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Amazon Enters Used Games Biz With New Store Credit Program

Online retailer Amazon is entering the used game space with trade-ins by mail, and is running a trial program. [UPDATE: Analyst Colin Sebastian compares the two services.]
Online retailer Amazon is entering the used games space, launching a beta of a new service that offers credits in the form of Amazon gift cards to users who send in their games. Amazon users have long been able to buy and sell software themselves via its user Marketplace, but the retailer is now directly participating itself through the new GameStop-like program. "Good condition" game shipments worth $10 or more are eligible to be traded in, and consumers self-ship to Amazon in exchange for the store credit, deposited directly to their account. Trade-in value depends on the game, and users can search the site to see what their titles are worth before sending them in. Amazon also points out top-value trade-ins, such as Fallout 3 at $25.50 on the PS3 (and worth slightly less at $21 on Xbox 360). This is another move for Amazon to compete more directly with specialty video game retail; just last month, it also launched an online store for downloadable games. [UPDATE: Analyst Colin Sebastian of Lazard Capital Markets has disseminated a research note in response to Amazon's new service, pointing out that the successful retailer plans to offer both higher trade-in values and lower prices for used games than its competitor GameStop. Across ten popular games, including Fallout 3 on PS3, Left 4 Dead on Xbox 360, Star Wars: The Force Unleashed on Wii, nine of them had 9 to 12 percent higher trade-in value with Amazon -- with the online retailer's values ranging from $16.50 to $33, compared to GameStop's $14 to $30. The difference in prices on used games was even more marked -- nine of ten games were priced lower with Amazon, seven were priced more than 20 percent lower, and half were priced more than 31 percent lower. Still, Sebastian warns, "GameStop still offers a unique in-store value proposition for core gamers, and believe that its pre-owned business should continue to thrive. In addition, the Amazon initiative does not appear to include hardware or accessories, which is a meaningful portion of GameStop’s used business." The analyst also points out that GameStop previously tested mail-based trade-ins, and abandoned the service due to low consumer acceptance.]

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