The video game retailer GameStop has been struggling over the past few years, as digital downloading has increased in popularity across all formats. The company had been reducing its store numbers even before the COVID-19 pandemic hit. However, with the next-generation consoles on the horizon, it appears the company has signed a deal with Microsoft that will allow it to bring in long term digital revenue from Xbox Series X and Series S consoles purchased at its stores.
Investments advisor company DOMO Capital Management revealed the information via Twitter, stating that GameStop will get a share of all content revenue for Xbox Series X/S digital downloads and digital content, on consoles that are purchased in its stores. This will include downloadable content bought for games physically purchased at another retailer, and count for both new and preowned consoles.
Perhaps most importantly, it appears that the deal includes subscriptions to Xbox Game Pass, which Microsoft has been heavily focused on for the launch of Xbox Series X and Series S. This ensures that GameStop has long term income from customers who would be less likely to purchase new or preowned games in-store. The revenue sharing agreement is part of a deal signed by GameStop and Microsoft, which also relates to backend software and the use of Surface devices in-store by staff.
Having experienced significant difficulties even before the COVID-19 restrictions, receiving extra income from lifetime digital sales and subscriptions appears to be a great deal for GameStop. Especially as subscription services like Xbox Game Pass are likely to further reduce its potential earnings from new and preowned games sales. With such a deal in place, many gamers are wondering to what extent the company could shift its sales focus towards Microsoft products, rather than competing products with no long term incentives. With this in mind, there are currently unsubstantiated rumors that GameStop is also in talks with Sony and Nintendo about comparative deals.
Given GameStop’s financial troubles, this Microsoft deal appears to be a win-win situation. GameStop has a guarantee of long term revenue in a market where physical game sales are starting to decline, compounded by digital subscription services like Xbox Game Pass. Microsoft in return can have more confidence that a major retail partner will avoid going under, and that said partner is likely to favor its consoles over the competition.
Of course, with such strong competition between the console manufacturers, it is inevitable that Sony and Nintendo will also look at whether such an agreement is viable, particularly for the PlayStation 5 Digital Edition.
Xbox Series X and Xbox Series S launch on November 10.
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