Market analyst warns of "explosion" in second hand game market

Speaking at the ELSPA Games Summit in London, game market analyst Nick Parker has warned of an imminent "explosion" in the second hand games market in Europe, which could damage publisher revenues.

Parker highlighted a study which showed that second hand purchases currently account for some six per cent of all access to videogames - a relatively small percentage, although it's over 10 per cent if non-retail methods of access such as playing games at friends' houses or pirating software are discounted.

However, he believes that this market is "about to explode" - with heavy retailer promotion of second hand games and trade-in schemes being noted as a key factor in the growth of the sector.

Retailers have increasingly moved second hand games out of "bins" in back corners and into dedicated racks at the front of their stores, largely due to the fact that the profit margin on second hand titles is significantly higher than on new titles - generally between 35 and 55 per cent.

While publishers do not realise any revenues from second hand sales, there is some trickle-down benefit in so much as consumers who trade in their old titles may well use the store credit acquired to purchase new games.

However, a major increase in the second hand market would still be damaging to publisher revenues - and indeed, in some territories such as Japan, publishers have fought to rein in the second hand market through legal means.