Tech giant Microsoft Corp. (NASDAQ: MSFT) broadcasted new plans for a service similar to Netflix, but for gamers, called Xbox Game Pass, charging subscribers $9.99/month. This will give them access to over a 100 games, that will include popular video games like “Halo 5 Guardians” and “NBA 2K16”. The gamer service will be launched this spring, will have access to a catalog of Xbox One and Xbox 360 titles from Microsoft, Take-Two Interactive Software, Warner Bros. Interactive Entertainment and more.
According to CNBC, it’s still one that threatens a core business of GameStop, which earns a significant portion of its revenue on the sale of used games, both new and catalog games. That’s a practice that has always stuck in the craw of publishers, who don’t see any revenue from the resale of titles. Under Microsoft’s program, they could monetize older titles that normally wouldn’t generate any revenue. Gamestop is already under fire as it saw revenues drop 16.4 percent in the holiday 2016 quarter. Comparable store sales were down 18.7 percent and used game sales fell 7.9 percent. The stock was down 4 percent in early trading Tuesday as news of Xbox Game Pass spread.
“We simply do not have confidence that [Gamestop] or anyone can accurately forecast console market growth in 2017 and beyond,” said Ben Schachter of Macquarie Capital in a January note to investors. “We remain open to the potential for [Gamestop] to rebound on a faster than expected shift to new businesses and business models, but given management’s recent track record and our own uncertainty around forecasting core console gaming, we simply want to see better execution before we can recommend the stock.”
“Every month new games will cycle into the subscription with some cycling out, giving you a constantly-updating library of games,” said Phil Spencer, head of Microsoft’s Xbox division, in a blog post. “Xbox Game Pass is your ticket to endless play.”