Microsoft Corporation (NASDAQ:MSFT) has cleared up some details on the way that the Xbox One will work, and it doesn’t look good for GameStop Corp. (NYSE:GME).
- Access your entire games library from any Xbox One—no discs required: After signing in and installing, you can play any of your games from any Xbox One because a digital copy of your game is stored on your console and in the cloud. So, for example, while you are logged in at your friend’s house, you can play your games.
- Buy the way you want—disc or digital—on the same day: You’ll be able to buy disc-based games at traditional retailers or online through Xbox Live, on day of release.
Let’s weigh the gravity of these two literal bullet points.
Every game release will be available online. Sure, Microsoft is throwing retailers the courtesy of a bone. You can head out to the store, deal with inventory issues unless you pre-order, and generally delay your eventual gaming experience. You can also just play the game right away through Xbox Live.
Let’s put this in terms where you can see how damaging this is to GameStop. The Xbox One is a Kindle, and the instructions say you can head out to your local Books Be Here for a hardbound best-seller or you can take advantage of the digital depth of the device you just bought and start reading the ebook you want right away.
If that’s not clear enough, consider this in terms of the iOS App Store. Every game is online. You buy it once. You own it forever on the cloud. How popular do you think the App Store would be if it offered you the option — instead — of trekking out to buy a physical copy? It’s just not necessary.
Now, fast-thinking owners of GameStop Corp. (NYSE:GME) stock won’t see this as problematic. They will smell an opportunity. If you don’t need the discs beyond the initial registration process, diehard gamers can just sell them back to GameStop the next day or share them with friends. Isn’t this the way that music fans would buy CDs, rip them, and then resell them?
Really? Do you really think Microsoft is that stupid? Do you think Activision Blizzard, Inc. (NASDAQ:ATVI) would’ve shared the stage with Mr. Softy for last month’s Xbox One unveiling of Call of Duty: Ghosts — Activision’s first announced game for the new console — if it was just going to sell one copy that would then be passed around?
Let’s assume that this would be true. GameStop Corp. (NYSE:GME) would be toast in that scenario, too. See, the original buyer wouldn’t trade in the game at GameStop Corp. (NYSE:GME) the next day. He would share it with dozens of his buddies who would’ve bought it at GameStop, and then maybe consider reselling the game.
