Analyst firm Lazard Capital Markets notes that reaction to Best Buy's recently announced Trade-In initiative "appears overblown" in regards to concern that the company will provide tough competition for used game retailer GameStop.
GameStop shares fell 5.4 percent on Tuesday, following Best Buy's announcement that it would begin buying and selling pre-owned video games at its retail stores nationwide.
The move expands Best Buy's efforts in buying and selling previously used electronics. Currently, the company provides customers with Best Buy gift cards in exchange for mobile phones, laptops, digital cameras, game consoles, and other products.
LCM analyst Colin Sebastian said in a statement today that the Trade-In program "is likely to expand the market for used games, rather than cannibalize the core gamer niche currently dominated by GameStop."
Sebastian cited Game Trading Technologies' recent filing for a common stock offering and partnering with large national retailers as evidence that initiatives like Trade-In will "drive awareness and adoption of used game trading among mainstream consumers, and in the process broaden the market for used games."
LCM also expects the majority of used games traded in to Best Buy to be worth less than $30, potentially lowering overlap with GameStop's significant pre-owned sales of newer titles.
