Second hand gaming market fuels gamers to make new game purchases through trade-ins, despite increase in used game sales

GameStop continues to see good things come from its pre-owned software sales and trade-ins, much to the chagrin of publishers.  The retailer previously reported an increase of 31.9 percent for used-game sales during the first quarter of its current financial year.  The growth of this market is further underlined in a new report from Wedbush Morgan analyst Michael Pachter.

Pachter's report estimates that up to 100 million games are changing hands through sales and trade-ins annually in the US alone, accounting for around one-third of the total number of games sold each year.  This leads to revenue of up to $2 billion USD for the pre-owned market.

The results sound like they would give credence to the grievances already aired by game companies who claim the second hand sales market is eating away at their potential profitability.  However, Pachter cautions that the pre-owned software business should only really affect no more than 5 percent of total new games sales:

The vast majority of used games are not traded in until the original new game purchaser has finished playing - more than two months after a new game is released - typically well beyond the window for a full retail priced new game sale.

Pachter dons the pragmatist cap and explains that rather than keeping new game sales down, the used game market helps empower less financially stable gamers to continue making new purchases.  As you may have guessed, the reason lies with the trade-ins which gamers can make towards the purchase of a new game.  Gamers as a result can secure additional "currency" (in-store credit earned from trade-ins) to help buy even more stuff.  Indeed, the report estimates over 6 percent of new game sales can be attributed to activity from the pre-owned market.