I agree, the silly red box that talks about Gamestop being "incented" to push used games is meaningless. In fact you could easily argue the effect is the exact opposite of what is argued:
Because Dawdle does not give "credit" it requires the sale of a used game to continue the "money multiplier" process. The purchasing power to buy these used games has to come from somewhere but in the chart as shown that is never addressed, it is just a magic net add to the system.
Gamestop, by providing the credit up front at least takes the risk of having to eat some of that investment and thereby possibly subsidizing the sales of new games from reduced profit on sales of used games.
Ah, I suppose this is why we should have done a little more exposition on the note rather than just target GDC attendees who already use the same terms - nothing is sekret on the intarwebs.
GameStop's margins on used products are 49%. They're 20.9% on new software and 6.5% on new hardware. [1] They make more money - revenue is meaningless, margin is profit - selling a used title at $55 than they do selling a new title at $60. That's why they're incented/incentivized to push used games at the expense of new games: that's the part of their model that pisses off the publishers/developers/retailers.
I don't follow the "magic net add"; the idea is that you start with $100 in cash and you move to the right over time.
magic net add is: to give somebody $40 for used game you must take it from somebody. For example by selling a new or used game to somebody.
This is not shown in lower chart, but is shown in upper chart. So in upper chart money are circling in closed environment(GameStop even takes some money out of it), while in lower chart there is some money coming from outside.
That is why these charts are meaningless.
You said your company has incentive to sell new games, because margin is bigger. OK, but if that is case, why at all you buy used games? Are you not planning to sell them?
