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Analyst ‘Skeptical’ of Best Buy Used Video Game Program

10 Sep, 2010 By: Erik Gruenwedel

Last month’s rollout by Best Buy Co. of a program that allows consumers to trade-in used video games for gift cards isn’t expected to have much impact on retail leader GameStop, an analyst said.

Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles, said the Minneapolis-based consumer electronics retail leader incorporated the program in about 600 stores but has yet to offer used games for resale.

Though frowned upon by the studios, sales of used packaged media generate significant incremental revenue for entertainment retailers while affording consumers an avenue to unload unwanted games and movies in exchange for store credit or cash.

Hastings Entertainment said same-store sales of new and used DVD, Blu-rays and boxed sets increased 11.1% in the first quarter. Blockbuster reported revenue of more than $120 million from previously owned packaged media in the same period.

“Due to its small scale, limited in-store presence (most participating stores do not have a dedicated desk), and the failure of Best Buy’s prior two attempts at entering the used video game market, we do not believe that the trade-in program will meaningfully impact GameStop’s market share,” Pachter wrote in a note.

Best Buy reports second-quarter results (ended Aug. 31) Sept. 14.

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