ANALYSIS: The pre-owned market

Before March this year, GAME and Gamestation were by far the UK’s biggest pre-owned game retailers.

Second-hand goods even made up a third of the group’s total revenues last year.

Yet this dominant force in used games has fallen. 277 of its shops have closed. So where do these customers go now?

There are of course other High Street chains, online stores, supermarkets and independent retailers all aiming to take a greater slice of the pre-owned pie.

The indies have a fantastic chance to win back customers,” says Complete Epos Solutions’ Chris Ratcliff, which offers retailers a Game Guide till system.

A slimmed down GAME is welcome as it leaves some space for the indies to fill. And pre-owned will always be important to games retailers as it is the only way to actually make money.

An old boxed game will always have a used value – whether it’s 1 to over 100 for PSone’s Castlevania: Symphony of the Night.”

Simon Mitchell from Eclipse Home Entertainment adds: Since GAME closed some stores, we saw a massive flood of second-hand games.We’ve had to limit the amount of games we buy from customers.”

SUPER MARKET

Another option for customers wanting to trade-in is the supermarkets. However, these grocers can present a frustrating experience. It’s not unusual for a customer to spend 20 minutes going through the complex procedure. Gamers may be required to use the voucher at a separate till. Some branches won’t accept games, let alone niche titles.

On the flip side, there are some great deals to be had.

Indies should never underestimate the supermarkets,” adds Ratcliff. I am not ashamed to say that I have tried to contact Tesco and interest them in a ‘proper’ games management system, but I assume they are comfortable with what they have, and are happy to have lots of used games on their shelves for a higher price than new versions.”

It certainly won’t be easy for non-games specialists to prosper in the space. Argos pulled out of the pre-owned games market last year after its trial ‘did not meet business expectations’.

Konami UK general manager Pete Stone says: Frankly, I don’t think the multiples have the infrastructure to do particularly well with pre-owned. If anyone is likely to benefit with pre-owned from GAME’s [store closures], it will probably be indies.”

Another option for consumers is to use online retailers like Amazon, but the need to post off games will be a deterrent for many.

FIGHTING PRE-OWNED

But does any of this matter? Are the days of pre-owned sales numbered? Although they might not admit it, publishers have been battling the used market for some time with one-time codes, which allow buyers of new releases to access online content for free. Pre-owned versions require the user to pay around 10 for a code.

And the situation could become more extreme, if the rumoured anti-pre-owned tech is incorporated?into next generation platforms.

Some developers have praised such ideas, but there are those who strongly oppose them – including SCEA’s CEO Jack Tretton.

But until those consoles are announced, the steady demand for pre-owned games will continue.

The chances are that demand [for pre-owned] will broadly remain constant, particularly when you consider the ongoing economic outlook,” says HMV’s head of technology and games Ewan Pinder.

For gamers where disposable income is tight, pre-owned is likely to be a realistic way for them to experience as many great new games as possible.”

Blockbuster’s UK commercial director Gerry Butler adds:?The first thing you need to look at is does the consumer want it? And the answer is unequivocally yes. Trade-in helps the sale of new product, because not everyone can afford 40 for each new video game.

Trade-in, in the right environment, increases the sale of new products. But economically the margins are tight for everybody.

That’s why there are less game shops on the High Street than three years ago.”