Being Used?

In the years that I was a Gamestop manager — dark days in which the sun was blotted from the sky and malevolence slouched through the halls of dingy shopping malls in the guise of poison-tongued high schoolers – I took quiet exception with countless official policies and products. Eventually I purged myself of these demons in a number of articles back around 2005, a very public exorcism which discussed at length how the company conducted its business and more importantly how talking about it made me feel a hell of a lot better, or at least cleaner.

In all that time, however, the one widely lodged complaint for which I could never really generate enthusiastic ire was on the matter of used games. To my addled mind, used games continue to seem like a pretty nice idea; a prime example of how the rare capitalistic initiative can benefit both retailer and consumer.

If you are a developer or publisher, I get it. I sympathize; really, I do. There’s a big damn hole in the bucket, dear Liza, and Gamestop chairman Dick Fontaine is standing there unapologetically holding a drill. But as a consumer I have to say that in the first, second and third place I’m watching out for numero uno, and I like not spending money. Or more precisely spending a little less money, so I continue to be baffled when well-meaning game buyers rise in a single voice against the anathema of used game sales.

Let’s not sugar coat it, when you trade in your game at Gamestop you are getting a return dramatically below the retained market value of your product. The company then turns around, often without doing anything but printing up a sticker, and resells your game at a substantial increase. As a trade-in customer, I accept when I walk in with my trades that I am substituting value for convenience. Yes, I could probably, nay certainly, demand higher through Ebay, but honest to God who has that kind of time any more?

That said, I don’t think there’s a big “A Ha!” moment when the monster profit margin is revealed between the cost at which the retailer buys the game from you and the price at which they resell the game. Here’s a hint, it’s big — really big. It is, by far, the biggest margin in the stores, but — and here’s the key — only if they manage to sell it.

The profit potential on used games is without question the goal of a strong used games market, but the real benefit to consumers in the deal is that we have an unlimited market for our used games. In short, Gamestop never says no.

Outside of clearly broken games or product for systems that aren’t sold anymore, if you walk in with a current or nearly current generation console game, you get something. It may be pennies on the dollar, but it is guaranteed. Imagine, for a moment, the monumental overhead and inventory nightmares this creates on a national level. How many beat up copies of Kameo are sitting in some Indiana Jones warehouse never to be sold? How much loss will the company have to soak up on Tony Hawk: Ride buyback as consumers looked to sell quickly while the value was high.

I don’t argue that Gamestop doesn’t make quite a bit of money by reselling games like Dragon Age or Borderlands, but the error that many armchair critics make is in not realizing how much of that money goes against the loss on Fusion Frenzy 2 or CSI game trades.

Still, it’s not like the proposition hasn’t worked out. This is a little bit like oil companies complaining about the cost of refinery and drilling development as they make tens of billions in a quarter, or pharmaceutical companies cashing in only on designer drugs for profitable illnesses … except of course, we are talking about a luxury product whose stagnant price point hasn’t kept up with inflation for decades. But, I’m not equivocating or making excuses, because let’s face it. Gamestop has been rolling in the money pool for a few years now.

Even if the Gamestops of the world pulled in monster profit on every single used game taken in, I still can’t get behind the consumer based fury. I am a fan of choice, of being offered the option of a reduced price. The math behind how Gamestop manages their inventory doesn’t factor into the question of would I like a given game for $59.99 or $54.99.

This is the point in the conversation, I suppose, where hearts bleed for the starving developers who never see the profit of those resell transactions. Bleeding hearts which I assume are asleep at the switch in the discussion of Ebay and other consumer resell avenues. Bleeding hearts which seem to get a nice healthy clotting agent when issues of Day One DLC or the proclaimed need for price point hikes to address the rising costs of development and piracy issues come up.

Forgive my cynicism, but a lot of the arguments against trade-ins and used game sales seem awfully convenient. There is something, which I admit I understand in my amygdala if not my more cognitive brain centers, about knowing that when you hand over your $50 bucks to the counter jockey, you are paying for something at double the price the company bought at. What I don’t understand is why it is better to buy essentially the same product for five or ten dollars more just because it bites into the margin of your supplier.

