Microsoft to share digital revenues with GameStop on every Xbox it sells

Rumours have emerged that US retailer GameStop will receive a cut of digital revenues generated from every Xbox console it sells.

These rumours seem to have been confirmed too, with investment advisor DOMO Capital Management claiming via Twitter that they have had confirmation from GameStop.

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

According to DOMO Capital Management, GameStop will receive a share of all downstream revenue from customers that they bring into the Xbox ecosystem. In effect, this means that the retailer will get a cut of all digital purchases, provided the console was bought via GameStop.

The deal doesn’t just apply to new consoles either, with GameStop reportedly getting a cut via secondhand console sales too, with the retailer reporting all sales back to Microsoft.

Additionally, DOMO Capital Management also claims that this also applies to DLC – provided the Xbox was bought through the retailer.

More explicit details about the deal, and whether GameStop has a similar deal with Sony have not yet been confirmed.

This is not the first partnership between GameStop and Microsoft. Just last week the retailer announced a multi-year partnership with Microsoft.

Gamestop, whose shares rose by 44 per cent upon the announcement, will have its backend supported by Microsoft’s cloud-based tech Dynamics 365, and employees will be equipped with Microsoft Surface devices. In addition, Microsoft 365 and Microsoft teams will be rolled out to over 30,000 employees.

The store will also be offering Xbox All Access – the console contract scheme that provides players with an Xbox console and 24 months of Game Pass Ultimate with no upfront cost.

This is a clear lifeline to the struggling games retail industry – GameStop had been struggling long before the COVID-19 pandemic, closing 200 stores amid a $32m Q2 loss back in September last year. The pandemic has only exacerbated the situation, closing an additional 300+ stores at the end of March.