A new report by Wedbush Morgan says 100 million units are moved by the used videogame trade in the U.S. annually, generating revenues of $2 billion.
The used games trade accounts for one-third of all videogames sold in the U.S. each year, according to the report, but actually has very little impact on the sales of new videogames. Only five percent of new game sales are affected by the pre-owned market and that amount is very likely “more than offset” by gamers who use money from trade-ins to purchase new releases.
“The vast majority of used games are not traded in until the original new game purchaser has finished playing – more than two months after a new game is released – typically well beyond the window for a full retail priced new game sale,” said Wedbush analyst Michael Pachter. Furthermore, he added, the belief held by many people that retailers push used game sales ahead of new ones is “largely untrue.”
“If trade-ins occur at GameStop, they should position the trade-in customer to buy more new games than he/she would otherwise normally purchase,” the report said. “Because the average used game value is around 20 per cent of the new game price, we think that used game trade-ins fuel incremental sales of over six per cent of total new game sales, suggesting that the cannibalization from the used game ‘push’ is more than offset by the benefit from used game currency.”