Pachter: Best Buy's New Games at Used Prices Experiment Destined to Fail

August 10, 2009 -

Brand-new games at used game prices?

A pilot program that does just that is being tested at a Best Buy location in Utah. While it sounds like a good deal for consumers, Wedbush-Morgan analyst Michael Pachter doesn't expect to see the Best Buy experiment gain traction on a large scale.

Of the program, under which Best Buy will match used game prices in effect at either GameStop or Game Crazy, Pachter said:

I don’t think it will do well.  The price match means that Best Buy either cuts their profit per game in half, or wipes it out altogether.  I don’t think that they can afford to sell $60 games for $50, and don’t think that it will be effective in the long run.  If it does well, then GameStop will cut used game prices to the point where Best Buy can’t match without losing money.


Comments

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

The biggest hurt for consumers I see with this is if GameStop cuts prices to compete. It will cut prices for trade in value to keep its profit margin.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Mmmmm why not keep the price higher longer to off set the drop in upfront price?
Bascily bargain bin titles(5-30$) are 5-10$ more so that new games will cap out around 50 or 40.

 


Until lobbying is a hanging offense I choose anarchy! Stop supporting big media and furthering the criminalization of consumers!! http://zippydsmlee.wordpress.com/


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Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Well hopefully it'll work so once the universal price hikes up to $70 USD we can get new games for the price we used to pay ($50 to $60) if we buy from Best Buy.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Isn't that the way the market is SUPPOSED to work?  Store A challenges Store B's prices, forcing store B to go lower to compete, which may or may not knock out Store A. 

If it forces GameStop to knock their used prices down more than $5 off the new price, I'm all for it.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

But if Store A lowers prices below their profit-point, knocks out Store B who can't compete at those prices, then, with Store B out of the way, is able to raise their prices beyond their profit-point, they could be violating the Sherman Act. 

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Too bad the Sherman act doesn't protect us from shitty companies that want to nothing more than rip us off. Instead, said shitty company is protected.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Also, that's part of Best Buy's motto... I mean the store chain was even named after it. Won't they match any competetors price for new items? Seems like they're testing the same thing they've always done, but for used games this time.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Hmm, I guess they're trying to starve out GameStop. The good news for the customers is that there will be crazy price matching, or GameStop will add worthwhile features to justify the higher cost.

 

The only bad stuff I can see are long term impacts to the gaming industry's business model. But they're switching to digital distribution anyway.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Flamespeak: Pratcher

hellfire7885: Patcher

Ganjookie: Patcher X2

His name isn't that hard to spell guys.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

WOW!! A living grammarian!!!

 


Until lobbying is a hanging offense I choose anarchy! Stop supporting big media and furthering the criminalization of consumers!! http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

---

http://zippydsm.deviantart.com/

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

I would like to be able to vote on certain people I want to see stories on, and then ban "Industry Analyst Patcher" from my view.

Is he real or just a program the spits generalizations?


 

Trevor Gray
ganjookie@yahoo.com

Trevor Gray
ganjookie@yahoo.com

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Ok why does he still have his job? I usually find it funny when he opens his mouth but now it's getting annoying to see this guy just pull shit out of his ass.

 

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Seriously.  Why the gaming press continues to flock to this third rate hack for "insights" I don't understand.  If they at least called out that 75%+ of the time he was wrong rather than ignoring that and only showering him with praise the rare time he's right, that would at least be tolerable.

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

They already kinda do this at my local EB, only it's the opposite where they sell used games for almost the same price as new. Why pay AUD$110 new when you can get a used copy in random condition for $105?

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

I would agree with him but games arent the only thing Best Buy sells. If this doesnt work out its not like they would implode. I only see them giving gamestop a run for their money with this.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

The math here is simple.  A person walks into Gamestop, picks up a used game for $5 less than retail, walks out with said game.  Same person walks into BestBuy, buys a brand new, never opened game at the same price as Gamestop's used game, also picks up a CD, maybe a movie to boot, and walks out.  The only merchandise Gamestop has to offer besides games is gaming paraphenalia (buttons, hats, action figures, ect), while BestBuy has a whole host of other electronics besides games to offer.

The plan is simple.  A retailer with a "wide variety" (I say that because there isn't much variety in their "variety", at least at my local BestBuy) of products increases foot traffic by selling a product for less than their competition, with a very narrow variety of products.  Increased foot traffic = increased chance for more customer spending.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Patcher still has a job? WTF!!?

 

Trevor Gray
ganjookie@yahoo.com

Trevor Gray
ganjookie@yahoo.com

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

That would be my response too.

This guy either failed economics 101, or just does not care.

Given how these people get and keep jobs (hint: it has little to do with actual knowledge of industries and markets) this does not surprise me.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Gotta bear in mind Patcher is an industry analyst, so if the industry might take a loss of course he'll say it's bad.