And, that's the point. It seems totally unreasonable to me to reject, even demand the elimination of a lower price point option simply because you don't like how much money the provider is making on the deal. It is a gut check reaction that seems more based out of an anti-Gamestop cultural undercurrent than anything else. If, for example Valve offered a way to resell your games back to them through Steam -- and this is a genius idea that I endorse with what can only be termed 'gusto' -- and buy through a digital used market, I have a hard time imagining the same fiery torches and proverbial pitchforks being raised.

I am willing to concede the argument from those who simply prefer a product in pristine, new condition. I have no beef with them, and even join their ranks on many games, but that doesn’t discredit the idea of having choice. Ultimately, used sales work to the benefit of both retailer and consumers keeping costs low and retailers competitive. Yes, one side usually comes out of the deal a little better, but that’s the way of good business.

For all the things that Gamestop and other retailers deserve to be criticized for, this once perhaps we should just take our $5.00 off and go about our business.

Comments

Personally, I don't partake in used game sales whenever possible as I like to support the developers and I'll admit that I do find more personal value in something that I'm opening and using for the first time. There's no particular reason for this, it's just how I am. I personally hate the GameStop experience overall which is why I don't shop there. I don't have a problem with used game sales in general and feel the choice should be there. Its true that developers don't see any money from them but used games have existed as long as the industry and it's a cost of doing business they should have to adapt to. Two points I'd like to address from the article though:

1. eBay may be a bit complicated but seriously Elysium, it takes 2 minutes to create a Kijiji or Craigslist ad and there's no shipping involved at all. I've sold several games on those sites recently (it's how I've managed to keep buying new games with essentially no income), received far more than GameStop would give me and it took even less effort because I didn't have to leave my apartment. The buyers either come to me or if they need me to take it to them, I charge an extra $10 to cover my gas and time. I'm not saying people should be faulted for taking whatever route they see as the easiest but GameStop trade-ins aren't and it takes almost no effort to make more money.

2. If you think GameStop's taking a loss on those ancient games sitting in a warehouse, you're mad. Anything they don't sell is written off before being thrown out if not when the credit is given to the customer, I guarantee it. When my company buys product for inventory, we get to write it off immediately, even if it never sells and then we get to write off its depreciated value if we decide to junk it. They may not be getting as much as if they sold it in retail and they may not be getting it right away but I guarantee you, every used game makes them money at some point in its life.

Darko wrote:
Why are 13 year olds using credit cards in your hypothetical?

They're not. That's my point.

Your beef has more to do with parenting than retailer ethics.

Even if you're under 18? While I'm sure Visa, Master Card, or Discover would like to agree with you, they are governed by laws that restrict that situation. Not everyone is privy to the same information as we seem to be here, and that's why I'm arguing that it's not an ethically sound practice.

Everyone is privy to the prices on Gamestop's shelves.

Kid goes in to trade in... Let's say Modern Warfare 2.

On the shelves, he sees used copies selling for $49.99.

He asks how much he gets in trade, and say it's only $20. That's less than half of what they're selling it for used. Either the kid has a good sense of value and sees that it's a bit of a rip-off, or the kid just sees $20 he's getting for nothing more than handing the guy the old game box.

Value is incredibly relative. If I had gotten my money's worth out of that game, and knew I would never play it again, that particular trade-in might be good enough for me, as I can get $20 credit towards another game, with extremely little hassle. If I'm willing to list it on ebay and handle the shipping cost and hassle, and get more money for it, because $20 seems like a ripoff, that's on me.

There's no shortage of overpriced garbage on store shelves, very few things priced at their actual value, and far fewer cheaper than their value. Gamestop is no different. The only protection is what you take with you, and your sense of value.

"Oh trust me, having been on the inside, let me tell you that there's no love lost among retail managers toward customers they don't like or perceive as "problematic"."

