GameStop to be Flooded with Used Wii U Games
On November 24, hundreds of used Wii U games could be dumped onto unsuspecting GameStop (NYSE: GME) locations all over the country.
The dumping may be caused by a deal between Old Navy and Nintendo (OTC: NTDOY). The Gap-owned (NYSE: GPS) specialty retailer is giving away free copies of New Super Mario Bros. U -- the first Mario game released for Wii U -- with a qualifying $40 purchase.
Old Navy's Black Friday promo page states that there are "an extremely limited amount of available wristbands per store which will be distributed on a first come first served basis and Old Navy can not guarantee that all customers in line will receive a wristband." Those who receive a wristband will be able to exchange it for one free copy of the game.
This is an interesting (if not unusual) promotion for the two companies. Old Navy certainly hopes to attract new customers by giving away a Mario game. In exchange, Nintendo will receive a ton of publicity for its brand, its characters and its new console.
The promo does come with one negative side effect, however: it could lead to an influx in used copies of New Super Mario Bros. U.
Old Navy operates roughly 1,000 stores in North America. Few people who attend the company's Black Friday event will do so solely for a free video game. Most will come for the sales. They might hope that they get a copy of the new Mario -- everyone loves free stuff. But the people that really wanted it already purchased it last weekend when they picked up the new console, which is now sold out nationwide. Without Wii U, the game is useless.
Thus, it is easy to assume that a large number of the free Mario U games will not be retained.
Old Navy will not say how many copies will be given out at each store. But if the giveaway was limited to just one game per retail location, the company would give away approximately 1,000 copies. Of those units, investors could assume that 25 will be kept and eventually played after more Wii U units are sold. Another 25 percent will be retained but will never be played. Those units are bound for GameStop next fall.
An additional 25 percent will be given away as gifts to friends and relatives. Of those units, one-fifth will probably be re-gifted or sold to GameStop because consumers either do not want the game or do not have a Wii U.
The remaining 25 percent will be sold right now. Old Navy may put a notice on the package saying that the game is "not for resale," but that won't stop consumers from turning to eBay (NASDAQ: EBAY) and other venues where the resale label does not apply.
Historically, GameStop willingly purchased pack-in games (such as Wii Sports) and others that have the "not for resale" label. The company is also willing to buy back games without the original packaging.
If only 25 percent of the free Mario games are sold to GameStop this weekend, the retailer could receive at least 250 copies. (That number could be much higher if Old Navy gives away more than one copy per store.) When spread across the United States, that may not seem like very many units. But it is a lot for a brand-new game, particularly one without any pre-owned copies currently available.
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