Microsoft Might be Responsible for GameStop's Troubles - The UpStream

Microsoft Might be Responsible for GameStop's Troubles

posted Saturday Jan 27, 2018 by Scott Ertz

Microsoft Might be Responsible for GameStop's Troubles

While the company has expanded its offerings in recent years, there is no doubt that GameStop's main business is in used games. A number of threats have caused the company's diversification, but analysts at The Motley Fool believe that a new move from Microsoft could be a nail in GameStop's coffin.

GameStop has been in trouble over the past year or so, even as the rest of the stock market has rallied. In 2017, GameStop took a slide of over 10%, one of few companies the end the year that way. The company has continued to see a slide in its stock price, as other companies in the industry have recovered or improved on their positions.

The move from Microsoft that could continue GameStop's trouble is the expansion of the Xbox Game Pass. As the service stands today, it offers a large, rotating catalog of games available to Xbox One owners for $10 per month. It's essentially the Netflix treatment for Xbox games: one price, all you can play. Already this is a problem for GameStop, who relies on the sale of older games to keep them alive, and with Game Pass, they are already getting hit.

At least GameStop still has newer releases, right? Wrong. Microsoft has announced that they are expanding the lineup of Game Pass to include Day One releases of first party titles. This will begin with Sea of Thieves, which will release to market in 2 months, and will be available for Game Pass subscribers at the same time. This means that gamers who would normally wait a few weeks for the hype to die down and buy the game used from GameStop in April for 20% off, will be able to play the game Day One for only $10.

If ever there was a threat to the business model of GameStop, this is it. Luckily for GameStop, this only affect Xbox titles, and currently only first party titles. There are still third party titles, and of course PlayStation and Switch consoles, in the mix. But, how long before Sony makes a similar move to include first party titles into their PlayStation Now offering? How will GameStop respond to this new threat to their aging business model? Only time will tell.


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