If the Penny Arcade Report is to be believed, watching Sony Corporation (ADR) (NYSE:SNE)‘s presentation at E3 was like watching the San Francisco 49ers take on a middle school football team. Sure, the kicker might be sick. Sure, you fumbled on your own one-yard line. And, sure, you’ve put in the ninth string QB, but you’re still going to win. Jack Tretton, CEO of Sony Entertainment America, laid down the gauntlet.
The PlayStation 4 would let you lend and sell games easily, you didn’t need to always be connected to the Internet, and you’ll be able to get the PS4 for $100 less than Microsoft Corporation (NASDAQ:MSFT)‘s Xbox One. While the implication for sales of the competing systems is yet to be determined, the market has already decided that Sony Corporation (ADR) (NYSE:SNE)’s move is a godsend for GameStop Corp. (NYSE:GME). The retailer’s stock has jumped 12% over the last week. Is this really the savior GameStop has been looking for?
The continuing saga of used games
GameStop Corp. (NYSE:GME)’s problem has stemmed largely from the issue of used games. Last quarter, the company earned 31% of its revenue from used games, while new games made up another 38% of sales. The functionality of used games on the next generation of consoles has been up in the air, with Microsoft Corporation (NASDAQ:MSFT) releasing an oddly worded statement earlier in the week.
Microsoft said that “[it] designed Xbox One so game publishers can enable you to trade in your games at participating retailers.” The statement clarified that GameStop Corp. (NYSE:GME) would likely remain in the picture, but didn’t make it clear who the retailers were, if you had to use a retailer, or which publishers would allow such trade-ins.
Sony Corporation (ADR) (NYSE:SNE) made things much more straightforward. The company summed its position up in one slide: “Trade games in at retail, sell it to another person, lend it to a friend, or keep it forever.” GameStop Corp. (NYSE:GME) investors loved that news, and it looks like Sony is all set to play ball.
Sony Corporation (ADR) (NYSE:SNE)’s announcement puts Microsoft Corporation (NASDAQ:MSFT) on the back foot, and demands a clearer response from the company on its used-game policy. The best news for GameStop Corp. (NYSE:GME) investors would be Microsoft’s capitulation, opening its system up just as Sony has. While hard-core gamers may ultimately make a decision on system based on the lineup of games, many casual users will simply take the one that offers the best features. Right now, PlayStation is winning that war.