Last week, it was announced that Microsoft and GameStop had a new partnership that will see the backend (and some front end) services move to the Microsoft 365 environment. But this business agreement has much bigger implications for GameStop and Xbox as well.
When the deal was first announced, on my weekly podcast – The Sams Report, I speculated that this would mean there is a profit-sharing agreement between these companies for selling Xbox consoles. I even went as far as emailing PR but they never responded.
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
Out today, $GME, or GameStop, confirmed that there is a revenue-sharing on downstream downloads and digital content for any device that is brought into the Xbox ecosystem from GameStop.
This is a huge win for both Microsoft and GameStop. Now, GameStop has a tangible way to improve its cashflow post console sales and Microsoft gains 5000 stores that are likely going to be pushing Xbox consoles much harder than PlayStation devices thanks to the extended revenue agreements.
The next question is if Microsoft is, or already has, signed these agreements with other retailers? For now, we don’t know those answers yet but I would think that if Best Buy saw what GameStop was receiving, they too would like in on the action.