Friday, October 15, 2010

Watch Out Video Game Retailers: Coinstar is Offering $2 a Night Rentals

They seem still be in the testing stage but this could be a big deal going forward.

Coinstar (CSTR) on Wednesday announced plans to expand its video game rental test this month to include additional markets in the West, Midwest and Atlantic Coast regions. The company said it began testing video game rentals in August 2009. The company is renting video games for Wii, Playstation 3 and Xbox 360 platforms for $2 a night plus tax.

That sound you heard was Gamestop freaking out. Imagine if you could not only rent a game for $2 a night but also buy used games as well. I don't think it is a big stretch to offer used games for like $20 a pop(or maybe a sliding scale based on how long the game has been available) that you can purchase from a Red Box video game machine.

They could even set the thing up to give you money for games a well.  I mean Coinstar already has machines that turn coins into cash so why can't they have a thing that redeems games? Have the person insert the game disk into a slot and the machine verifies that it is the correct game and then spits out $5 or $10 or something for each game.

The game manufacturers would love this because they would be able to track game resells since they would have to supply the verification technology. I bet Microsoft would love to get $60 for the game then an additional $1 each time the game is resold. Also I would bet that some games would be resold many times over in its lifetime depending on how popular it is.

Also if you are long Coinstars stock this gaming rental service is the one thing that Netflix cannot beat them at. For a while the only reason I went to Blockbuster was so I could rent games. Now all I have to do is go to the local Wal-Greens and rent the game from there for $6 for 3 nights. This might also spell the slow death to gaming rental by mail companies like GameFly.

Console gaming is the only rental service left that hasn't been digitized and probably won't be for the near future. I mean it is in Microsoft, Sony, and Nintendo's interest to keep their product in physical form and just sell the add-ons online. HD Games are still far too large to transfer to a console via Internet and they cannot be streamed yet without crazy lag. I can't imagine waiting 4 hours to download a major game to the Xbox just to find out it sucks when I could just go to a Red Box machine and rent it for $2 a night.

The more I look at it the more I see that Blockbuster fumbled and Coinstar is scooping it up and taking it to the house.

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