Why digital downloads are a far cry from becoming competition
"The majority of trade credit given for pre-owned trades goes towards the purchase of a new title at GameStop."
We don't know how much of the credit goes towards other used games or hardware, or as cash it could be spent on groceries or drugs or whatever. We don't know.
"If pre-owned was eliminated from the equation, new game sales would drop dramatically."
I estimate sales would drop by low single digits %, that's all. The major pubs have GME at around 14% of their sales. From GME's 10K, new game sales is 3.73BN and used game product, including hardware and accessories, is 2.39BN. I don't know how much of that 2.39BN is software, so I'll just guess at 75% = 1.8BN. So if all that credit disappeared, conceivably GME's new game sales could drop by about half, meaning GME would become 7% of new game sales for those pubs instead of 14%, i.e. total sales dropping by 7%. That's the worst case. If half of that credit goes towards other used product or non-games items, then total new game sales would drop by 3.5%. And that's also assuming 0% of the used game buyers buy any new games instead. More than likely, most would do so. Therefore that low single digits number drop could become 2% or lower.