Saturday, July 5, 2008

Justifying losing money; or, how GameStop is printing its own profits

Very rarely can you feel good about giving things up and getting much less for your money value than you should, but I honestly feel like that right now after a trip to GameStop to return some games for store credit. I traded in three games I'm not playing much right now - NBA 2K8, NCAA Football 08, and FIFA 08 - in exchange for $43 worth of in-store credit, which I turned into a brand new copy of Major League Baseball 2k8 and a scant $3 worth of a card.

In theory, selling games back to retailers makes sense. I had three sports games I didn't play much (and, in the case of NCAA 08, a game that was about to see its trade-in value nose-dive - its replacement NCAA 09 is due in a week, two max), the store gets to buy them back and re-sell them at a lower price then new, and it's a profit margin for the store. Makes sense, right?

The problem is the profit margins GameStop makes. They're obviously a very big company with many stores, but they're keeping themselves out of the recession, according to Forbes, by being in the second-hand market and making so much. In fact, from an article on Kotaku.com, GameStop is making 50 cents of pure profit on the dollar on their used sales. GameStop is raking in $650 million per year on used games.

I added to the 2008 totals tonight, even though my friend Nick and I got there just before the store was supposed to be closed - and even though the manager and the other goober clearly wanted to leave, badly.

So how is this $650 million made? Simple: mark up the price on hot used games, and quite seriously low-ball gamers on their sales. Like, "here's some lube, you'll need it" low-ball on the amount of money you get back (oh, and if you want it in cash, that's a certain percentage less that you get. It's a fucking racket).

Let's take my turn-ins for the night as an example. I received $43 for my efforts. I don't know the specific breakdown of how much money each was worth, but I do know that FIFA 08 was probably the most out of the three I got. I also got an extra $10 for turning in three "next-gen" (re: PS3, 360 or Wii) games, which is clearly another indication that three is the magic number. So, without bringing the De La Soul-style bonus, I got $33.

How much do these games retail for used from EB? According to EBGames.com (same parent company as GameStop), the PS3 version of NCAA 08 is $19.99 (no 360 version and the prices are usually the same), the 360 version of NBA 2k8 is $26.99, and the 360 version of FIFA 08 is $44.99.

GameStop paid me $43, including a $10 bonus, for games they will turn around and sell for a grand total of $91.

This, ladies and gentlemen, is how $650 million of profit is made. Somehow, I can still justify it - I mean, those games were just lying around, right? Might as well get something new - but I still feel horrible knowing that I am nothing but $.50 profit on the dollar to GameStop.

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