American retailer GameStop has cut an usual deal with Microsoft in which any digital content purchased on an Xbox Series X|S sold by GameStop will benefit the retailer. In other words, if you buy FIFA 21 on an Xbox Series X you bought from GameStop, GameStop get a cut of the money you paid for the game.
Obviously this means GameStop will want to sell Xbox Series X|S consoles over the PlayStation 5 so will be adjusting the instore marketing to reflect this. The news came via an investment firm on Twitter.
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
“GameStop shares in all of the digital revenue on every xbox they sell,” they clarified in another Tweet. “All full game digital downloads. All downloadable content (DLC). So, if a customer buys a physical game from another vendor and then downloads content in-game – GameStop is sharing in that if sold Xbox.”
It’s not been revealed just how much GameStop will get per sale but the money will be coming out of Microsoft’s cut which is around 30% of the price of the sale. It does seem to be a good deal for Microsoft and may work out to be a lot cheaper in the long run than paying for a huge instore advertising campaign.
At the start of this year GameStop looked a bad investment, share prices tumbled as the company insisted it was an “essential retail service” at the start of the pandemic. However, in the past few months an investor called RC Ventures has bought up 9.98% of the shares in the company and plans to focus more online services and subscriptions, this new deal with Microsoft appears to be part of that focus.
However, GameStop is still in trouble, and it is estimated they will only just survive until the Christmas spending rush starts. What happens after that remains to be seen, they are going to need a spectacular Christmas period to get them back in the game.
Earlier this year, GameStop announced it would be closing over 300 stores but recently confirmed that number is going to rise to between 400 and 450 stores worldwide. There has also been confirmation more stores will close next year. While Gamestop saw sales rise online by 800% over the last few months that still only made up for 20% of the company’s total sales, and performance overall is down by almost 13% compared to last year.