Wal-Mart Stores Inc. (WMT) has begun selling used videogames on its Web site, diving deeper into the category dominated by GameStop Inc. (GME) after testing a used game trade-in program via store kiosks earlier this summer.

The world's largest retailer by sales lists hundreds of titles for various game systems at prices Wal-Mart says are 15% to 30% below new game prices. Most titles indicate the pre-owned version isn't sold in stores, but free shipping to local stores is available.

Internet retailer Amazon.com Inc. (AMZN), Toys `R' Us Inc. and Best Buy Co. (BBY) have each begun some form of a used game program this year, either issuing credit for future purchases when consumers trade in old games or offering used games for outright purchase.

Wal-Mart this summer put kiosks in 77 stores to accept used games. Representatives for Wal-Mart and GameStop weren't immediately available for comment Thursday.

But Wedbush Morgan analyst Michael Pachter sees little threat of meaningful share loss by GameStop's used-game business as a result of increased competition from other retailers.

"None has thus far been able to attract the core trade-in consumer [unemployed boys], and we think that only Amazon will make inroads with this group," Pachter said in a note upgrading GameStop to outperform from neutral late Wednesday.

Employed customers are less motivated to use games as currency for purchases, he said. GameStop has a competitive advantage in that it encourages teenagers to visit and linger in its stores, he said. "This is not true of Wal-Mart or Toys R Us, and we think that GameStop's openness to this core customer group will provide a competitive advantage for years to come."

Amazon might be able to capture as much as 10% of the market and generate some pricing pressure for GameStop, but that could take five or more years, Pachter said. Meanwhile, store closings by Movie Gallery Inc.'s Game Crazy chain and by Blockbuster Inc. (BBI) reduce competition in the videogame space.

In the current quarter, GameStop should benefit from recent price cuts on videogame systems and an improved slate of new games coming out, Pachter said.

"We expect overall September U.S. retail videogame sales to be up 6% [combined hardware and software], and expect overall industry sales for the October quarter to track better than company guidance of -6 to -11%," he wrote. "Similarly, we think that GameStop's Q4 comp guidance of -1 to -7% is conservative."

Used videogames make up as much as a quarter of GameStop's revenues but at least half the company's profits. Profit margins are also higher on used games than on new software and videogame hardware. Wedbush Morgan estimates GameStop controls about 90% of the U.S. used videogame market.

-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com