Wal-Mart beefs up its used game business

Screenshot from video game 'Destiny'
Activision

Wal-Mart, which took the plunge into the used video game business in March, is leveling up.

The retailer on Tuesday announced the launch of a certified preowned program in 1,700 stores nationwide, finally putting those games it has been offering store credit for over the last seven months back up for sale. It's a move that heightens the growing battle between Wal-Mart and GameStop.

Used games have been the bread and butter for the game specialty retailer. GameStop's profits from the sale of used games are roughly 25 percent higher than what the company earns from new titles, and the used game market generates more than $2 billion a year in sales.

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While the entry of a retailer Wal-Mart's size could prove to be disruptive to GameStop's business, investors have so far shrugged off the threat. GameStop share have increased 17 percent since Wal-Mart announced its entry into the used game field.

"Our goal is to buy used video games for more and ultimately to sell used video games for less," said Laura Phillips, senior vice president of entertainment at Wal-Mart.

Certified preowned games from the retailer will carry an average cost of $12 to $30, says Wal-Mart. (A new title for today's consoles typically costs $60 or more.) The company plans to sell them in a separate section of the store or alongside its value titles. Officials say stores will not put used copies of games alongside new ones, as GameStop does.

Wal-Mart is leveraging the upcoming launch of Activision's "Call of Duty: Advanced Warfare" to give its entry into used game sales a big initial push. The retailer will let consumers pick up the "Day Zero" version of the game at midnight on Nov. 3, giving them full access to the game for 24 hours before it is officially scheduled to go on sale.

Other retailers—including GameStop—have offered this version as well, but players were required to preorder their copy. Wal-Mart will have copies for anyone who walks into the store.

To promote its used game business in conjunction with the deal, Wal-Mart will offer a 50 percent bonus on trade credits to people who buy a copy of "Advanced Warfare" on Nov. 3 and 4. It will also double what it pays for used games to shoppers who buy a PlayStation 4. (The deal is exclusive to Sony's system and does not apply to purchases of Microsoft's Xbox One.)

Wal-Mart's trade program accepts games for all existing console systems, but (unlike GameStop), the retailer does not accept game hardware. CE Exchange maintains the database determining the value of the titles. That eases the burden on Wal-Mart associates, who only have to scan the game's UPC code (after first checking the disc for scratches and cracks) to determine how much credit to give the customer.

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This isn't the first time Wal-Mart has explored the used game business, but it's by far the largest expansion of the program. In 2009, the retailer launched a pilot program using kiosks, but never expanded on it. The company has been slowly rolling out sales of used games over the summer, but this is the big national launch.

The question is: Is it coming into the area too late? The used games business is still sizable, but the number of digitally downloaded games is rapidly increasing.

Wal-Mart plays to the mass audience, though, and has a strong following among people who don't have broadband connections (or who live in areas where a multi-GB download isn't feasible). That's the market it's hoping to steal away from GameStop.