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.

---

Patreon

Deviantart

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 :

Shout box

You're not permitted to post shouts.
Andrew EisenFeel free to leave us suggestions on Facebook or Twitter too. We're going to be busy but we'll try our best to keep an eye on 'em.08/31/2015 - 8:59pm
Andrew EisenIt's an interesting idea though. If we do anything, we probably won't know until after the site goes offline so keep an eye on GP social media for announcements.08/31/2015 - 8:59pm
Andrew EisenYeah, we could use my Twitch chat box too. There's always IRC but we don't currently have a GamePolitics channel.08/31/2015 - 8:57pm
Goth_SkunkThough I think the limit is 9 at a time in the hangout, so anyone who can't get in would be stuck out in the 'on air' portion.08/31/2015 - 8:57pm
Andrew EisenFor the show, I'd like the chat open to anyone who wants to watch.08/31/2015 - 8:55pm
PHX CorpI could Set Up a Temporary chatroom on My twitch.TV page while GP is busy updating the site(since I'll be Fighting Megaman Legacy Collection on Xbox one)08/31/2015 - 8:54pm
Goth_SkunkI don't see a problem with inviting viewers. It's not like I'm advocating this to be an open forum, just something specific to GP members.08/31/2015 - 8:53pm
Andrew EisenThat's why I embed the chat box from my Twitch Page. Can't get chat on the YouTube page to work either.08/31/2015 - 8:49pm
Andrew EisenI do but I haven't seen a way to incorporate viewers to chat without specifically inviting them to the event.08/31/2015 - 8:49pm
Goth_SkunkThough I'm surprised you'd not be familiar with this, Andrew. Do you not use Google Hangouts when you do S.P.A.C.?08/31/2015 - 8:45pm
Andrew EisenGP Movie Night!08/31/2015 - 8:41pm
Big PermEveyone should be too busy with phantom pain to notice GP is down. Hail Vidya!08/31/2015 - 8:40pm
Goth_SkunkBut such a hangout *could* be a neat idea. It could be used, for example, for all us GPers to get together and watch the new FemFreq video, and then discuss amongst ourselves in real time what our thoughts are.08/31/2015 - 8:38pm
Goth_Skunkcacophany of voices all trying to talk at once.08/31/2015 - 8:37pm
Goth_SkunkVideo is entirely optional. The only criticism I have of the hangout system is that I don't believe the moderator has the ability to "give the floor" to any one particular individual. Without mutual respect and tact, a Google Hangout can be reduced to a08/31/2015 - 8:37pm
Andrew EisenWell, I can't stream anything because I'm at work all day (still am).08/31/2015 - 8:28pm
Goth_SkunkIt seemed simple enough to me. During a shift at work I was bored and hopped on a Google Hangout that was GamerGate themed and streamed on YouTube. Granted, I was not the host, but joining in seemed fairly straightforward.08/31/2015 - 8:24pm
Andrew EisenSo, like a space where we can all hang out and chat while the site is down? I can dig it. No idea how to do that though. Is there a way to create a public chat in Google Hangout?08/31/2015 - 8:23pm
benohawk@Goth Thirded, I think the motion carries08/31/2015 - 8:17pm
PHX Corp@Goth_skunk Seconded08/31/2015 - 7:43pm

Be Heard - Contact Your Politician