Microsoft's Gamestop Deal Could Steer Shoppers To Xbox

Microsoft’s deal with GameStop could steer holiday shoppers toward Xbox

By Tom Caswell October 14, 2020

GameStop has entered into a partnership with Microsoft that could put Xbox consoles front and center on the store’s shelves, as well as assist both companies on multiple levels. Xbox consoles sold at Gamestop’s brick-and-mortar or online stores will give the retailer a cut of revenue from digital downloads purchased on those systems.

Is it enough to save the struggling retailer?

For the last few years, GameStop has made drastic changes to survive in an increasingly digital market. It tried to become a publisher, attempted to turn stores into social spaces, and made drastic cuts to staff and the number of retail locations. None of it has made a difference.

Perhaps this new deal, which plugs GameStop into a new source of revenue, will throw the company a lifeline. But there’s reason to be believe this new deal will be as successful in saving the company as past ones — which is to say, it probably won’t be.

GameStop now has an incentive to sell Xbox consoles over PlayStation.

For this deal to prove lucrative for GameStop, it needs a bigger slice of the console sales pie. According to data from the 2017 holiday shopping season, Amazon, Walmart, Target, and Best Buy were ahead of GameStop in console sales, with it capturing only 6% of the market that season. Right behind them, with nearly the same percentage, was Microsoft itself.

Why buy from GameStop when you could just as easily get your next-generation consoles, along with everything else you need for the holidays, in the same location? GameStop mostly caters to ‘hardcore’ gamers now, which leads to another problem with Gamestop’s new deal.

GameStop now has an incentive to sell Xbox consoles instead of PlayStation. Personally, as someone who worked a holiday season at one of GameStop’s retail locations, the company goes hard on pushing initiatives that will make it money, even at the expense of the customer. I’ve witnessed employees tell customers they are out of stock on new games to sell them a used copy, something the company keeps the totality of the sale on.

I’ve even purchased games that an employee rung up with the added warranty — without asking if I wanted it. That’s meant to be against company policy, but hitting sales metrics is placed above all else.

GameStop’s incentive to push the Xbox over the PlayStation might be good for Microsoft, but it may not be good for the retailer in the long run. I can only imagine how I’d feel if I walked into a store with the intention of purchasing a PlayStation, and a new Xbox was pushed on me. With some analysts expecting Sony’s next-gen console to outsell Microsoft’s this holiday, that’s going to be a problem if GameStop’s approach is too heavy-handed.

GameStop teaming up with Microsoft could improve the situation temporarily, but it may only be a band-aid when intensive surgery is required.

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