A Look Inside the Profitability of Used Games

March 17, 2010 -

If any doubt remains about how lucrative the used videogame market is, news from a company that specializes in the field should remove such misgivings.

A Maryland-based company called Gamers Factory completed a public stock swap with City Language Exchange in late February, while simultaneously executing a private placement with investors that netted the company $3.9 million. The merged company now operates under the name of Game Trading Technologies and is public, trading under the symbol GMTD on the OTC Bulletin Board.

Armed with the new funds, Game Trading Technologies just acquired more than 320,000 used videogames and accessories from a “national retail firm.”

The company brings a high-tech component to the used videogame business; its “game trading engine” provides up-to-date, real-time market pricing for over 10,000 videogame and consoles. The firm says it has “relationships” with GameStop, Best Buy, Wal-Mart, GameFly, Target, Toys ‘R’ Us, Blockbuster, 7-Eleven, eBay and Costco. These companies also “may use” GTT’s game trading engine.

The ability to go public in such turbulent times should provide some inkling of the company’s profitability and indeed, Game Trading Technologies posted revenues of $36.7 million in 2009, up from a 2008 total of $17.0 million. Net income also skyrocketed in year-over-year results, rising from $325,000 in 2008 to $1.74 million in 2009.

All in all an interesting snapshot of the used game market, especially in light of how tight-lipped GameStop is over revenues it derives from the sector.


Comments

Re: A Look Inside the Profitability of Used Games

The profitability is disappointing, as I hate used games. It bothers me that the used game markets gets bigger every year. I feel this way because, of all the people involved in a game, the ones who deserve the money the most, get the least overall; and this is doing nothing but punishing them.

Re: A Look Inside the Profitability of Used Games

Once everyone realizes the value of a website like Goozex.com, the customer will stop getting screwed with GameStop or [insert used game seller]. It baffles me that the gamer is stupid enough to trade in games for such little money.

With Goozex, say I buy Bad Company 2 and I don't like it (God forbid)... I put it up for trade on the site and I get 1000 points (equivalent to $60) to get another brand new game. Since Bad Company 2 is high in demand, it's gobbled up. No more getting $20 from GameStop for a hot game that they'll turn around and resell for $50.

Feel free to check it out, I've saved so much money on used games already with this.

http://www.goozex.com/referral.asp?idr=6194647584958

 

Re: A Look Inside the Profitability of Used Games

You can do pretty much the same thing by selling a hot used game on ebay and you get real money.

Some people just want the instant gratification.

Re: A Look Inside the Profitability of Used Games

Great, now industry types are even more convinced that they need to kill the used market.

Re: A Look Inside the Profitability of Used Games

A games store dose just that pushes game sales, if you take away their make profitability in used sale you remove the store from existence, remove EB/GS and any other game retailer big or small. Would that hurt publishers any? Now I do not mind taxing the sale of used games, digital storage devices,blank discs and internet service 10% and dishing it out to the media industry as long as fair use is expanded to protected the individual to share freely as long as they do not make or move any money off it.

Until lobbying is a hanging offense I choose anarchy! CP/IP laws should not effect the daily life of common people! 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: A Look Inside the Profitability of Used Games

Actually, the core of Game Trading's business model isn't really buying and selling on the second-hand market. They're actually a service provider that offers other retailers the use of their proprietary "market making" software and algorithm technology to set real-time price quotes on used games, consoles and accessories. That's where they make their profits. 

Re: A Look Inside the Profitability of Used Games

Well when a place like EB buys used copies of new release games for maybe au$20-25 and sells them for au$90-100, its not too hard to make an educated guess as to the profit margin.

New game RRP is $100

Week old game bought from user at $20

Week old used game sold for $90

EB pockets $70 and the developer loses a profitable sale

 

I can see why the industry claims that used game sales are a threat, just such a shame they seem intent on pinning the blame on the end user rather than the real crooks in the matter

Re: A Look Inside the Profitability of Used Games

The problem with this assessment is that it assumes that every transaction is like that and it ignores the piles of copies of used games that they took in and will likely never sell, or sell at a loss, and they have to pay to warehouse, insure, and the opportunity cost of having those games take up space on the shelves.

Don't misunderstand, I'm not saying that used games aren't profitable, obviously they are, but everyone looks at the most profitable case and assumes it's like that across the board, and it isn't.

Re: A Look Inside the Profitability of Used Games

On top of that is subsidizes the New games market. Retailer profits on New games and systems are very narrow. Add on top of that price drops of games and systems and that profit get's eaten pretty quickly. So any profit from used games has to go into recovering costs associated with stocking new games.

