Wal-Mart entry into used videogames trade threatens GameStop

Tue Mar 18, 2014 11:38am EDT

Customers shop at the Wal-Mart Supercenter in the Porter Ranch section of Los Angeles November 26, 2013. REUTERS/Kevork Djansezian

Customers shop at the Wal-Mart Supercenter in the Porter Ranch section of Los Angeles November 26, 2013.

Credit: Reuters/Kevork Djansezian

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(Reuters) - Wal-Mart Stores Inc will allow U.S. shoppers to trade in used videogames for anything from groceries to gadgets, a move that could dent the profit of GameStop Corp, the largest dealer of used videogames.

GameStop shares fell as much as 6 percent in morning trading, making it one of the top percentage losers on the New York Stock Exchange.

Wal-Mart said on Tuesday its trade-in service will accept games for popular consoles like the Sony Corp's PlayStation3 and Microsoft Corp's Xbox 360, and customers can in return buy anything at Walmart and Sam's Club.

"Gaming continues to be an important business for us and we're actively taking aim at the $2 billion pre-owned videogame opportunity," Duncan Mac Naughton, chief merchandising and marketing officer for Walmart U.S., said in a statement.

The move would pit Wal-Mart against retailers such as Best Buy Co and Target Corp, besides GameStop, which also have trade-in programs for used videogames. Such games are refurbished and sold later.

While GameStop would be unlikely to lose market share, the company would be forced to go into a price war to both buy used games and to sell the refurbished games, according to Stifel analyst David Schick.

"We know that WMT "invests in price" ... and we expect GME will match an increasingly competitive marketplace to protect (market) share," Schick wrote in a note to clients.

GameStop has already warned of sagging sales of games played on older versions of Xbox and PlayStation consoles.

Sales of videogame products such as consoles have been pressured by lower-priced online offerings and as gamers spend more time on tablet computers and phones.

GameStop shares were down 5 percent at $37.82 in late morning trading on Monday, while Wal-Mart shares were up marginally at $74.87.

(Reporting by Supriya Kurane and Abhirup Roy in Bangalore; Editing by Gopakumar Warrier and Savio D'Souza)

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Comments (5)
nose2066 wrote:
So now that the Federal Reserve is busy making the American dollar worthless, the people will need to go back to a barter system for buying and selling things???

Mar 18, 2014 8:23am EDT  --  Report as abuse
diluded0000 wrote:
Nose2066: care to explain in you own words, exactly how the Fed is making the dollar worthless?

With these game developers comprising one of the largest segments of the entertainment business, I’m surprised they aren’t raising a stink about this. Sony doesn’t get paid when Walmart buys and sells a used game, and those are game dollars that don’t get spent on new product. But with Walmart being maybe the largest (is Amazon larger?) game retailer, they can get by with things like this. Personally, I think some of these games contribute as much to random violence as high capacity magazines, but it is a free country.

Mar 18, 2014 10:02am EDT  --  Report as abuse
cvpn81 wrote:
nose2066: i’m really sick of people like you speaking about things like this. especially when you know nothing of government or how things work. this “system” is BASED on the dollar. the video game is worth XX.XX$ and is SOLD to walmart for CASH by the owner of the video game. walmart gives the owner DOLLARS for the game which they spend at walmart for things they need. if your little theory is correct, the video game would be worthless as well and this entire trade-in system would not work at all. put your ignorant party-politics behind you and MOVE ON. this is really getting old quickly. seriously, interest rates for a home loan are STILL quite low in comparison with previous years (remember 10-15%…Reagan years i believe). Auto lending rates are extremely low and unemployment continues to dip lower. sure nothing is perfect but i fail to see the need to do a whole lot of complaining. it could be far worse. maybe you would like it in russia or the ukraine better??

Mar 18, 2014 10:05am EDT  --  Report as abuse
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