Used games sales continue to cut into profit margins

The videogame industry continues to struggle under the weight of piracy and pre-owned game sales, says analyst group Cowen and Company. According to their recent study, though install bases for the Xbox 360 and PlayStation 3 are comparable to that of the original Xbox and PlayStation 2 in 2003, software sales (that is, the games) have dropped by a disheartening twenty percent.

The study goes on to say that new releases now see a significant drop in sales after their first month of release, losing on average sixty-two percent of their original profit margins. Not even blockbuster titles are exempt, as even Square Enix’s Final Fantasy XIII saw a staggering sales loss of ninety-three percent between its first and second month on shelves.

What’s the difference between now and a decade ago? The sheer volume of retailers participating in used or second-hand games sales. Whereas in previous hardware generations you might have had to haunt specialty stores or yard sales for used game bargains, second-hand games are now available from major US retailers like Wal-Mart, Best Buy and even 7 Eleven.

Yes, even your local gas station is cannibalizing the videogame industry.