Wal-Mart taking on GameStop, will soon accept video game trade-ins

Watch out, GameStop, you have a new competitor in the used game market. Wal-Mart announced today that it will begin accepting video game software trade-ins at 3,100 stores nationwide on March 26.

During a conference call attended by GameSpot, Wal-Mart merchandising chief Duncan Mac Naughton said Wal-Mart is hoping to "shake up" the secondhand market and steal some marketshare away from competitors like GameStop.

There are 880 million video games sitting in homes today, Mac Naughton said. And according to a cited NPD report, 80 percent of these games, or more than 700 million, are rarely played. Clearly, there is a market for second-hand games, just look at GameStop's quarterly revenue for evidence of that. But why trade these games in at Wal-Mart instead of GameStop or Best Buy?

Wal-Mart's "true differentiator," Mac Naughton said, is that you can use your in-store credit for purchases outside of gaming like food and clothing. Indeed, GameStop can't compete there. But unlike GameStop, Wal-Mart will not have a cash option for trade-ins. It's credit or nothing. And on top of that, Wal-Mart will only accept games, not hardware.

Wal-Mart will accept all games (provided they are not scratched or damaged beyond repair) and refurbish them via a third-party company. These games will then be sold at stores and online with a "certified pre-owned" label on their packaging. Wal-Mart expects to have a solid inventory of secondhand games available this summer.

GameStop has its own dedicated refurbishment center in Grapevine, Texas and it is this very operation that management believes sets GameStop apart from competitors. We've reached out to Gamestop for comment on this story but we have not heard back.

Just because Wal-Mart is getting into the used game market, it doesn't mean the company is backing away from new games anytime soon. The company's new release business will "remain a focus" for Wal-Mart going forward, Mac Naughton said.

But why get into the secondhand market now, in 2014, when an increasing amount of attention is paid to download services? It's a question we poised to Mac Naughton and he said Wal-Mart isn't worried because bandwidth into homes is still an issue for many. Still, he explained that Wal-Mart is indeed eyeing the digital market as a future growth opportunity.

"We think being on the shoulders of disruptive tech is good," he said. "We're ready to grow into digital as that business emerges."

Wal-Mart's move into the used-game market will also conceivably affect publishers like Electronic Arts and Activision, which do not participate in second-hand sales. We've also reached out to these companies, but have not heard back. We'll have more in the future.

Finally, though Mac Naughton never mentioned GameStop by name during the call, he said Wal-Mart's aim with its secondhand program is to "pay more than anybody else" for your old games. Of course, trade-in prices will vary, but he said the average price paid per title should be around $35.

Here's how Wal-Mart's used-game program works:

• Customers bring their working video games, in the original packaging, to the electronics department.
• Associates scan the UPC code on the case and evaluate the game for obvious damage such as deep scratches or cracks.
• The customer is then provided with a trade-in value for each game to accept.
• The total value accepted by the customer is awarded immediately and can be applied at checkout in a Walmart store or Sam’s Club, or online at Walmart.com or SamsClub.com