I bet. This whole topic humbles me in the sense that we're all uninformed or lazy in some capacity. Maybe Gamestop is the McDonalds of this industry. You know it'll make you sick, but it's that 2 a.m. go-to when there's nothing else for miles.

The mall near me contains 2 separate gamestops, one on each floor. And there is another a quarter mile down the road.

If I buy anything at Gamestop/EBGames (mostly EB, but it's the same company so it doesn't really matter), I almost always get it new if it's available. I'd much rather pay that extra 5$ to get a game that's guaranteed to be in perfect condition, and supporting the company that made said game is a pleasant extra. I find that Gamestop is expecting a bit too much for it's used games.

"There's no shortage of overpriced garbage on store shelves, very few things priced at their actual value, and far fewer cheaper than their value. Gamestop is no different. The only protection is what you take with you, and your sense of value."

That's a great point. I bought "Torchlight" on Steam for $20. It went on sale a few weeks later for $5 or 10. Do I feel like I got a bad deal? Absolutely not.

Your beef has more to do with parenting than retailer ethics.

It was just a point, not my beef. Credit card companies can't prey on underage kids, so why should it be okay for Gamestop to do it?

Let's consider video games a hard commodity for a second. Commodity prices are regulated by supply and demand. The marketplace decides the value of a good, and it is traded based on the average conception of value at any given moment. If we looked at video games on a resale level, Gamestop is essentially an outlying figure if you look at ebay/craigslist. Ebay and Craigslist, in my opinion, set the true market value for the used video game market because they accurately run off supply and demand. If MW2 is $40 on average in that marketplace, what justification is really there for it to be $55 on another? Now, you would have to take into consideration any brokerage fees when trading commodities (convenience here) so add in an extra 5% to that $40 and I'd say that's a fair price for the same game at Gamestop.

In other retail environments there is competition (Target vs Walmart) so prices stay fairly inline wherever you go. It seems like Gamestop has the opinion that it can do what it wants simply because it's really the only option (seemingly) to most people. That is where I feel they are taking advantage of their position. I think that's a fair ethical question. Should you take advantage of people because they 1) don't know any better, and 2) you are the leader in the industry?

And before you start, I realize that no large retail chain is going to look to Ebay for fair market value.

Well said Elysium.

The reason that Gamestops are freakin' everywhere is that they have a business model that works. Convenience is a powerful motivator. I've certainly used their service in the past when it's suited me, and I don't regret it. These days, I've transitioned to the Goozex/Ebay/Amazon route, as monetary value currently trumps convenience for my current gaming lifestyle, but I certainly don't begrudge Gamestop's business. As a consumer, it's good to have choice, and for all that we may lay the blame for the demise of the mom'n'pop game store under the Gamestop sign, there's probably more choice now thanks to the large number of online outfits.

I used to check out their used game selection on Buy 2 Get 1 Free sales pushes, but really only for titles that fall in the 17.99 and below price range before discount. Stacked with the EDGE card which was an additional 10% off, it was fun for impulse buys and filling out gaps in the collection of slightly older titles. Checking to make sure its complete and in good shape though, is a bit of a hassle at the counter.

I really havent had a need to buy anything used for a long time though. I find Amazon's prices in particular so good, that it doesnt take long for even new releases to hit a comfortable price point.

Buying new from GS, unless its a Day One release that was pre-ordered is tricky, because all too often after that, their new stock is gutted stock. I'd rather go across the street to Target or just be a bit patient with an Amazon shipment.

I wouldnt buy used over new for a mere 5 dollar difference. For that 5 dollars I'd rather have the joy of a virgin shrinkwrapped game. Opening a new game still brings back a brief impression of opening Ultimate 3 for Christmas when I was a kid I think.

