In a recent conference call to discuss the company’s fiscal fourth-quarter earnings, Electronics Arts Inc. (NASDAQ: ERTS) COO John Schappert estimated video game sales would be down 3% year-over-year in April industrywide. But Wal-Mart Stores Inc. (NYSE: WMT) isn’t concerned about slumping video game trends – the retail stock is looking to give rival video game retailer GameStop Corp. (NYSE: GME) a run for its money by jumping back into the used gaming business.
Walmart is teaming up with a small retailer called Game Trade, partnering in five test locations to see if it can successfully enter the used video game industry. The company is right to be cautions, after a failed attempt about a year and a half ago to roll out self-serve kiosks at over 75 stores.
There are a few reasons to think this venture may succeed where others failed, and provide traction against used video game sales leader GameStop Corp.
- Walmart Stores Get Personal: When the retail stock stuck 77 kiosks in its stores that scanned a used video game’s bar code and then add a credit to the customer’s credit card, WMT stock execs were taking the easy way out. This is a real effort at a retail experience.
- WMT to Sell Used DVDs Too: This isn’t just Playstation, Wii and Xbox discs — Walmart is toying with used movie sales too.
- Movie Gallery is Dead: And with the movie rental store’s demise so died the brand’s Game Crazy locations that rented video games and sold used titles to gamers. This offers an void that the retail stock can step in to.
There are, of course, a few hangups. Gamestop is a clear leader in the industry and won’t be unseated easily. Another snag in this retail plan is that video game sales in general aren’t as strong as they once were. And video game sales aren’t what they used to be. But who knows — Walmart may have learned from its previous venture and see success in test markets. If so, expect to see used video games on sale at a Supercenter near you later this year.
As of this writing, Jeff Reeves did not own positions in any of the stocks named here.
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