From consoles they sell.
Here’s a story most of you didn’t quite expect. Recently we learned the Microsoft had entered into a partnership with GameStop that appears destined to slowly transform GameStop into an extended Microsoft store. More details of the deal have come out and reveal that the agreement includes revenue sharing for all digital content purchased on Xbox through consoles bought from Gamestop.
Which means GameStop has a huge incentive to sell Xbox consoles, and even the Xbox Series S which is all digital and cannot play disc games making it a software dead-end for GameStop in recurring sales otherwise. Apparently these are lifetime sales, meaning any revenue made from the moment you buy the console to the moment that console dies will result in a kick-back to 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
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It is a massive profit incentive for GameStop as digital sales overtake physical discs. It also means GameStop has a big incentive to push the Xbox over the PlayStation as they literally don’t have to do anything after that point to continue bringing in revenue, including even bringing people into the store. Everything from games to DLC to Xbox Live and Game Pass will count.
Hopefully this will help alleviate GameStop’s massive debt.
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