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GameStop will get a cut of digital revenue from every Xbox it sells

But it's unclear how big GameStop's portion will be.
Mariella Moon, @mariella_moon
October 16, 2020
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Microsoft and GameStop have inked a deal that would give the latter a portion of the tech giant’s digital sales revenue for every next-gen Xbox the gaming retail chain sells. The companies published a press release about their collaboration last week, but it mostly focused on GameStop employees using Microsoft’s cloud solutions and hardware products. As Ars Technica has noted, though, there’s a vague line buried in there that deserves more attention: “GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.”

Speaking to investment firms Domo Capital Management and Loop Capital, the publication was able to paint a better picture of the situation. Domo President Justin Dopierala told Ars that GameStop Investor Relations representative Eric Cerny sent an email with the statement: “We are allowed to state we will receive a portion of the downstream revenue from any device we will bring into the Xbox ecosystem.”

Loop Capital analyst Anthony Chukumba confirmed what Dopierala said, adding that GameStop will get a percentage of the revenue from every full game and DLC download, every microtransaction and every subscription made through an Xbox Series X or Series S it has sold through its stores. And since the original line in the PR mentions “lifetime revenue value,” it means the retailer will be receiving money from Microsoft throughout each console’s lifetime.

BWW Media Group executive editor Brad Sams first brought attention to the deal last week and noted Domo Capital’s confirmation:

How big GameStop’s cut is, however, remains a mystery. Neither GameStop nor Microsoft would reveal the details of their partnership, though Dopierala believes it could be anywhere from one to 10 percent of all digital revenue. Chukumba told Ars that it’s probably much smaller than that, because, well, Microsoft probably isn’t getting a lot out of the deal. “If they didn't have this [arrangement], would they sell fewer Xboxes?" he said.

It’s also unclear if the deal would mean GameStop will push Xboxes more than PlayStations — that’s something we may find out next month when the PS5 and the Xbox Series X and S arrive.

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