Back on Oct. 8, GameStop announced that it had entered into a multi-year strategic partnership with Microsoft. Now we’re learning that partnership includes GameStop earning a share of the digital revenue generated on every Xbox console it sells over its lifetime.
As Ars Technica reports, it wasn’t clear from the initial press release exactly what the partnership entailed in terms of revenue sharing. There was a one sentence reference to it, which states, “GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.” The situation has since been clarified by GameStop Investor Relations representative Eric Cerny, who in an email to Domo Capital Management President Justin Dopierala confirmed, “We are allowed to state we will receive a portion of the downstream revenue from any device we will bring into the Xbox ecosystem.”
Such a deal is good news for GameStop, especially when you consider the cheaper next-gen Xbox Series S doesn’t have an optical drive, meaning once the console is sold there’s no potential for future physical games sales for GameStop. However, now each Series S (as well as the Series X) will continue to generate revenue for the company over its entire lifetime, assuming the owner chooses to purchase digital games, subscriptions, DLC packs, and any other type of microtransaction on the console. What’s unclear, however, is if the deal only covers digital games, or extends to the wider ecosystem of digital goods which includes music and video services.
The deal shouldn’t have any impact on the consumer who purchased their Xbox at GameStop. Digital prices will remain the same and they’ll enjoy the same sale prices everyone else does, it’s just Microsoft will be giving a small percentage of each sale to GameStop. How small? We have no idea and it’s very unlikely either Microsoft or GameStop will divulge such detail. Dopierala believes it be as low as one percent or as high as 10 percent, though, so it’s probably somewhere in the middle.
