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Changes In Florida Law May Impact Used Game Sales

| 18 May 2007 14:05
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A tightening of laws in Florida means that game retailers must now hold onto traded videogames for a minimum of 15 days before they can be resold.

The measure is a part of tougher "pawn shop" laws, which also require retailers who deal in second-hand CDs to have a permit to do so, and invest in a $10,000 security bond with the Department of Agriculture and Consumer Services.

While game retailers are required to hold second-hand games they receive for only 15 days, and do not require the permit, there is some hope that the trade-to-resale delay will help boost the number of new game sales. "With a new console game, their margin is usually under 10 percent, while their margin on a used game can be over 50 percent," said Mike Russell, formerly of Ritual Entertainment. The problem, from the perspective of game developers and publishers, is that none of the money from used game sales makes it into their pockets.

"The publishers (and most developers) are paying for ad circulars, shelf space, in-store contests and promotions, point-of-purchase advertising, subsidized special editions for certain chains, and more," Russell continued, "Just to bring a customer into their store who is going to buy a used copy and not help recoup any of that money."

GameStop, the largest videogame retailer in the world, reported a gross profit of $651.9 million on sales of $1.36 billion in its 2006 fiscal year; by comparison, the company reported $3.09 billion in new software and hardware sales, which accounted for a profit of only $504.3 million. Used games, comprising 24.8 percent of total sales during that period, were responsible for 48.8 percent of profits.

"Laws like the ones in Utah and Florida won't significantly impact sales of new or used product," Russell said. "The most sure-fire way that publishers could 'stem the tide' of used sales would be to eliminate support for chains that sell used product, but given the quantity of new product that goes through those outlets as well, that would be throwing the baby out with the bathwater."

Similar laws are slated for Wisconsin and Rhode Island, while some cities have enacted municipal legislation with comparable requirements.

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