Gamestop stock battered as Amazon enters used game market

By Patrick Garratt
6 March 2009 09:04 GMT


Gamestop’s share price dropped 13 percent yesterday following Amazon’s announcement that it’s to enter the used game space, Joystiq reports.

Amazon said it is to start offering vouchers in return for secondhand games, a ploy Gamestop slapped last night as unworkable.

UBS analyst Ben Schachter concurred, saying the market was overreacting.

“Online game sales currently comprise less than 2% of GME’s total business (via the website) and we estimate well-less than 10% of industry game sales,” he wrote in a research note reported by Variety.

“We believe the ‘instant gratification’ of the trade-in process at physical stores remains a key advantage for GME, and we note that GME once offered online/mail-in trade-ins but stopped after issues w/product quality/shipping expenses. The bottom line is that [Amazon] is a formidable competitor, but we don’t see any meaningful near-term risk, and online used just isn’t a particularly big market.”

Plenty more through the links.

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