By Chris Tribbey | Posted: 05 Mar 2009
Amazon.com launched a video game trade-in service March 5, sending stocks of No. 1 video game trade-in company GameStop down more than $4, or 15%, in afternoon trading. Shares of Amazon were down slightly.
Reports were also circulating that Toys “R” Us was testing the used-game business in some of its stores.
GameStop did not immediately return a request for comment.
“Since this is a beta launch, you can expect two things: Our trade-in store will continue to evolve over time, and we’re interested in your feedback on how we can improve it,” Amazon said in its blog announcing the new service. An Amazon spokesman said the blog was the only official announcement the company had about the new program.
The service points Amazon users to a list of games they can trade in — from next-generation console games to those from the first Xbox — and tells users how much the games are worth. After printing out a prepaid shipping label and sending the game in, the customer receives credit in their Amazon.com account that they can spend on most anything they want sold on the Web site. Amazon.com is also giving an extra 10% off a game or game accessory purchase to those who trade in a game.
Several news outlets quoted Ben Schachter, an analyst from UBS, as telling UBS clients that the market reaction against GameStop on Amazon’s announcement was “overblown.”
“The bottom line is that Amazon is a formidable competitor, but we don’t see any meaningful near-term risk, and online used just isn’t a particularly big [market],” Schachter’s note read.
As for Toys “R” Us, gaming sites recently reported that a handful of stores were trying out a used game service, where used games could be exchanged for store credit. A request for comment to the toy retailer was not immediately returned.