"It as unlikely that GameStop will agree" to Xbox One pre-owned fees

Ben Parfitt

The industry could be on the verge of an unprecedented standoff between retailers and platform holders.

That’s the prediction of Baird Equity Research’s Colin Sebastian, who reckons that E3 could be mostly bad news for platform holders.

“The announcements were mixed for GameStop, alleviating some concerns over used game restrictions, but raising others around publisher discretion over game access,” the analyst wrote.

“In our view, it is still unlikely that publishers will block used games; however, they may try to extract a retail fee.

“While Microsoft itself will not restrict used game sales, nor charge a fee for game transfers, the company is giving third-party publishers the discretion to restrict used or negotiate a fee from retailers. At first glance, we would not be surprised if publishers use the opportunity to ask for a revenue share, although we see it as unlikely that GameStop would agree to any meaningful fees given business model constraints and outsized market share (almost 50% of Xbox software sales).

“Expect mixed headlines from E3. We remain cautious on the video game sector, and expect choppy share performance on a mixed batch of headlines from the E3 conference; however, there continue to be potential positive catalysts later in the year, including a return to positive comps in Q4 and ongoing capital allocation.”

The big games retail players have publically remained supportive of Microsoft’s plans, presumably because they see value in being of the privileged few included in Xbox One’s pre-owned partner program.

Behind the scenes will likely be a very different story, however. We await from confirmation from individual retailers regarding their plans.

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Tags: Microsoft , Retail , pre-owned , Xbox One , gamestop

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