GameStop CEO Says Restricting Used Game Sales Is Bad For Everyone

GameStop CEO Dan DeMatteo says the industry crackdown on used game sales actually has a negative impact on new releases as well, as customers can no longer use the “residual value” of their old games to help them afford new ones.

Despite the nearly-universal negative reaction from consumers, many leading figures in the videogame industry have made no secret of the fact that they are trying to find ways to curtail the pre-owned market. Epic President Michael Capps recently equated the legal sale of used games with piracy, while in July Microsoft’s Alvin Gendrano said the advent of downloadable content could be used to help “defend against the used games market.” Install limits built into games like Spore, meanwhile, effectively render the games worthless for anyone but the original buyer.

But for specialty retailers like GameStop, pre-owned game sales represent a significant profit opportunity, particularly in the current economic climate, and according to DeMatteo, the industry attitude toward game sales is becoming a problem for both sellers and buyers. The high prices of many new games tends to mask the fact that profit margins are minimal, and it’s not unreasonable to conclude that if game retailers are forced to carry new games only, their selection will be cut considerably as they focus exclusively on games that are sure-fire moneymakers.

“I think it creates contention not only for us, yes, but also for the consumer,” he said in a recent interview with Gamasutra. “Anything that limits the transferability of a game from consumer to a friend of theirs, to selling it on eBay, to exchanging it and trading it with one of their friends, or selling it back to GameStop — I think is a bone of contention with the consumer.”

Rather than harming new game sales, DeMatteo claimed that new game sales grow alongside trade-ins, as consumers use the “residual value” of their old games to help purchase new ones. “The consumer has been trained that there is a residual value to their video games,” he said, adding that that value to customers is typically held at around $20 per game.

“We will give out approximately $800 million in credits this year – trade-in credits that will go toward the purchase of new video games,” he said. “The consumer, oftentimes and especially now, needs that residual value from those games as a trade-in to be able to afford a new video game.” He also implied that publishers could find themselves without the good graces of the biggest game retailer in North America, warning that if they continue to fight used game sales, it will “eventually get the customer upset, as well as GameStop.”