GameStop's New Deal With Microsoft Includes Xbox Digital Revenue Sharing

Struggling video game retailer GameStop quietly announced a major new revenue-sharing deal with Microsoft last week, eclipsing the news with information about what Microsoft gets from this arrangement. Details about the mutual benefits provided by this business arrangement have trickled out, however, with insiders claiming that Microsoft will share a portion of the revenue earned through digital transactions that take place on Xbox consoles sold by GameStop.

On October 8, GameStop published a long press release announcing that it and Microsoft have struck a multi-year "strategic partnership." The same announcement made almost no mention of what GameStop gets from the deal, instead focusing on Microsoft's benefits, including the fact that GameStop employees will start using Microsoft Surface devices.

However, some careful readers noticed a tiny snippet in the announcement that reads:

GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.

That intriguing statement merely hints at a wider arrangement that took place behind closed doors, one that Ars Technica has surfaced some details on.

According to a new report, GameStop has confirmed to investors that it will get a portion of the 'downstream revenue from any device' the company adds to Microsoft's 'Xbox ecosystem.' Upon additional clarification, it seems that Microsoft has agreed to give GameStop a certain amount of revenue on all digital sales that take place on the next-generation Xbox game consoles — the ones that are sold through GameStop, mind.

Put simply, for each next-gen Xbox console sold by GameStop, the retailer will receive an unknown percentage of the digital revenue earned from that console — this is said to include everything from microtransactions to subscriptions, DLCs, and full game downloads. Microsoft hasn't commented on this aspect of the deal, however, leaving a mystery surrounding how large of a revenue share it has agreed to give GameStop.

Whether the revenue share ends up being enough to save GameStop in a market that has increasingly abandoned physical game media is yet to be seen.