Big box stores like Walmart, Target and Best buy don't have to worry as much because they carry enough other merchandise to cover those costs without having to deal in used games.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: A Look Inside the Profitability of Used Games

I really don't feel there are any "crooks" in this. The RRP is higher that the perceived value of the product - $80 and $90 respectively. EB gives the users options to buy the product at the cost in which they value it.

--
A house is not a home unless it contains food and fire for the mind as well as the body. Benjamin Franklin

--
A house is not a home unless it contains food and fire for the mind as well as the body. Benjamin Franklin
 
Forgot your password?
Username :
Password :

Poll

Will the FCC preempt state laws that limit municipal broadband services?:

Shout box

You're not permitted to post shouts.
PHX CorpI'm going to do a test stream later today, if anyone is intrested07/31/2014 - 2:40pm
Andrew EisenYes, I'm such a big Nintendo dork that I read Nintendo's quarterly financial reports.07/31/2014 - 2:09pm
Andrew EisenCool tidbit - Mario Kart 8 sales account for more than half of total Wii U software sales for the last quarter even though it was only available for the last third.07/31/2014 - 2:09pm
Andrew EisenStill a pretty cool promotion. Unfortunately for me, I'm not interested in purchasing Mario Kart 8 and I already owned or didn't want any of the free games on offer.07/31/2014 - 1:43pm
Andrew EisenInteresting that EU had 10 games to choose from while North America only had four.07/31/2014 - 1:41pm
MaskedPixelanteIt certainly worked, I probably would never have bought Mario Kart 8 if it didn't come with a free copy of Wind Waker HD.07/31/2014 - 1:14pm
Andrew EisenI imagine will see similar promotions like "Buy Mario Kart 8 get a download code for one of these specific games" but almost certainly not for all of its (however you would define) biggest releases.07/31/2014 - 11:24am
MaskedPixelanteI wonder if Nintendo is going to be doing "buy one get one free" promos for all their biggest releases going forward.07/31/2014 - 10:48am
MaskedPixelantehttp://www.mcvuk.com/news/read/special-report-retail-revolt-over-pc-code-strippers/013614007/31/2014 - 8:27am
ZippyDSMleeWouldn't they be able to afford and get done in a timely manner a general gba emluator for the 3DS? It seems to me if they want to make money off sales they need to do it.07/31/2014 - 7:25am
Sora-ChanAmbassador program, that's what I was looking for. Anyway the other games that have been made no longer exclusive to the early adopters got updates in their software. It'll only be a matter of time more than likely for the GBA to get the same treatment.07/31/2014 - 5:35am
Sora-ChanI might be naming it incorrectly when I say "founder" i mean the program for earlier adopters.07/31/2014 - 5:34am
Sora-Chanthe 3DS's GBA emulator was a rush job due to the founder program. No other GBA titles have been released on the 3DS yet. If/When they do get around to it, they'll more than likely update the emulation software.07/31/2014 - 5:32am
Zenemulator...it's not just a slap job that makes "some" work..they do it for each which is why they work so well. I would rather have the quality over just a slap job.07/30/2014 - 5:48pm
ZenMatthew there is a difference between "worked" and "accurate". You play the Nintendo VC titles they play as damn close to the original as possible. The PSP would just run them as best they could, issues and all. And Masked...EACH VC title has their own07/30/2014 - 5:48pm
MaskedPixelanteOnce again, the 3DS already HAS a GBA emulator, it just can't run at the same time as the 3DS OS.07/30/2014 - 4:54pm
Matthew Wilsonyou cant street pass in ds mode ether, and if moders can make a gba emulator that runs very well on the psp as I understand it. you are telling me that Nintendo devs are not as good as moders?07/30/2014 - 4:49pm
Zenperformance. Halo 1 and 2 worked great because they actually did custom work on each of them...just like Nintendo does now lol07/30/2014 - 4:08pm
Zenexisting hardware while the GBA has to be emulated completely. Same reason the 360 couldn't run most Original Xbox games correctly, or had issues because they just did "blanket approach" for their emulation which led to game killing bugs or horrible07/30/2014 - 4:07pm
ZenSora/Matthew: It's not just Miiverse, but the whole idea of streetpass and things like that would be affected if the OS is not running. And just because a 3DS game can be downloaded and run does not mean that GBA can as easily. Those 3DS games use the07/30/2014 - 4:06pm
 

Be Heard - Contact Your Politician