The announcement by Microsoft that all first party games would get a day and date release on their Game Pass subscription service was huge- potentially, this could alter the paradigm of how games are distributed to customers, with us moving from tangible physical games with ownership towards a more Netflix-like subscription based model.
Unfortunately, such a paradigm would also cut out retailers- who make most of their games related profits on actual game and accessory sales, as opposed to console sales. Consoles are sold at minimal to no margins- so by undercutting physical game sales, you are basically removing the potential profits retailers might be able to get from your platform, and thus, disincentivizing them from carrying your hardware.
And that’s exactly what has happened- following in the wake of Microsoft’s announcement, Austrian retailer Gameware has announced that it will be delisting all Xbox hardware from its stores, according to German magazine Gamesmarkt. Reasons cited by Gameware include the undermining of their profit margins, and the fact that the hardware will bring them zero profits, while leveraging their infrastructure. Speaking directly to Microsoft, Gameware has said, “If you want to do business alone, you should do the work alone.”
Gameware is the largest dedicated games retailer in Austria, and since 1989, has had almost 375,000 customers- while that is a very small size of the global market, if other retailers decide to follow in its footsteps, Microsoft could have a problem on its hands here.
