An Insight On The Philosophy of GameStop Corp. (NYSE:GME) And Microsoft Corporation (NASDAQ:MSFT)

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GameStop Corp

The video game industry is shifting toward digital circulation.  In future or a later date, physical game discs will simply cease to exist;gamers will be downloading their purchases directly over the Internet. Many of them already do, but many more could be about to make the switch to digital.

The price of GameStop Corp. (NYSE:GME)’s stock has dropped nearly to 8% after the revealing the Xbox Game Pass service by Xbox boss Phil Spencer. The Xbox Game Pass Service is a program where Xbox One owners can pay $10 per month for unlimited access to over 100 Xbox One and backward-compatible Xbox 360 games. In fact, all these are digital games downloadable from Microsoft Corporation (NASDAQ:MSFT)’s Xbox Game Store. Many investors have seen this as a significant threat to GameStop.

Microsoft announced its new premium membership program for Xbox that will give players immediate access to scores of digital games, and Wall Street has said that move is hostile toward the world’s biggest gaming retailers.

The Xbox Game Pass, a $10-a-month service will give access to more than 100 titles, plus the company’s Halo 5: Custodians, publishers such as Take-Two Interactive’s NBA 2K16. The games will be available for download on Microsoft’s Xbox consoles.

The download feature poses a threat to GameStop business mainly selling new and used discs Robert W. Baird & Co. analyst Colin Sebastian stated in a research note.

“We continue to highlight the importance of GameStop’s to diversify our strategy to increase shares and move higher, without non-gaming types helping to balance potential market share declines in games,” he wrote.

Threatened by digital downloads, GameStop has diversified its business in recent years and has acquired hundreds of Wireless stores in its Spring Mobile division and increased sales of toys and other video-game accessories in its shops. The company also sells games online and publishes its titles.

After the announcement of the introduction of Xbox Games Pass service by Xbox boss Phil Spencer the GameStop’s stock has dropped nearly 8%. The owners can pay $10 per month for unlimited access of over 100Xbox one and backward-compatible Xbox 360 games. In fact, all these are digital games downloadable from Microsoft’s Xbox Game Store. Investors see this as a significant threat to GameStop.

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