Video Games' Second Life
Already contending with soft sales and rising costs, video-game publishers have one more thing to worry about: The used-game market.
Though new-game sales have been weak in recent months, GameStop, the leading video-game retailer, reported strong demand for used games and expects that strength to continue -- at least in this quarter.
Whether sales of used games cut into those of new games is an open question, say analysts. But the strength of used-game sales is an indicator that in the near term, consumers are becoming more cautious about spending money on games.With Microsoft (MSFT) having recently launched its new Xbox 360 game console and with other new game machines on the horizon, many consumers are likely saving up money to buy the new machines, they say. "Consumers are going to be a little tighter with their wallets, says David Cole, an analyst with industry research firm DFC Intelligence. "That's a big challenge for software publishers overall." Hard numbers for used-game sales are difficult to come by, because none of the major industry research firms track them. GameStop itself has only recently begun divulging information about its used business. But if GameStop's numbers are any indication, the used business is a significant part of the industry -- and it's growing rapidly. Sales of used products -- which include both hardware and software -- amounted to $511.8 million last fiscal year for GameStop, or about 28% of the company's sales. That was up sharply from two years earlier, when such sales totaled $296.4 million, or just 22% of the company's overall revenue. Electronics Boutique, which recently merged with GameStop and also released its used sales results in recent months, saw similar growth over that period.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV