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Video game players take a shot at being frugal

Fans are devoting more time to playing, but many are buying used titles or renting them, a study finds. The trend has been a boon to such retailers as GameStop and GameFly.

July 06, 2009|Alex Pham

To video game publishers, Mark Weiner is both a dream come true and a nightmare.

The 23-year-old San Francisco Bay Area operations analyst likes to pounce on the latest blockbuster releases. He spends dozens of hours a week playing a wide range of titles.

"I am passionate about games," he said.

This should be good for game companies such as Activision Blizzard Inc., Electronic Arts Inc. and Ubisoft Entertainment, which publish many of the titles Weiner likes to play.

But it's not welcome news. By buying used games and renting new releases from GameFly Inc. in Los Angeles, Weiner has cut the amount he spends by nearly half.

Weiner of Saratoga has lots of company, according to a report released today by Nielsen Co., which found that players are devoting more time on average to games, but many are doing so on the cheap. They are scouring the used bins or renting titles instead of spending $60 to buy a new game.

"Used game purchases have picked up in 2009," the report found in its fourth annual survey of 2,400 gamers, "and this has increasingly come at the expense of new games."

The game industry has held up better than many other forms of entertainment during the recession as consumers cut back on their discretionary spending. That's because many see games as a good value since most titles feature dozens of hours of play.

But it hasn't been immune to the recession. U.S. game sales have declined on a year-over-year basis for three straight months since March, according to NPD Group, a market research firm.

Still, for the entire year, the game industry is expected to grow 7.2% to sales of $55 billion worldwide this year, up from $51.4 billion in 2008, according to PricewaterhouseCoopers. Meanwhile, box-office and movie DVD sales are projected to grow just 1.1% this year to $84.8 billion, while music is expected to tumble 7.7% to $28.4 billion worldwide.

Part of the reason for the sluggish game sales this year is the dearth of blockbuster titles and the wider availability of used games from retailers such as GameStop Corp., Best Buy Co. and Inc., said Michael Flamberg, director of client consulting at Nielsen.

"The used game market is thriving this year because gamers want to get more value out of their purchases at a time when there aren't as many releases," Flamberg said.

From January through May, gamers surveyed by Nielsen bought an average of 3.4 used games, up 31% from the same period last year. Although they're still buying new games, one third of their purchases were used discs, up 13% from last year.

In addition, more players are renting games. More than 13% in the survey said they rented games in May, up from 10.5% in May 2008.

Those two trends have helped fuel revenue at retailers such as GameStop and GameFly, which rents and sells used games by mail.

GameStop, based in Grapevine, Texas, posted a 31% surge in its sale of used titles in its first quarter that ended May 2, but reported a 1.5% decline in new game sales.

GameFly, a 7-year-old privately held company that doesn't disclose its financial results, is having its "best year ever," co-founder Sean Spector said.

The company operates an online, mail-order service that charges $22.95 a month, plus tax, for renting out two games at a time, or $15.95 a month for one game at a time.

The company also lets subscribers buy used games -- an option that Weiner, the Saratoga gamer, never considered until last year, mostly because he likes to play newer titles and because he feared used discs might be damaged.

"A few years ago, it was 'Buyer beware' with used games," said Weiner, who is trying to be more frugal. "With GameFly, I've never had a game not work. And it's super convenient."


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