MARCH 18, 2014 • Four years after finding its last run at the used games market to be unsatisfactory, Wal-Mart Stores Inc. is taking another swing at the previously-owned used games segment. This time around used gamer purchases and sales will not be handled through a kiosk, but in a partnership with Texas-based CExchange Inc. The latter was retained last year to operate the retailer’s similar Gadgets to Gift Cards online-only program for game systems, smartphones, MP3 players and other consumer electronics. Rather than an automated kiosk, consumers handle the transaction online, and then receive a free shipping label to send the device to Wal-Mart. By contrast, the new used games program will start next week and will be rolled out to 3,100 locations instead of an online-only solution. Store credit, and not cash, will be offered on game trade-ins.

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Impact: Looks like Wal-Mart is pleased with its relationship with CExchange. The strength of the Gadgets to Gift Cards program is that gift cards are issued immediately, and that prices paid are generally above average. The hook is that consumers have to provide valid credit card info in case the used device comes in damaged or not at all. Better pricing will go a long way in making the used games portion of the system successful, but that’s not how Wal-Mart is framing the opportunity. Instead, the point of differentiation is being sold as trade in the game and buy groceries, socks or a bike. That pitch may resonate with a mom’s intent on liquidating a child’s game collection, but we think it will not be that attractive to gamers themselves. The program gives Wal-Mart associates in store Electronics sections access to CExchange’s database. After they ascertain the condition of the game, they can then check the database for the latest value of the title in question. Again, price paid will be the main factor, but in our experience the used game business is a very hands-on affair – both in assessing the value of the trade-in, and in working with the consumer. These are factors that play well for specialty retailers like GameStop that already have knowledgeable people on staff that can fill the role. Another issue is that game sales are becoming a more digital business every year. Many new console titles are shipping incomplete on disc and need a content download to play. Those enabling downloads may or may not be available to a secondary buyer, and if they are available, they may require an additional fee to the publisher. We will wait for additional details on Wal-Mart’s system before saying more, but the used games business always looks like easy money when it really is not that easy at all to be successful at.