GS is useful for immediate satisfaction. This goes for buying and trading / selling. For example I was really dying to get My Fitness Coach for the Wii as a trigger for my New Years Resolution. GS was just a few stores down from the Supermarket shopping and so I jumped on it. [Sidenote: We've been having a ton of fun with Maya and the original My Fitness Coach... though I hear the recent My Fitness Coach 2 is a huge letdown (they dropped Maya) :(]

There is nothing wrong with the concept of used games as a principle. We buy used cars, used houses, and used books, why not used games? Gamestops margins are perhaps ridiculous, but the prices are indeed right there for everyone, and there are alternatives. Gamestop is like a used car dealership - sleazy, perhaps, but mighty convenient.

My personal gripe with Gamestop is that every single one I've been inside looks, smells and feels like an XXX video store. (And nowhere near as nice as the one in the picture above). I also hate being places where I have to fight through sweaty teens huddle around used bins, 8-year olds being babysat by demo machines, and incredibly long lineups due to the half-dozen pitches the clerk has to give each customer for every transaction.

It is among the most unpleasant places I've ever conducted business, and yet it remains one of the most public faces of the video game industry. That is reason enough to disparage it loudly and publicly, and avoid it like the plague.

It used to be so much fun going into the old EB stores, the Babbages, etc. because you didn't know what was in store for you on that next visit. In a time before the internet, you could go in and discover a Sega Genesis box (w/Altered Beast) for the first time, or a headspinning $600 Neo Geo (with $200 games) or the crazy-ass game boxes on the PC wall. Yes, that's right... a wall for PC games. No real point here, just a random flashback that I wanted to share with you all who remember the "good ole days."

Dysplastic wrote:
My personal gripe with Gamestop is that every single one I've been inside looks, smells and feels like an XXX video store. (And nowhere near as nice as the one in the picture above). I also hate being places where I have to fight through sweaty teens huddle around used bins, 8-year olds being babysat by demo machines, and incredibly long lineups due to the half-dozen pitches the clerk has to give each customer for every transaction.

It is among the most unpleasant places I've ever conducted business, and yet it remains one of the most public faces of the video game industry. That is reason enough to disparage it loudly and publicly, and avoid it like the plague.

The feel of a XXX video store crossed with the ambiance of a Chuck E. Cheese. GameStops embarrass me, for exactly the reason you state, Dysplastic: that's the most public face of video gaming. Try to convince someone of the value of video games in the middle of a cramped, smelly, noisy EB. Killing time in one of them while Ms. Gravey is shoe-shopping is an exercise in simultaneous hidden-gem-finding and self-loathing.

If I had the money, wherewithal, time, and inclination, I would open a video game store that would be atmospherically indistinguishable from a used bookstore, complete with obligatory store cat hedgehog.

A great followup to this topic might be an interview with the owner of liongames, one-time-sponsor of the site. I believe he had to pull out of used videogames. If he were open to such a discussion, it might be very interesting to hear his perspective on the market and his experience with whether it was because of his particular business model, the fact that used / discount game shoppers are relentlessly price savvy, the constant downward pressure of used game value and/or other factors such as inventory cost etc.

I've started to go to Game Crazy. They are attached to Hollywood videos and unfortunately in my area, several has closed and now harder to get to. But they have good deals and more knowledgeable staff then GS it seems to me. At least the one I go to. More down to earth and ready to cut deals within reason. Lot's of coupon and add deals etc. Trade in and used games seem better too.

My opinion started to sour when Gamestop bought out the market. It made sense from a bottom line perspective, but the experience degraded in a very predictable way. It also irks me that their membership cards are what caused Game Informer to be one of the last VG mags standing.

I have no spite for their employees, just pity; it's not a pleasant place to work.

I used to live in a city where it was illegal to sell used games. Yep. No used games were allowed to be sold. Needless to say Ebgames/Gamestop was the worst shop in town to buy games.

Thanks for the article. Good read.

I too am looking out for Numero Uno.

I thought someone might mention that buying used games from Gamestop is like renting a game for a week, isn't it? Buy it, beat it, return it within 7 days? Sounds like a sweet deal to me, whatever the cost is.

