GameStop recently announced a multi-year strategic partnership with Microsoft where the retail giant will move its online operations to the cloud-based business suite of Microsoft and offer Xbox All Access bundles at zero upfront cost.
It was however confirmed earlier today that the business agreement between GameStop and Microsoft includes a revenue-sharing model as well. The retailer will earn an unspecified percentage on all downstream downloads and digital content for any Xbox console sold through one of its official stores.
GameStop will hence basically earn from digital activity done by users on each Xbox console sold, which does suggest that the retailer will be pushing Xbox consoles as hard as possible. It remains to be confirmed if the revenue-sharing agreement includes only the next-generation Xbox Series X and Xbox Series S consoles or the current-generation Xbox One and Xbox One X consoles as well.
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
There are two factors that need to be noted. GameStop firstly has more than 5,000 stores in more than ten countries. Secondly, 2020 has witnessed a great rise in digital purchasing over physical. GameStop has hence found a valuable opportunity to keep itself afloat considering that the retail chain has been facing cash-flow concerns. Microsoft on the other hand has found a global ally (and presence) to push Xbox consoles in all major regions.
The only question now is if Microsoft plans to extend a similar opportunity to other retail chains out there, and if Sony Interactive Entertainment plans to counter by signing an equally sized retail chain for PlayStation.