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On October 8th, GameStop announced that it had entered into a multi-year strategic partnership with Microsoft. We now know that the partnership involves earning a portion of the digital revenue generated by all Xbox consoles that GameStop sells for life.
As Ars Technica reports, from the first press release it wasn’t clear what the partnership needed in terms of revenue sharing. “Both GameStop and Microsoft will benefit from the value of each gamer’s customer acquisition and lifetime revenue brought into the Xbox ecosystem,” said one sentence. Later, Eric Cerny, head of GameStop Investor Relations, revealed the situation. He emailed Justin Dopierala, President of Domo Capital Management,: “Part of the downstream revenue is the Xbox ecosystem.”
Such deals are good news for GameStop. Especially given that the cheaper next-generation Xbox Series S doesn’t have an optical drive, once the console is sold, there’s no potential for GameStop’s future physical game sales. However, if the owner chooses to purchase digital games, subscriptions, DLC packs, and other types of microtransactions on the console, each Series S (and Series X) will be profitable for the company throughout its lifetime. Will continue to produce. .. However, it’s unclear whether the deal is for digital games only or extends to the broader ecosystem of digital products, including music and video services.
This deal should not affect consumers who purchased Xbox on GameStop. The digital price remains the same and everyone else enjoys the same selling price. Microsoft only gives GameStop a small percentage of each sale. How small is it? As we don’t know, it’s unlikely that Microsoft or GameStop will reveal such details. Dopierala believes it’s as low as 1% to 10%, so it’s probably somewhere in the middle.
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