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Thursday, March 5, 2009

Gamestop about to get Amazon’d?

Amazon has started a video game trade-in page, reports.

Clearly investors in GME are freaking out as the stock is down 20%.  My first reaction was the same as theirs.  Upon further investigation, however, I find myself more sanguine about GME’s prospects in the face of Amazon’s inroads.

Amazon provides a shipping label.  That’s it.  You need to get a box, package it, possibly go to your post office to mail it.  The title is then sold to a “third party merchant” – nowhere does it indicate who this is but there is some speculation on the discussion page that its Toys R Us.  2 weeks later, Amazon will issue a gift card to you for the amount of the sale.

Gamestop, on the other hand, gives you cash in hand at point of purchase.

It seems unlikely we’re looking at Netflix vs Blockbuster the sequel here.   Gamestop is unlikely to be unseeded by Amazon’s lanky attempt to enter their market.

Though I harbor certain suspicions about Gamestop’s used game accounting (mostly because they get all Madoff when you try to ask them about it), I don’t think Amazon’s entry into the used game market is the end of their franchise.

I will buy a little GME at $22.40 and a lot at $20 if they give me that kind of chance. 

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