
Leading UK specialist details value of trade-in sales for the first time - £353m for FY08
GAME has this morning finally, for the first time, started to publicly discuss the value of its pre-owned offer as part of its end-of-year results.
Lisa Morgan, GAME CEO, today revealed that pre-owned games represent 18 per cent of turnover for the financial year - during which the firm reported record profits and sales - and revenues continue to grow.
Pre-owned accounted for £353m in the retailer's previous year of trading, up from £257m.
And, GAME revealed that the service isn't just a key part of its offer to consumers, but its also represents and 'attractive' gross margin 39 per cent.
"It's only appropriate to reveal [these figures] as profits grow further," said Morgan this morning in an interview.
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"We have worked hard to maintain our leading position and the market has been very competitive so we have had to reflect that," Morgan added in a presentation.
Recruiting staff who are 'knowledgeable and excel', with the 'widest range of games on the market'.
"And our trading and pre owned program is invaluable in the current markets. Pre-owned has been a key component of our customer offer and a vital part of our business model.
"We have seen excellent growth in this area. It offer better margins and has real potential to drive profitability of our group.
"And it offers a unique way for consumers to save money and drive sales, using games as credit against new purchases."
Comments
Killing Publishers
I think Game and others should understand that they're damaging small-medium and large publishers. Publishers are investing a lot of money into making games and they can't get all their money back with just day one release, by selling second hand games one/two weeks after they're out they're are killing the publishers! If there is a further increase in second hand business fewer publishers will survive and eventually there will be only few publishers left and a few games per year. I’m surprised that they're looking at short term business instead of long term business.
Second hand also makes it difficult for a publisher to forecast how many units will be sold in the first few weeks and we see quite often now that we have a shortage of products. This is because publishers are scared to over build when they have second hand games sold after just a few days.
They should carefully consider what they’re doing and stop selling second hand otherwise they cannot not blame the publishers if they start moving towards downloads!
RE:KILLING PUBLISHERS
If customers did not trade in, they would not be able to afford to make the purchase at all. So, games sell much better on release day. Without pre owned many publishers would not survive. There are two sides to every story.
killing publishers??
The abolishment of preowned sales would be catastrophic for many small to medium publishers, because they would lose 30% of the market they hope to sell to, as they would not be able to afford to keep up with new releases. Look at the preowned selection on most game stores and it's not new releases that dominate but actually older games that are six plus months old. The others are made up of poor quality or poorly reviewed games that have been ignored by a very savvy buying public, who have to money to spend but not on titles deemed to be a waste of money.
Who in their right mind, working for a small publisher, decides with one or two titles under their belts to take on the big boys with a brand new IP? Look at the other avenues for smal indie devs to go down XBLA, PSN and even Iphone distribution till you are financially stable enough to market and support a title properly.
Don't moan about preowned because customers will not like being told that this industry is the only one in the world that restricts its end customers as to when they can choose to sell on their property.
Its time for David Braben et al to move on lest the hand refuses to feed.....
Preowned
Preowned adds longevity to a products life cycle it dos'nt shorten it. Consider this? Why is there a market for preowned product?? Because the paying public consider the price of new product to be over inflated and do as is thier choice opt for preowned (steps off soap box). Individual sectors should stop whinging about "Oh my forecasts are crap because your preowned has stolen the show" Yawn Yawn any excuse for not hitting your over stated market and customer forecasts. Listen to the retailer, work with their forecasts adapt to the changing gaming market and reduce your returns numbers by forecasting based on logic and not as a means to pacify your out of touch MD's from across the water.
Preowned adds longevity to a products life??
Yes for retailers and they make the money without paying any royalty... Retailers have Margins of 39% profit on second hands, Publishers instead have sold less and got losses on their books, if they have not sold many on day one, this is a stupid excuse the longevity.. You may do not understand publishers longevity, If you look the Budget that come out today, the Gov will pay you 2k when you give the old car back and you buy a new car to help car manufactures that are not selling enough new cars and they are closing, is same principle, second hands does kill manufactures and is a proven fact! The problem is that the Gov will not help Game publishers!!
pre-owned
The view that selling pre-owned games kills publishers is a little naive. Particularly in this difficult financial climate, people are finding it harder to warrant spendingmoney on games. By trading in old titles people can continue to buy new ones. Some publishers are making efforts to keep people playing their games by constantly releasing extra content, both free and paid for. This means that people are less likely to trade those titles in. Maybe Publishers need to look at improving the life cycle of games. Another idea would be to make the online element of a game only work for one user. if that game gets traded in and someone buys it 2nd hand, they would then have to pay a small fee to unlock the online content. That way EVERYONE wins.
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