than selling new.

So what does this all mean?:

  • Secondhand could easily grow to be the bulk of Game’s turnover. This is because many people buy their new games from supermarkets and discount online retailers who don’t do secondhand. So when these games make the secondhand market they do so at Game.
  • Customers are now obviously counting in the resale value when they buy a new game. So if a game is say £40 new and they know they will get £18 back from Game, then they look upon it as a £22 purchase.
  • Popular games have higher trade in values. This forces people to buy blockbusters even more because they know it will cost them less overall. Thus polarising the market into fewer and fewer big titles.
  • Game developers and publishers are missing out massively on hundreds of millions of pounds of revenue. The secondhand buyer is not contributing directly towards the game being made. This will force games online and away from the plastic and cardboard high street retail business model.

The important thing here is that as the game industry moves towards an online distribution model the games should become a whole lot cheaper. We are already seeing this on the iPhone. Here’s why:

  • The publisher gets income from every customer.
  • No plastic and cardboard to manufacture and ship round the world.
  • No high street shop expenses to pay for.
  • Much more competition as the market diversifies away from blockbusters.
  • Global distribution enhancing revenues.

We know that high street retail of video games is probably doomed and that this demise has been hastened by the huge success of the app store business model. But most people will win from this. There will be far more games and they will cost a lot less. The only really big losers will be the people who manufacture the cardboard and plastic, and the high street retailers, like Game.

6 comments ↓

#1 Ian Osborne on 10.02.09 at 12:02 pm

Don’t points Two and Four contradict each other here? If the gamer is factoring in a title’s resale value before making a purchasing decision, the second-hand market is indeed contributing to the games market beyond retail, as he or she might well be willing to part with your de facto price of £22, but not the actual purchase price of £40.

#2 Hugo on 10.02.09 at 4:14 pm

I do have some sympathy with the game developers/publishers over second hand sales when retailers like GAME and Gamestation promote used copies over new. I’d say 9 out of 10 times when I have walked into one of their stores and bought a game new they have asked me at the till if I’d like to buy the game second hand to save money.

Personally I’d rather buy the game new than save the paltry £2 or at best £5 on a used copy. Most games even a month or two old are marked up at around £37.99 when a new copy costs £39.99. As a more mature gamer with an income that allows me to indulge my gaming habit those stores are actually a turn off for me and I’ll either buy online at a retailer such as Gameplay or Play.com or as I did today buy at a supermarket where FIFA 10 can be bought for the extremely reasonale price of £25.

Second hand may appeal to the younger gamers who don’t have a lot of money to spend and stores like GAME, Gamestation and Blockbuster actively pursue trade-ins through offers in the national press and shop windows where if you trade in a specific game (usually around a week old) you get the new release a lot cheaper. This just boosts the shops inventory of used games for them to push onto shoppers and the whole thing goes around in a cycle and cuts out the developer/publisher.

#3 Sean Bean's Gravy Boat on 10.05.09 at 9:09 am

The whole argument about whether or not shops should be able to sell second-hand games really annoys the tits off me. Should we also close down all of the used-car dealerships? Should charity shops such as Oxfam be forced to close because EA won’t get any money if I buy that copy of Nascar on PC that’s been lying in there for the last 4 months?

Surely the emphasis to reduce the amount of second-hand sales falls on the developer to make games that are good enough, and have enough longevity, to ensure that the people that buy them new don’t WANT to trade them in for more games. That way the market isn’t flooded with second hand copies a week after release as most people manage to finish them within that time. Games such as Rock Band aren’t anywhere near as prevalent in second-hand as games like Batman: Arkham Asylum, simply because Rock Band doesn’t have a single story mode that has an 8-hour playthrough time with little to no replay value.

#4 BC on 10.05.09 at 10:48 am

The industry needs the shops to flog their games.

The shops need second-hand to stay alive.

(at the moment, digital distribution isn’t there yet).

#5 Joe on 03.13.10 at 5:52 pm

I’m thinking of the Warcraft II:BNE CDs I have. We got the original (DOS) pre-Battlenet version then wanted the version more stable on Windows. Me and my brother had a CD key for online play but broke the CD. Getting the game at a retail store for $20 with some other stuff thrown in free+bonus of 2nd key made the decision for us. I couldn’t imagine selling a game as addicting as that. The term I believe is called “killer app” when you have something people refuse to resell because they keep using it. You wouldn’t sell your Xbox if you were renting games every week. Why would you sell a strategy game you keep coming back to at least once a month? The first 10 years after that game’s release saw a lot of play from my family. ;)

The amazing thing is that even counting the 2 extra licenses we purchased, the original game’s disk alone was still more expensive, yet alone the expansion set so we considered it quite a bargain for the years of play! Now compare that to some XBox games that you play to death for a day, then realize that it’s just about the same as the other 3 games you rented that month. Too many games feel the same so you just play it to death then rent another. :( Those games I’d resell in a heartbeat if paid retail.

#6 ayreon on 05.06.10 at 2:54 pm

Second-hand simply should not exist at all (regarding license issues!), so how is it possible that GameStop.com and Gladriel.com earn billions from this business in each and every year?

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