GameStop CEO Predicts Failure For Amazon's Trade-In Program

| 6 Mar 2009 13:01

GameStop CEO Dan DeMatteo is giving Amazon's new videogame trade-in scheme "zero" chance of working, but the announcement nonetheless knocked the company's share value down by 13 percent.

Amazon's used game trade-in program, announced earlier this week, lets gamers mail their used games to the company in exchange for credit on their Amazon account. The process sounds simple but DeMatteo predicts it will fail because it doesn't have the "immediacy" of trade-ins made at a retail outlet, pointing out that GameStop tried and failed with a similar program itself several years ago.

"Electronics Boutique also tried it and failed. There's no consumer acceptance. With consumers, there is an immediacy for currency when they want to buy a new game," he said. "It didn't work for us, and I can't see it working for them."

Gamers who want to trade their used titles with Amazon must invoice and ship the games to the company, which will then accept or reject them within two business days. Gift cards for accepted shipments will be immediately deposited into the sender's Amazon account, but delays of as much as a week between shipment and receipt of the payment could still occur. The trades are also only good for credit on Amazon accounts, while GameStop will offer cash for used games.

"I give the probability of this working at zero," DeMatteo said.

Despite his comments, GameStop's share value reacted strongly to the news, dropping from $27.30 the day before to as low as $22.42 following Amazon's announcement. But some analysts have said the market has "overreacted" to Amazon's entry into the used videogame fray, pointing out that its online program is significantly different from GameStop's.

Source: Edge

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