An interesting industry story has been developing over the past few days, which could potentially affect PlayStation 5’s store presence compared to the Xbox Series S|X in GameStop shops. Microsoft has signed a partnership with the retailer, which will see its 5,000 outlets across the United States equipped with Microsoft Surface tablets and the like.
But there’s more: “GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.” So what does this mean exactly? Michael Pachter of Wedbush Securities explained: “If a customer signs up for the $15 monthly Xbox Game Pass Ultimate at a GameStop store, we would expect GameStop to receive $1.50 or so from that monthly revenue stream for as long as the customer continues to subscribe.”
According to DOMO Capital Management, this expands to all downstream revenue, including digital game purchases, DLC, and microtransactions. In theory, then, if GameStop sells you an Xbox Series S|X, it stands to earn a share of the revenue from all digital purchases made on that box for the lifetime of the console.
This is, of course, how the GameStop business model has historically worked. For example, while it profited very little from, say, PlayStation 2 hardware sales, its revenue came from subsequent software sales – both pre-owned and new. But as the industry has switched to digital, it’s losing out on a chunk of that income, hence initiatives like this emerging.
So what does this all mean for the PlayStation 5? Well, in theory, it gives GameStop a great incentive to sell Xbox Series S|X consoles over Sony’s system, which could result in smaller retailer presence and even “gentle persuasion” away from the PlayStation console. In reality, Sony will probably ink a similar relationship with the store.
In fact, while the company’s never got into specifics, boss Jim Ryan did recognise recently the importance of physical retailers, and how it’s involving them in its increasingly digital business: “I don't want to get into the back and forth of the margin discussions between ourselves and our retailers, but we think we've found a way to make that work together,” he said of the sale of PSN credit in physical stores as part of an interview with Games Industry.biz.
It’s interesting, isn’t it? Retail presence is importance for the overall health of the industry, but the business is slowly transitioning online. It’s a balancing act that companies like Sony are having to walk, and this move from Microsoft may temporarily give it a leg up in GameStop stores – assuming the Japanese giant is slow to respond.