Amazon starts video game trades

GameStop shares fall 15% after trial launch

NEW YORK -- Amazon.com said Thursday that it would allow shoppers to trade in used video games for store credit, a move that may challenge a core driver of profitability for game retailer GameStop.

GameStop shares were down 15% in late morning trading after Amazon set the trial launch of "Amazon Video Games Trade-In." Users can send in used games and get an Amazon.com credit, including an additional 10% bonus toward items in Amazon's online video game store.

Shares of GameStop, the biggest U.S. video game retailer, had risen 35% in the past 3 months as sales of video game consoles by Nintendo, Sony Corp. and Microsoft remained robust, driving consumers into GameStop stores games to buy software for their systems.

However, its profit margins have benefited from an active trade-in system, where shoppers return used games for a fraction of the purchase price or credit toward future sales. The returned games are sold at a higher profit margin than new games.

Shares of GameStop fell $4.04 to $23.26, while Amazon shares were off 31 cents at $64.50.
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