Why does Gamestop like selling used games so much, and what are your options?

Do you like Gamestop? Do you like buying your games there, and selling them? If you do, that's great. The company is serving its primary purpose: to sell you as many used games as possible at the highest price possible while also purchasing enough used games at a low enough price to keep things going. If you like being part of that process, terrific. If you don't like it, though, there are other options. Before looking at those, it's worth understanding why Gamestop likes selling used games.

Gamestop is the victim of a simple reality: greedy game publishers actually expect to receive money for their games. Absurd, isn't it? When you buy a new $60 game at Gamestop, the nation's largest retail chain typically will have paid between $45 and $50 for each copy. The potential markup that leads to the MSRP can range from 15 to 25 percent in most cases, or perhaps less if a title is sure to sell in such massive quantities that the publisher can extract more for it (a huge event game, such as Call of Duty). This is fairly standard retail markup across a variety of product lines, but for whatever reason, people who sell video games find it to be a massive burden.

Now, let's say that the average markup for a new $60 game is $10, just under 20%. That $10 isn't as impressive as it seems because Gamestop has to pay for health insurance and taxes and an hourly wage (or a portion of a salary) for every minute that every employee is in the building and on the clock. There's also the matter of rent for the building (which is usually a significant expense in any location where you'll likely find a Gamestop store), advertising--in local and national markets--and so forth. These costs rule out the likelihood of much serious competition, except from department stores, Best Buy, Amazon.com and the guy who runs that tiny little game shop on that one side street that maybe you sometimes visit. That guy is agile and if he's lucky, he'll find a way to stay in business 6 months from now. He probably buys games used too, and he probably pays more for them than Gamestop does.

Given all of the expenses, $10 for each new copy of a game doesn't sound like an awful lot of money to the accountants at Gamestop. This is the reason that Gamestop pressures you to place pre-orders. If you put down $5 on a game, that reveals your intent to generate $10 in revenue for the store. It eliminates most of the risk involved in ordering a copy of a new game. Unfortunately, most consumers resent being treated as people with money and only like the fact that they have money to be discussed when they are trying to return an opened copy of a game that they bought. Unless that customer has an issue with a store's service (real or imagined) and is threatening to take his business elsewhere, a retailer must do everything possible to avoid the mention of money except when it is time to tender a transaction at the cash register.

Gamestop used to sell a lot of used games, in its early days, but gradually it found a way around that unpleasant practice. Somewhere along the line (probably after buying out Funcoland, which specialized in used game sales), the company executives realized something astonishing: there's money in used games. Oh, there is so, so, SO much money in used game sales!

The ideal scenario for Gamestop evolved to become this: 1) A hot new game is on the horizon, so you head into the local Gamestop and you put down $5 to secure your pre-order; 2) The game releases, so you get an automated call letting you know that it has arrived; 3) You go down to the store and pay the remainder of the $60, where a helpful clerk talks you into a store membership and a subscription to Game Informer so that you find out about other great games that are coming soon or that were recently released; 4) You go home and play the game for a few hours before deciding that it sucked; 5) You return to the store a couple of days after that with your $60 game and you sell it for $30; 6) With that money, you pay $30 for an older game that is available used, which Gamestop obtained for $15 the day before from a 12-year-old boy with big dreams. 7) Repeat.

In the above scenario, you are out $80 and you now are the proud owner of a game that you can eventually sell to Gamestop for $10, as well as a subscription to Game Informer (which is a cool magazine, admittedly) and a card that says you can save a little bit on future used game purchases. The biggest value to you is that $10 game that wasn't even teh one you initially wanted (though maybe you'll get lucky and it's awesome). Basically, you just got screwed.

Did you know that a lot of stores calculate profits right down to the amount of space a game takes on the shelf? A game on a store shelf might be taking up space that is valued at 30 cents. So if you are a retailer, what do you want to put in that 30-cent space? Do you fill it with the used game that makes you $25, or do you stock another copy of the game that might make you $10? Keep in mind that the game that might make you $10 is more likely to see a price drop in another week or two (in order to compete with the used games market and revive waning consumer interest), and suddenly you'll lose money selling it. Take your time on this one. It may be a difficult decision.

Gamestop considers all of the above and more, which explains why the company stops just short of forcing you to buy used games if you want to do business. However, Gamestop's efforts to avoid being a victim lead to other victims: most gamers and developers. Gamestop's laser focus on profits and expansion, while understandable, is crippling the industry that makes the retail chain's very existence possible. That will remain true until consumers start standing up for their own rights. Presently, the best way to do that is to remember that you don't have to deal with Gamestop. The more frequently you take advantage of your other options, the more reason Gamestop will have to be behave responsibly.

Here are some steps that you can take:

1) When you head into a Gamestop and can't find a copy of the game that you want new, leave without purchasing a used copy for $5 less. Remember that $5 isn't a big difference. A lot of times, you can save $5 and get a new copy from an online retailer like Amazon.com (or perhaps even a $10 credit toward a future purchase, a nice reward if you're someone who purchases games frequently).

2) When you have purchased a game that you don't like, consider trading it with a friend instead of selling it (if you can find an agreement that you and a friend both like, both of you come out ahead). Perhaps you even have a group of trusted friends and can start an exchange program with them.

3) If you have purchased a game that you no longer want or need and you decide to sell it, list it on eBay or Amazon.com. This is less convenient and you won't get your money as quickly, true, but you'll get a larger cut of the profits. For instance, if you immediately discover that your new $60 game sucks, you might be able to turn it around with a quick eBay listing and make yourself as much as $45 or $50 after seller fees and shipping fees. Try getting that at Gamestop!

4) Before you purchase games, used or new, take the time to do more research. Reviews can't tell you everything because everyone has different tastes, but you can get good information by reading 4 or 5 reviews for that hot new game you are contemplating. If consumers are smarter about which games they purchase, they're less likely to find themselves wanting or needing to sell them later.

5. Don't buy games. (Just kidding!)

Gamestop isn't an evil empire. The company is just out to make money, like any business. If you don't like the way the company does business and the harmful effects that it has on this industry, the best way to bring about change is to adjust your own behavior as a consumer. Stores implement policies that respond to consumer trends. The people who are in charge at Gamestop pay very close attention to everything you do in their stores and they adapt accordingly. If you tell them that you want to buy more new games or you insist on a larger cut of the profits when you sell games, they'll eventually listen... as long as other gamers are saying the same things and all of you are talking with your wallets, not your mouths.