The arrival of next-gen consoles may have video game fans elated, but analysts have been quick to temper that enthusiasm with reminders that overall retail sales in the United States during 2013 were down by 2%, with the end of a console generation leading to slower sales. But even as full-priced PS3 and Xbox 360 games failed to shift themselves off of store shelves, the used game market proved itself a worthy contender with cheaper, second-hand releases showing a 2% increase in revenue.
Used games may be a persistent thorn in the side of publishers, but that discomfort looks set to continue as Walmart has now announced that they, too, will be looking to cut themselves a lucrative slice of the used games market.
Walmart suggested the move into the market in an official press release, explaining that the company is “ready to shake up the marketplace and is taking aim at the $2 billion pre-owned video game opportunity.” Walmart’s statement also alludes to the 110 million gamers in the United States who would be prime targets for the new service, given that their brand recognition is far and wide enough to appeal to both core and casual gamers alike – and its hard to disagree:
Starting Wednesday, March 26, the more than 110 million gamers across the country will be able to trade in their video games and apply the value immediately towards the purchase of anything sold at Walmart and Sam’s Club, both in stores and online. The traded-in games will then be sent to be refurbished and made available for purchase in like-new condition starting this summer. This is a new category for us and something our customers have been asking for.
Ultimately, when Walmart disrupts markets and competes, our customer wins.
It’s unclear if consumers will be able to trade their games in for money rather than store credit, but systems in place at other retailers suggests that should that be the case, the money offered would be significantly less than that of the store credit.
The announcement from Walmart comes after not only strong sales in the used games market, but poor revenues on their own books, as the well-known chain of superstores announced mixed quarterly results in February of this year, leading them to lower their outlook for the fiscal year of 2015. So while a sudden attempt to turn around its fortunes isn’t quite at play here, the fact that the used games traded in at Walmart “will then be sent to be refurbished and made available for purchase in like-new condition starting this summer” suggests the company has found a creative way of getting cut-price stock to sell at premium (yet competitive prices).
One company which will no doubt take notice of the move is GameStop, the far-and-away leading retailer in the used games market. Following the announcement, Gamestop’s shares were down 5.11% (down to $37.22). How the two compete for profits, used stock and fan interest – not to mention resist pressure from publishers seeking to snuff out the used games market – will all be seen before long. This competition will certainly be one to watch.
Do you see this move as a positive for consumers? Will you be more likely to trade in games at one location or the other? Share your thoughts in the comments.