embargo for midnight. Can go at 6 am.
Since March, Walmart has been offering gift cards to its customers in exchange for their old copies of Call of Duty: Ghosts or Killzone Shadow Fall. The company’s collection of used video games is now big enough that it is ready to begin selling them, too. On Tuesday, Wal-Mart said its pre-owned gaming business is going live in 1,700 of its 4,800 U.S. stores.
The idea is to lure some gamers away from GameStop, the Texas-based retailer that dominates the $1.6 billion market for used games. For Walmart, which has been increasingly interested in used electronics of all kinds, the strategy is pretty simple. “Our goal is to buy used video games for more, and ultimately sell certified pre-owned video games for less,” says Laura Phillips, the company’s senior vice president for entertainment. It is starting aggressively next week, with the release of Call of Duty: Advanced Warfare, one of the most anticipated games of the year. Walmart is planning a series of midnight release parties starting Sunday night at 10 pm, where customers will be able to buy the game 24 hours before it goes on sale generally. On Monday and Tuesday, Walmart customers can get double trade-in value for their used games if they also purchase a Playstation 4.
GameStop maintains that it doesn’t feel threatened, although this summer it did change its trade-in policies to make them simpler and more generous. “Target, Walmart, Best Buy, Amazon, they’ve all tried or are trying used games,” says Tony Bartel, the company’s president. “Frankly, when someone comes it helps us, because it raises awareness that you can turn in video games, and we have the lion’s share of the market.” Bartel says that setting buy and sell prices for used games is more difficult than it seems, and Walmart runs the risk of getting stuck with inventory if it gets that balance wrong.
Many analysts agree with Bartel: Walmart probably isn’t a fundamental threat to GameStop. “The trick with used [games] is not demand. It’s supply,” says Michael Pachter of Wedbush Securities. “Getting people to buy used games is easy—cheap people will buy used stuff. Getting people to trade in games requires a relationship.” Walmart declined to go into detail about the volume of its trade-ins, saying only that it has seen “great interest.” Its stores will offer between 40 and 100 titles.
GameStop has several attributes that Walmart is unlikely to replicate. It is staffed almost entirely by people who actually play video games. Those with old games to trade probably already have a relationship with a particular GameStop location, and many gamers have been amassing credit in their GameStop loyalty accounts. Unlike most retail locations, adolescent males are actively encouraged to come in and hang out. Finally, GameStop is willing to pay for used games with cash, not just gift cards.
Walmart’s job is particularly difficult because gamers aren’t simply weighing the economics when deciding what to do with their old games, says James Hardiman of Longbow Research. If money was the only thing that mattered, people would be inclined to ignore retailers altogether. “They might offer you $20 for a fairly new game you’re done playing with, and turn around and sell it for $55,” says Hardiman. “There’s a lot of ways, if you’re concerned about the economics, to do better than that. You can sell it on eBay for $45.”
