Following the announcement of Amazon's used games trade-in program, shares of GameStop (GME) stock sunk 14% as investors freaked out and sold, sold, sold. GameStop's used games comprise 22% of the company's total revenue, and - until today - they were the only major supplier of used games and accessories to gamers everywhere, whether they liked it or not.

With Amazon jumping on the bandwagon, and Toys R' Us testing the market waters in New York, it's clear that retailers are using the economic status of their main demographic to increase sales, or at least encourage more of them. After all, GameStop profits rose 33% in 2008. Personally, I think having a significant competitor in the video game market can only mean good things, at least for the consumer. Think of it: Higher trade-in values! Cheaper prices! Better deals! Or not?

Analyst Ben Schachter of UBS had this to say:

"We believe the 'instant gratification' of the trade-in process at physical stores remains a key advantage for GME, and we note that GME once offered online/mail-in trade-ins but stopped after issues w/product quality/shipping expenses. The bottom line is that [Amazon] is a formidable competitor, but we don't see any meaningful near-term risk, and online used just isn't a particularly big market."

And he's right, at least in my opinion. Retail and online stores are two completely different beasts. While each method may have their own cult of followers, most purchases are made in-store because of the short turnaround: you walk in, you buy, you go home and play; cutting out the middleman of the United States Postal Service can do wonders for business. In the end, I think the people who already shop online will stay logged on, and those who frequent the same couple of GameStop locations will continue visiting regularly.

As for the company itself, I imagine the worst that could happen for GameStop, should Amazon's service take off, is not unlike what we have seen in video rental retailers taking on the traits of an in-store unlimited rental service when Netflix blew up in popularity. Rest assured, if a company feels their competition is outdoing them in any way, they will react. They simply have to find a way to adapt.

So calm down, GameStop haters. Absurd inflations on used games won't be going anywhere for a bit. Stick to eBay!