Today we have some news that Walmart (WMT) is experimenting with rental & used game kiosks - obviously if this giant treads on your turf, it's not good news for profits. Last time we looked at Gamestop was 2 months ago when Amazon.com moved into used games [Mar 5, 2009: Gamestop Hit by Amazon.com's Move into Used Games] - I was not that concerned about that move because we have an instant gratification society and most people are not going to wait (wait for it...) days to get their video game fix. But Walmart is only a few miles from most people's homes....
Back in January we noted how important used games were to Gamestop [Jan 21, 2009: WSJ - Used Games Score Big for Gamestop]
I didn't realize used games were about a quarter of sales... and frankly the cost they sell the used games is not that much below a new game - savvy business model there.
What sets it apart from other game retailers is its virtual lock on used game sales. Those sales are expected to reach $2 billion, or 23%, of GameStop's revenue for its fiscal year ending Jan. 31, according to Pacific Crest Securities. That is up from $1.6 billion, or 22.4%, of revenue a year earlier. Its business has gathered steam in the recession as consumers pinch their pennies. In the nine weeks ended Jan. 3, its sales of new games and consoles increased 19% to $1.9 billion. But sales of used games and consoles rose an even stronger 32%, to $543.5 million. Nobody else has that used-games draw," said retail analyst Joseph Feldman of Telsey Advisory Group.
Now this is just a pilot program for Walmart but again... it's Walmart - you don't want them on your turf as a competitor. So said American consumer can drop off old game at kiosk, collect money as they cross GO and then head over to Walmart video game section and buy new game. Or just rent a game for $1 a night. Photos of the kiosks already surfacing on the internets! See here.
- Wal-Mart might be considering a challenge to specialty videogame retailer GameStop, if a new test of self-service kiosks that allow for videogame rentals and trade-ins as well as DVD rentals is any indication. Kiosk operator E-Play, based in Columbus, Ohio, will install machines at 77 Wal-Marts in New York, Massachusetts, Connecticut and Rhode Island by the end of the month.
- In addition to offering $1-a-night DVD rentals like kiosk leader Redbox, the E-Play machines will let users turn in Nintendo Wii, Microsoft Xbox and Sony PlayStation games in exchange for credit on their credit cards, the companies said. The E-Play kiosks, which can hold about 4,000 movie and game discs, pay as much as $25 for a copy of a high-demand game such as Resident Evil 5 or as little as 50¢ for older titles, E-Play CEO Alan Rudy said.
- “The Redbox machine does not sell games or allow for trade-ins,” said Wal-Mart spokeswoman Melissa O’Brien, who added that the company hadn’t made plans to install more E-Play machines beyond the pilot program. “We’re interested because of the added convenience of games in these units. It provides a great competitive price for games.”
- The kiosks will charge $1 a night for both DVD rentals and game titles, and $2 for the first night for Blu-ray titles and $1 for each night thereafter.