What does this mean for XBOX?
Early this morning GameStop in the US released a statement announcing that they would enter into a strategic partnership with Microsoft for back end services and cloud computing with Azure. This rallied the stock of GameStop by 27% and has been widely seen as a net positive for both companies.
- Under this agreement, GameStop will standardize its back-end and in-store solutions on Dynamics 365, Microsoft’s portfolio of cloud-based business applications and customer data platform, empowering associates with integrated experiences across its business operations including finance, inventory, eCommerce, retail and point of sale. This will enable store associates the ability to access omni-channel insights about customer preferences and purchasing history, real time information on product availability, subscriptions, pricing, and promotions in order to provide a differentiated and personalized in-store customer experience.
- Additionally, associates will be equipped with new Microsoft Surface devices that will transform the in-store experience and help unlock new retail experiences in the future. The mobility of Microsoft Surface will allow associates to move freely within the store footprint, meeting the needs of customers faster and more efficiently. Microsoft Surface devices have already been an important part of the digital modernization strategy for store management.
- As part of its transformation, GameStop plans to roll out Microsoft 365 and Microsoft Teams to its stores, empowering more than 30,000 store associates with enhanced productivity and collaboration tools. With Teams, store associates will more easily be able to ask questions and share insights with one another, enabling them to provide a better customer experience. Associates will also benefit from enhanced security and identify management capabilities.
- Following decades as an essential provider of the Microsoft Xbox gaming platform and services, GameStop has expanded its Xbox family of product offerings to include Xbox All Access, which provides an Xbox console and 24 months of Xbox Game Pass Ultimate to players with no upfront cost. GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.
The big takeaway for Xbox is that GameStop will be incentivized to sell Xbox consoles and services more than competing platforms due to the structure of greater revenues for stores that sell more Xbox subscription programs like all-access and gamepass monthly cards. there are also reports from analyst Benji Sales that there will be bigger in-store presences for Xbox than in previous generations.
This deal is good for GameStop who has been challenged previously with aging infrastructure and unoptimized software for customers. This deal is also good for Microsoft who look to put their foot firmly into the cloud compute and business software sector and take on companies like google and amazon in corporate back end software, windows still remains the number 1 local operating system for businesses on pc but they are now looking to complete that circle with online back ends and cloud computing with Azure.
All in all this is a good symbiotic deal for everyone involved and Microsoft continues to show their interest in being a big player in the gaming sector.