BIZ: When do you think Wiis will be readily available at retail?

DD: I don't see a near-term end in sight for Wii shortages, not unless they really ramp up supply. I think they've ramped it up 20 percent or so, but Nintendo is fairly cautious by nature. They ramped it up 20 and it's still evaporating.

BIZ: What impact do you see Microsoft's recent price cuts having on sales this holiday?

DD: I think the sub-$200 Xbox 360 arcade is extremely good for holiday. Historically, whenever you get a system under $200 it appeals to a much wider demographic. So that's a good thing.

BIZ: Do you believe Sony will follow with PS3 price cuts?

DD: I don't know if Sony's going to follow or not. Right now, they haven't. Sony's known about this price cut a long time since it's been rumored for a month. I don't know what they're going to do.

"I think the argument that [used game sales] competes with the new games is false. Imagine what new car sales would be like if you couldn't trade in your old car."

BIZ: What are your thoughts on the digital distribution options that connected consoles are introducing to gamers today? Do you see today's gamers bypassing retail one day, as music consumers currently do with iPods and iTunes?

DD: The first digital distribution was Napster and it was illegal. Let's just start there. The software publishers are afraid to death of piracy. Once a full game is lying on a hard drive, there's the potential for piracy. Aside from the games, the bandwidth, etc., our studies have concluded that the network won't be in place to do digital distribution of full games until 2020 to 2025. And that's using today's size, but as consoles get more powerful, games get bigger. Right now, a 30GB game with your best T1 line is about 72 hours to do it.

BIZ: Do you feel threatened by the lower cost digitally distributed games offered to consumers?

DD: I would argue that the average value of a current generation game is about $20. We will give $1 billion out to consumers this year, who will use that money to buy new -- not used -- games. Consumers have been conditioned that their video games have residual value, just like a car. The real cost of a game today isn't $59 but $39. Nothing that has been digitally distributed retains the same value as a retail version; it's always less. Let's say a retail game is $39. Microsoft and Sony are the gatekeepers for their consoles. And if you're a third party that should scare the hell out of you because that's the only way to get to your customer. They'll take 10 to 15 percent. Video game publishers sell me games today for $48 wholesale. If they go direct to the customer they'll probably get about $30 for them. They'll get less for the game if they bypass retail.

BIZ: What are your thoughts on the extension of a game's value through digitally distributed add-on content?

DD: If I were a publisher, I'd try to elongate a game's value through digitally distributed add-ons. If I can sell content for $4.99 that keeps you playing the game longer, that's added margin dollars. But I think we're years and years away from being able to technically, economically and safely digitally distribute full games.

BIZ: If gamers are sticking with games like Grand Theft Auto IV longer, thanks to new expansion packs, doesn't that hurt your trade-in sales?

DD: I think that's okay. There are so many games our there and so few get traded in, relatively speaking, that it's not going to have an effect on us. Call of Duty 4 has had add-ons and it's had no impact on our trade-ins for that game.

BIZ: What are your thoughts to those in the publishing business who say used game sales are hurting the games industry?

DD: I do talk to many publishers about this. We will give out $1 billion worth of credits that will be used to purchase new video games this year. New games in the U.S. this year will be $10 to $12 billion, so 8 to 10 percent of the total dollars used to buy new games this year will be from currency from GameStop's trade-in program. What we see is that consumers want to buy new games, but they don't have the cash because our trades go up as our new game sales go up. They're using trade-ins to buy games because more money is going into their gas tank. It's a source of currency that helps drive the video game business. I think the argument that it competes with the new games is false. Imagine what new car sales would be like if you couldn't trade in your old car.

BIZ: Thanks for your time.