GameStop Corp. (GME) Falls on Microsoft Corporation (MSFT)’s Stupidity

Page 1 of 2

They’re shoveling more dirt on GameStop Corp. (NYSE:GME) , but this time it’s not the retailer’s fault.

The small-box seller of video games and gear is stumbling after a renewed report suggesting that Microsoft Corporation (NASDAQ:MSFT)‘s new Xbox will not support used software titles. GameStop’s shares fell as much as 11% this morning, and rightfully so. If there is no longer a market for secondhand games, the retailer will miss out on its most profitable business of buying back old releases for a pittance and reselling them at juicy markups.

GameStop options active on earnings, sales of Call of Duty®: Black Ops IIEdge — a U.K. magazine and website for die-hard gamers — reports that the next generation of Xbox consoles will require activation codes on software installations that can only be used once. Since the state-of-the-art system also reportedly requires continuous online connectivity, there’s no legal way to circumvent this safeguard.

This isn’t a new story. Gaming enthusiast website Kotaku reported the same thing last summer.

“I’ve heard from one reliable industry source that Microsoft intends to incorporate some sort of anti-used game system as part of their so-called Xbox 720,” Kotaku’s Stephen Totilo wrote at the time.

Well, more details are starting to come out on the anti-used game protection, and it’s not going to be pretty for GameStop. The shift to digital delivery was already making the strip mall staple scarce, drying up the supply for new releases. GameStop has hosed down its same-store sales guidance four times over the past year. Now it’s getting hit with what will be a problem with the supply for old releases, too.

It’s not just GameStop that’s going to be hurting with this move, though.

Does Microsoft really think it can get away with this? Edge‘s report claims that Microsoft is finally following rival Sony Corporation (NYSE:SNE) into supporting Blu-ray as its optical disc platform of choice. The new system discs will have as much as 50 gigabytes of capacity, so the potential for these immersive environments to blow players away is huge.

However, does Microsoft really expect gamers to pay $60 for a game that can’t be traded in or passed over to a friend when complete? Has Microsoft gotten that cocky? Yes, it’s been the leading console maker in this country for two years, but this is a shrinking pie. Nintendo Co., Ltd (OTCBB:NTDOY) thought it would raise the bar when it introduced the Wii U in November. It has sold just 3.06 million Wii U units. Nintendo last week slashed its Wii U target for its fiscal year ending in March from 5.5 million to just 4 million units.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!