GAME for a laugh (GMG)

12345th - it's not just the ELBO CEO...
US analysts have been very upbeat about the pre-played segment of ELBO and GME. That article I posted the other day was very positive about GameStop's pre-played business and the much higher profit margins than new games provided. Certainly pre-played is much higher margin than consoles which have always been the least profitable line for GMG/EBQ/Rhino. Margins on new consoles are usually wafer thin - this is probably the first year that console margins in the UK will be close to those of software.

Some analysts were sceptical about ELBO and GME devoting so much space to pre-played but now they've seen the results they have admitted they were wrong. What I like about US reporting is the much greater financial and operational information provided. By last August, pre-played was over a quarter of GME's turnover, was its most profitable line, and was growing fast.

Pre-played is going to be an increasingly lucrative part of GMG. Selling second hand stuff may not look very sexy but it has proven to be a high-margin business which is growing rapidly and is not undermined by supermarket discounting. As always, it's important to get the buying and selling right to attain good margins and this will be more difficult than with centrally purchased new games. I'm sure there's a great deal of buying empowerment given to the individual store managers and some will get it wrong initially, but poor trading will be quickly revealed in the store's margins and corrected by area managers.