GAME anticipates yet more growth for trade-ins, as sector generates 25% of H1 sales
Pre-owned sales could account for close to a third of GAME’s revenue in 12 months’ time – as the firm looks forward to another year of double-digit growth for its trade-in business.
In alarming news for publishers, pre-owned generated 25.7 per cent of the firm’s revenues in a tough H1 2009 – up 12.3 per cent year-on-year.
GAME CEO Lisa Morgan told MCV this week that GAME enjoys “significantly better margins” from pre-owned sales than from new games.
Last Wednesday, the GAME Group posted a 60 per cent year-on-year drop in profits for the six months to July 31st.
New income for the period fell from £35.5 million to £14.5 million.
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The company said the fall was in line with company expectations, following a record year in 2008. Overall sales dipped seven per cent, down to £690.8 million.
Despite the downward trend, pre-owned sales leapt to £177 million in the period – representing impressive growth on the £157.8 million taken in H1 2008.
Morgan said she hoped to see similar growth next year. When asked if GAME expected another 12 per cent rise in pre-owned sales in H1 2010, she added: “I can’t give guidance, but we would suggest you’ll continue to see the same kind of trend. Pre-owned makes significantly better margins than new.”
Morgan added that GAME expected pre-owned’s impact on sales to “soften” during Q4, but admitted that the retailer would never deliberately limit trade-ins to please publishers.
“It’s not up to us to restrict the way in which our customers buy,” she added.
For the full year ended January 31st, 2009, pre-owned revenues made up 18 per cent of GAME Group’s overall sales, up to £353 million from the previous year’s £257 million.
Comments
Future?
Congratulations to Game on very good results.
However, what future is their for them with the move to digital distribution looking more of a certainty everyday.
Their are good rumours that the next generation of consoles, PS4 Xbox 720 etc Won't even have an optical drive in them. Only a large harddrive and the ability to purchase games digitally.
Where does that leave Game Group?
Same as every other retailer
It's the same for every retailer involved in entertainment software.
The move to digital will have an impact but it won't be an instant shift. There's a few years left before the death of physical product.
Digital Long Way Off !!
Seriously I agree digital ditribution is where it will end up but this article proves beyond doubt people are not willing to let go of physical media and the benifits it gives them anywhere in the near furure.
Without trade ins people will buy a lot les of the new titles arriving as they simply will not be able to afford it. Digital distribution falls into this category as well unless the prices are significantly less than that of physical media now they will just sell less as there is no resale value and EVERYONE only has limited amounts of deposable income.
Also what about the ability to take disks to mates or swap games for periods, where they can't afford every new title each !!!
I think people need to start getting real with this and congratulate Game on growing an IDEAL business model for the current climate.
not yet
A complete DD future is a long a long way off, for a start BB needs a massive overhaul in the UK.
What about me!!
There are also people who like to collect their games. There will always be a market for physical media as there is a large group of people who don't like to trade their games in and are proud of their collection they have on display at home.
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