The great thing is this will create competition, something Gamestop has never really known(I base this one the fact that I have NEVER seen a Game Crazy in my area) meaning prices will get driven down, meaning more people can afford a product they could use for escapism in these tough times.

The one thing many industry types forget is that cheap escapism during tough times means good money for them, markign prices up during tough times is generally a bad idea.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

"Gotta bear in mind Patcher is an industry analyst, so if the industry might take a loss of course he'll say it's bad."

Are you serious?!  "The industry" makes ZERO money when Gamestop sells a used game.

I love hearing people talk about 'industry types' like they're a different species, all with the same goals.  Many of the producers and industry types are the ones who are having to close studios and redlight otherwise great games in favor of the next sequel-fest, because the economy and their shareholders can't stomach the idea of a game that's not guaranteed to sell.  (Hi there, Guitar Hero 21!)  This is ideal neither for discerning gamers nor for the devs with unique ideas.

The used games industry does need more competition, and it's a wide-open area.  Unfortunately, GS has been doing it for so very, very long that they have all the tricks down, from offering extra discounts and temporary used sales to honoring vastly more lenient return policies on used items.  Remember when Canadian EBGames cut a deal with Lucasarts to allow 100% buyback on new copies of The Force Unleashed if a player didn't like it?  People can do that with any used game all day long.  THAT is what's necessary for new games to have a chance vs. used in the long run.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

American's only get $5 off their used games? I seen games that's $10 off just because the packaging is bad (even though the game is new). I am talking about Gmestop here too.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

$5 off used copies of popular new games. The used price starts falling with time, lack of popularity, case conditions, etc.

-Gray17

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Still, that's retarded. And I'm an American. It's 100% profit for Gamestop since it's used. Hell, chances are it'll be on sale for that at Best Buy one of these weeks, maybe even for less.

 

Saying that Jack Thompson is impotent is an insult to impotent men everywhere. They've got a whole assortment of drugs that can cure their condition; Jack, however...

Saying that Jack Thompson is impotent is an insult to impotent men everywhere. They've got a whole assortment of drugs that can cure their condition; Jack, however...

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Having worked for Best Buy Ltd., I can say that the mark-up for a game averages at about $10. Some games are more, some are less. If a used copy of a game is going for $5 below Best Buy's price, it's not big deal when you take into account just how many people could be getting the game at that price. The aim here isn't so much to make money as it is to take away the used game sales that Gamespot has.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Maybe Best Buy should emulate GameStop and sell used games at new prices.  Seems to have worked for GameStop...

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

"If it does well, then GameStop will cut used game prices to the point where Best Buy can’t match without losing money."

From a consumer point-of-view, I wouldn't consider that a fail...

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Unless you are a consumer trying to trade in a game. Trade-in value sucks at GameStop, but it will suck more if they cut prices.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

This guy doesn't seem very smart. Best Buy could still make plenty of money even if they ran their game business for no profit. Gamestop on the other hand soley relies on it's game business. When people go to best buy and save 15 dollars on a video game there is a halfway decent chance that money will still go into best buys pockets. What real man can't find something they want at best buy for ten bucks easy.

Here's what I am saying it boils down to. Best buy can sustain it's self making no profits off their videogame sales. This would cause gamestop to further reduce the price they sell used games for. this cuts their profits down. They would be forced to start offering less for used games to keep thier profit margin. There will be a certain point when that offer becomes to low for people to want to sell their games used. This will put gamestop out of business unless they refit their strategy.

Alot of this depends on if best buy is willing to take the long term gamble.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Since Game Stop and Game Crazy only price their used games at $5 or less below the new price, this isn't really much of a discount. However, since that location is nearby, I plan to check it out to see exactly how much they're willing to price match.

 

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

The big factor will be, can Best Buy maintain such low prices long enough to kill off GameStop?

One of the ways Standard Oil used to kill other companies was to lower its prices to the point they were taking a loss, and keep them there to force other companies to lower their prices to similiar values.  The company with more cash reserves would survived, the one with less cash on hand would fold.  Rinse-lather-repeat from county to county and you could kill off local competition pretty quickly.

So it would really come down to 'who can bleed longer',.. combined with 'how well does cash flow between stores'.  

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

you beat me to it

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Game prices come down naturally anyway I can't see this having much of a negative effect. But after Activision bosses stated how much they love to rip off gamers a company helping consumers save money on new products is bound to be criticised.

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Video games get a decent mark-up for sale. Not a huge one, but enough of a one that $5 off (not $10 Pratcher) will not really hurt their bottom line if they are selling more of the product as a result.

"

Re: Pachter: Best Buy's New Games at Used Prices Experiment ...

Agreed. Amazon.com does this all the time on video games. I know that anyone pre-ordering Aion or Final Fantasy: Dissidia will get $5 off (in addition to any pre-order goodies).

On top of that, I don't believe the pre-order costs anything itself, so it's really just a good deal. Shipping, admittedly, is still there, but if you use their membership program that includes a year of some form of free shipping... hey, there ya go.

 
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