Rethinking game trades: ParcelGamer takes on the world
For most gamers, trading in used games is a mixed blessing at best. Trade values tend to be poor, sometimes insultingly so, with games often trading in at a third or less of their used resale value. There’s also the guilt factor – the sense that saving a few bucks buying a used game instead of new is depriving the publisher of any revenue from the sale, lining only the pockets of the retailer (who’s just going to screw you again when you trade the game back in).
More recently, publishers have been striking back with specific functionality or content missing from the game without an “online pass,” a one-time use code that enables, say, multiplayer to function. Buying the online pass for a used game tends to cost in the neighborhood of ten dollars, usually outweighing the cost savings for a used copy of a game and giving new copies a higher perceived value.
Ideally, there’d be a way to make everyone happy – gamers who want to trade in their games for a fair price, retailers who want to make a living selling used product and publishers who want royalties on the games that sell. A couple of entrepreneurs think they may have cracked the code with their new business, ParcelGamer.
“The main thing is the gamers and giving them a better place to trade in their games, where they’re going to get around 30 percent more for their trade-ins, which I think everyone will like,” said Mike Kennedy, CEO of the GameGavel network, which includes ParcelGamer (the name of the site was recently changed from PostalGamer to comply with a trademark request from Running with Scissors, developers of the Postal game franchise). He said that he wants to undercut GameStop by around $5 on used titles, or by more if the online pass isn’t included, and offer closer to $30-35 trade-in value for recent games.
The ParcelGamer idea works like this: gamers create a “trading cart” of games they want to trade in, with significantly higher buyback prices than retail outlets like Gamestop. Gamers are advanced the credit – secured against a credit card on file – and can start shopping for their games immediately. The gamer sends his trade-in games in postage-paid mailers. Upon receipt, the games will be refaced and sold to consumers at a lower price than Gamestop and, where possible, ParcelGamer will negotiate with publishers to have any online pass content included with the used copy.
Game publishers are using one-time "passes" for multiplayer functionality to devalue used game sales.
Kennedy says that ParcelGamer will deal with game publishers to restore the missing content and that ParcelGamer will provide the publishers with a royalty for used games sold in exchange for promoting the service. The idea, he says, is to bring game publishers into used game sales instead of doing battle with them.
GameGavel Editor in Chief Steve Sawyer’s assessment of ParcelGamer’s mission goes beyond simple economics: “[Game resellers] are coming from a place where they’re profiteering from the industry. They don’t care about any of the things that define us as gamers,” he said. “I don’t know what GameStop’s MO is, but I feel like they’ve forgotten a big part of that.”
Videogame industry analyst Michael Pachter said that gamers are likely to take to the idea, but that he’s skeptical of the business model. “I don’t think it works,” he told us. “They take risk (paying before they get the game), and they are cutting their margin at least in half, if not more, by giving the higher credit. If Best Buy can’t make a go of it with competitive pricing, these guys have no prayer paying more. Gamers will like it, but they won’t make money.”
Kennedy said that his plan is to deal mainly in newer used titles or IPs that tend to retain value, and that he’s confident that they will be able to find the right formula to stay profitable and keep their inventory moving. “It will be a fine line since our margins will be roughly half of what GameStop works with, in addition to the publisher rebates, free shipping and higher trade-in values we offer; but there is still enough profit to go around if the quantity of ‘used’ games we are selling is significant,” he said.
Kennedy said that he recently had a “large” publisher commit to supporting the ParcelGamer model and that he’s hoping to have between six and eight more by the end of October. He said he wants to launch the site in the first quarter of next year, with a beta being a possibility.
this is intriguing. I always like to see people some up with better ideas than the status quo that everyone bitches about, even if there’s a lot of people saying it won’t work. I think the key to this is the publisher participation, and if they get that going for them, i think they have a chance to make it. It would be awesome if your new games started coming with a ParcelGamer prepaid envelope in the box so you could trade it up as soon as you’re ready. that would give GameStop something more to steal out of their “new” copies of games, wouldn’t it?
Go for it I’m in.
This is why I can’t stand 20th century IP lawyers. The market provides. Wherever there are inefficiencies, someone enterprising like ParcelGamer will fill the niche.
Why the MPAA/RIAA types can’t see this boggles me mind. I can’t wait until they get benched to sit alongside Vaudevillian actors, silent film stars and monks who thought that Gutenberg guy was a schlockmeister.
Go, ParcelGamer, go!