Darko wrote:
It was just a point, not my beef. Credit card companies can't prey on underage kids, so why should it be okay for Gamestop to do it?

In other retail environments there is competition (Target vs Walmart) so prices stay fairly inline wherever you go. It seems like Gamestop has the opinion that it can do what it wants simply because it's really the only option (seemingly) to most people. That is where I feel they are taking advantage of their position. I think that's a fair ethical question. Should you take advantage of people because they 1) don't know any better, and 2) you are the leader in the industry?

Darko I don't agree. If the cost of a game at Gamestop doesn't match the value contained within the game, why would you buy it? People are not dependent on games to survive the way they are on credit cards (which people also shouldn't be, but that's a completely different can of worms).

So to your question, I don't see how they are taking advantage of people--that implies deception. If they are lying to people, then you have a point. But taking advantage of a person's ignorance? How hard is it to go online and check video game prices? I'd call what Gamestop does catering to laziness, but not taking advantage (convenience does have value, and usually quite high value, so that should also figure into your calculations). It almost sounds like you're saying they shouldn't be able to charge what they want for the product they sell--or do you want Gamestop to be saying, "Hey, this is our price, but look you can get it on Amazon for $10 less!"?

And no kid under the age of 16 should be buying games without their parents' knowledge, not because of the content but because it's not a small purchase. It's up to the parents to decide how their money is spent, and if shopping at Gamestop is as lugubrious an experience as people are saying, then for heaven's sake teach your kids that it's not the only option around.

Where's that GameSpot from the photo at? If they all didn't look like a used game slum, I might consider going into one.

Darko wrote:
Ebay and Craigslist, in my opinion, set the true market value for the used video game market because they accurately run off supply and demand. If MW2 is $40 on average in that marketplace, what justification is really there for it to be $55 on another? Now, you would have to take into consideration any brokerage fees when trading commodities (convenience here) so add in an extra 5% to that $40 and I'd say that's a fair price for the same game at Gamestop.

A 5% premium ($2 per $40 game) for renting the store space, stocking it, and staffing it? Things on Ebay are cheaper in part because it's just a dude with a game on his shelf he doesn't want, not a dude with 100s of games he's trying to flip, in rented retail space, being sold by multiple pimply faced teenagers (and occasionally a depressed bearded guy).

I just don't get the hate. Gamestop provides a convenience to those that are "informed", as you would say, and a service to those that know of no other means to sell used games. Do you feel this way about all retailers? No matter what product you can think of, someone is out there knowingly selling for a higher markup than someone else for no other reason than because they can.

Looks kinda like the Mall of America one (2nd floor, not 3rd floor).

McChuck wrote:
Where's that GameSpot from the photo at? If they all didn't look like a used game slum, I might consider going into one.

I have never seen an EB or GS that spacious or empty. Take half the available floor space and fill it with plastic instrument bundles, and the other half with blathering teens and kids piled around the demo stations. Add some clueless parents, noise and odour to taste, and serve.

If people are going to buy a new game for $60, play it for a week, and trade it in for $20 in store credit, why don't just rent games in the first place?

Gamefly has saved me more money than any used game shop has. When I do decide I want to own a title, the price is better than gamestop, I know the disc works and I'll get the packaging and manual in like new condition. I don't understand why anybody would go to a Gamestop in the first place.

Evo wrote:
I must have missed it, but where is Elysium saying "screw developers" here?

It was very late at night and I was paraphrasing, but here:

Elysium-Lordofallthatiswritten wrote:
...The math behind how Gamestop manages their inventory doesn’t factor into the question of would I like a given game for $59.99 or $54.99.

This is the point in the conversation, I suppose, where hearts bleed for the starving developers who never see the profit of those resell transactions...

It's not a direct correlation but I just found it ironic that he was one of those bleeding hearts not too long ago, though I'm not sure used games were brought into the equation at the time.

Also, I must have been really tired last night because I didn't recognise large portions of the article as I read through it to find that quote. Maybe I should try to avoid late-nigth forum posting...

