Whyos

It seems to be getting an awful lot of press today that Toys R Us, Best Buy and Amazon are all buying-in used games for re-sale, and hence endangering GameStop’s revenue from this element, but:

As has been pointed out, Amazon, the most interesting of these from a usage perspective, is fairly insignificant when you look at actual market share. They may do well on the model of having users ship games in to them, and nobody is better set up to do so, but this isn’t a new model, and it hasn’t taken off yet for others.

Toys R Us has only 585 stores in the U.S., so that’s pretty much a destination store with only a limited demographic overlap with GameStop. -Probably incremental pre-owned sales, which is great for GameStop, but seems set to rile publishers.

Best Buy’s depth of involvement appears fairly undefined at this point, although they do look like the most direct threat, if they choose to get heavily involved. But there are several factors that make BBY seem less likely to be wholehearted in this area:

• They make their money on hardware, and brand is meaningful here; now, though, in the current economy, this is less true, and it may well be what they feel gives them the chance to move further into pre-owned games. But, nobody knows better than BBY that content on physical media is transitory.
• They are aggressive in moving toward support of digitally distributed product. -You’ll remember how they jumped on music distribution, and that would have been even more substantial earlier if they could have gotten their buyers more into line. It is an odd time for them to double down on sales of games on disks.
• If they’re going to push publishers on anything at this moment in time, it doesn’t make sense for it to be pre-owned. If I were Best Buy, I’d threaten to do this, then find a way to partner on sales of digital content revenue. Best Buy could stop selling games on disk entirely, because their bottom line comes from other categories, and this is a key strength they have over GameStop. Getting more reliant on physical media today, at the cost of vendor relationships seems unlikely unless just it’s bizarre desperation.

These moves from retailers do however seem to combine with an economy in which:

• Developers have a hard time finding backing or loans to make full frontline titles.
• Larger publishers and developers are laying off talent, freeing up creative for other projects/models.
• Users still buy a lot of games, but are likely to buy them in smaller pieces, if they can.

To form a perfect storm for accelerating the move to digital distribution and more varied content models.