GameStop Will Get A Share Of Digital Game Sales On Xbox
The revenue-split agreement comes as part of a larger partnership between GameStop and Microsoft.
GameStop is selling digital-only consoles from both Xbox and Sony this year, including the PS5 Digital Edition and Xbox Series S. That seems like handing your executioner the gun when so much of your business is based on selling used games, but an apparent agreement to split digital revenue between Microsoft and GameStop could explain the retailer's willingness to support the systems alongside the disc-based Xbox Series X and standard PS5.
The investment advising firm DOMO Capital Management shared on Twitter that GameStop will receive a share of digital revenue for any Xbox system purchased at one of its stores or online. This includes game downloads and other digital content.
Today $GME confirmed with @DOMOCAPITAL that the agreement with $MSFT includes revenue sharing on all downstream revenue (i.e. digital downloads and digital content) from any device that GameStop brings into the @Xbox ecosystem. GameStop now meaningfully participates in digital.— DOMO Capital Management, LLC (@DOMOCAPITAL) October 14, 2020
Game industry analyst Michael Pachter doesn't expect it to have a substantial impact on GameStop's heath, saying the company would likely get around 10% of digital revenue in these cases. An Xbox All Access subscription, for example, lasts 24 months at $35 per month on Xbox Series X, but this split would only give GameStop about $84 in total over that period. This is speculative, and doesn't necessarily represent the actual revenue split.
The revenue split is part of a multi-year agreement between GameStop and Microsoft that will also bring tools like Surface notebooks and Microsoft Teams to its stores.
It makes particular sense for GameStop to partner with Microsoft over Sony, as Xbox Game Pass's popularity means digital gaming will likely huge on Xbox Series X and S. All first-party Xbox games come to the service on launch day and are included as part of the $15 monthly fee. This will extend to all upcoming Bethesda games, as well, now that Microsoft has purchased the publisher. Sony doesn't have any comparable system, nor is it seemingly offering any deal like this to GameStop. Should players buy the PS5 Digital Edition, all they'll be able to use from GameStop are accessories like controllers and headsets.
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