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Monday, November 23, 2020

GameStop surges after forming strategic accord with Microsoft

GameStop is expected to get a surge in sales when new video-game consoles arrive in coming weeks, and the Microsoft partnership could help them extend the momentum.

By: Bloomberg | Updated: October 21, 2020 2:29:38 pm
GameStop, Microsoft, GameStop Microsoft partnership, Xbox, Xbox Games, Microsoft Surface, Xbox All AccessGameStop investor Ryan Cohen, the former head of Chewy.com, has been prodding the company to focus more on e-commerce, rather than its physical chain. (Image: Bloomberg)

GameStop Corp jumped as much as 27 per cent after a strategic partnership with Microsoft Corp gave investors fresh optimism that the video-game retailer can turn around its business.

Under a multiyear agreement, GameStop will use Microsoft’s cloud services to handle business operations, including finance, inventory and e-commerce, according to a statement Thursday. In-store workers also will use Microsoft Surface devices while they’re helping customers. And GameStop will offer Xbox All Access, a monthly service for the Xbox gaming console.

GameStop is expected to get a surge in sales when new video-game consoles arrive in coming weeks, and the Microsoft partnership could help them extend the momentum. A new Xbox and Sony PlayStation are debuting next month, which should drive traffic to GameStop’s stores and e-commerce site.

Longer term, GameStop faces a tough challenge. Video-game companies are relying less on physical media and increasingly delivering their products online, making a brick-and-mortar chain less necessary.

GameStop investor Ryan Cohen, the former head of Chewy.com, has been prodding the company to focus more on e-commerce, rather than its physical chain. But GameStop has a massive retail footprint, with thousands of stores in 10 countries.

The shares climbed to as much as $11.90 on Thursday after GameStop announced the deal. Even before the jump, the stock was up 54 per cent this year, lifted by excitement about the new gaming consoles.

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