Donan wrote:
I've started to go to Game Crazy. They are attached to Hollywood videos and unfortunately in my area, several has closed and now harder to get to. But they have good deals and more knowledgeable staff then GS it seems to me. At least the one I go to. More down to earth and ready to cut deals within reason. Lot's of coupon and add deals etc. Trade in and used games seem better too.

Last time I was in a Game Crazy was the day Street Fighter IV came out. I called before, after reading on here that people were getting them at other Game Crazy stores. I asked for a 360 copy, they said they had a PS3 copy. I said I'd take it, as I planned on getting it for both systems.

I got there, and the manager said they had a cancellation on the 360 pre-order, so I could have that one. I took it, and he said "If you want to buy any other games, you have to pre-order. They aren't going to be printing extra disks if they aren't guaranteed a sale anymore."

Elysium wrote:
2. If you think GameStop's taking a loss on those ancient games sitting in a warehouse, you're mad. Anything they don't sell is written off before being thrown out if not when the credit is given to the customer, I guarantee it. When my company buys product for inventory, we get to right it off immediately, even if it never sells and then we get to write off its depreciated value if we decide to junk it. They may not be getting as much as if they sold it in retail and they may not be getting it right away but I guarantee you, every used game makes them money at some point in its life.

This is an excellent point.

You should be required to counter-point all of my articles.

A write off will lessen the sting of a loss, but it's still a loss. They give you $20 credit for a game that they sell for $10, so they don't have to pay tax on that $10. It might save them a buck or two, but they're much better off selling that game for more than $10. A business that relies on write offs is soon bankrupt.

PopEsc wrote:
If people are going to buy a new game for $60, play it for a week, and trade it in for $20 in store credit, why don't just rent games in the first place?

Gamefly has saved me more money than any used game shop has. When I do decide I want to own a title, the price is better than gamestop, I know the disc works and I'll get the packaging and manual in like new condition. I don't understand why anybody would go to a Gamestop in the first place.

That doesn't make sense to me either, but for used games it would. Last I remember Gamestop had a 1 week policy where you could return a used game you bought there for full credit/cash back (not sure which). Cheaper than renting.

I can understand trading in games (Personally I don't do it because I'd rather just lend the game to someone who's going to have fun with it than get a credit for it and watch Gamestop make a profit on it.) But I have really no idea why the hell you'd buy a 'used' game that is 5 dollars cheaper than a brand new copy? You're saving the cost of a happy meal and potentially having to deal with a disc that has been mistreated and could be damaged. If you're so hard up that you need to save 5 dollars on a video game purchase, maybe you should investigate you're spending habits...

You're not saving a significant amount of money and you have to deal with Gamestop employees and Gamestop as a company, which is simply hellish on all fronts. I'd much rather spend the extra 5 dollars, get a brand new copy of the game and pick it up from Best Buy or Futureshop without having to deal with any of this pre-order bullsh*t they make you deal with.

*Legion* wrote:
That's why I scratch my head over people who line up on Black Friday to save 33% on a DVD box set. For these people, their time and effort are apparently of no real value, to be traded so willingly for a decent but not earth-shattering sale price.

It is supply and demand. If a person has available time but is low on available money than using 4 hours of a plentiful resource to save $30 of a scarce one makes sense.

Timely article. In a recent podcast you guys were talking about the anticipated death of used game stores via digital downloads with a lot of glee. What you forgot, I felt, is that many of us actually like that arrangement in some cases. Even more, some of us are lucky, really lucky to have a local new/used game shop. One that has goofy workers that really truly LOVE video games. People who will give their honest opinion and advice. If they know you won't love a game, they'll tell you why it might not be for you. If they get something in they know you'll love, they stash a copy under the shelf in the hope that you come by and buy it from them.

These companies do exist. And they're worth keeping. In a digital only world there is no place for them. I've already watched my local record store disappear. I am going to fight for my local book store and my local game store.