After seeing how well Game Stop is doing during the recession, it looks like Best Buy is going to try the same thing.

The electronics chain will begin to accept used video games for store credit at its stores across the country. The used video game market is estimated to be worth between 2 and 3 billion dollars annually. Best Buy has attempted to take the leap into used video game sales in the past, offering around 5,000 titles, but never made it past the test stages.

Game Stop has been able to do so well because the stores it chooses to purchase are generally small with little overhead and are located in places where Best Buy wouldn’t go.

One of the things I like about the Best Buy plan is that they are giving gift cards in return for the used games. The gift cards can be used on anything in the store, not just other video games. This could lead to some people trading in games that have been collecting dust to try to finally get that new cell phone accessory or digital camera

Some think that Best Buy entering the market could hurt Game Stop’s bottom line but not everyone agrees:

“While we believe that Best Buy’s entry into the used video game market will create a new overhang on shares of GameStop, we expect Best Buy’s initiative to expand the used video game market rather than take significant share from the specialty channel,” said Colin Sebastian, an analyst at Lazard Capital Markets.

Used video games are a very lucrative market for sellers, like used textbooks, they sell for just under retail for a new title. Used video games typically sell for $5-$10 less than a new copy and retailers pay nothing to the publisher for those sales. GameStop makes the majority of its money from the sale of used video games and most of its success is due to this.

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This holiday season, video games are still selling well. With a 10% increase in sales last month, video games are still selling well even in the economic tough times.

Perhaps consumers find video games to be a better “time investment.” Like in the video below, when a family spends $50 on a video game they are getting several hours of entertainment, if the same family spends the same amount at the movies…they are only getting 2 hours of entertainment.

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