2 Winners and 1 Loser From The New Xbox

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Microsoft (NASDAQ: MSFT  ) left out some key details in its next-gen console unveiling this week. For example, Mr. Softy didn't disclose either the price or the actual release date for the Xbox One.

But one thing we do know is that the console is already making new friends -- and creating new enemies.

The Xbox One console. Source: Microsoft.

Left out in the cold
Video-game retailer GameStop (NYSE: GME  ) , for one, can't be impressed with what Microsoft just unveiled. The new Xbox console won't accept games made for the current Xbox 360. And considering that console has been the top-selling one in the U.S. for 21 months straight, there will be a mountain of used games that won't have much value to gamers who upgrade this year.

That should make for an especially bumpy console transition for GameStop, which pulls its highest profit margins from selling used games. Last year the company logged a 48% gross profit on those sales, versus just 22% on sales of new video games. GameStop can expect new software sales to jump as the Microsoft and Sony systems hit the market this fall, but its used video-game business will take a painful hit.

Activision Blizzard
(NASDAQ: ATVI  ) , on the other hand, must be all smiles. In a product demonstration that was light on actual gaming features, Activision's new Call of Duty game was the only title that got center-stage attention.

Activision is aiming to keep that profitable franchise on top through the volatile transition to the next generation of consoles. And a close partnership with Mr. Softy at launch will help as it takes on rival Electronic Arts this fall.

And chipmaker Advanced Micro Devices (NASDAQ: AMD  ) got a boost, too, as Microsoft confirmed a switch over to its products. AMD will also be providing chips for the Sony PlayStation 4, giving it a near lock on the game console market.

But probably the biggest benefit from Microsoft's chip switch is that developers can more easily create games for both major systems now. Console makers will need to do everything they can to get developers on board, as their attention is on smartphones and tablets, where the explosive sales growth has been lately.

With game developers happy, that leaves just one group left to please. And it's the most important one, consumers, who will have their say starting in the fall.

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Read/Post Comments (9) | Recommend This Article (5)

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  • Report this Comment On May 23, 2013, at 11:54 AM, ewro wrote:

    Guess what MS you don't have a monopoly anymore.

    People aren't going with Xbox. We don't want extra fees to use our own internet connection, to watch our own cable, to use Netflix we already pay for. We don't want to be gouged by your proprietary accessories (360 accessories don't work, Xbox1 HDD non user replaceable). And certainly we aren't going to pay you a fee so we can trade games with our friends. I ditched you several years ago for Playstation and have been enjoying the savings, quality and games. I'm not even considering you now.

  • Report this Comment On May 23, 2013, at 12:04 PM, AttfayElleybay wrote:

    If I have to pay a fee to play a used game, I'm not interested. It would be like, if I bought a used car, and had to pay Ford so the AC worked.

  • Report this Comment On May 23, 2013, at 12:20 PM, znajit wrote:

    With Xbox1 launch, how does it effect Nvidia's Biz in the GPU but more so there own gaming platform which has none of the advance Active IR and depth features for advance games?

  • Report this Comment On May 23, 2013, at 12:42 PM, fwe43 wrote:

    LOL wow, calm down ewro

    And I'm pretty sure that the XBOX one will be able to play 360 games but you will have to be an additional device that connects to the One. That's not the greatest solution but I'm pretty sure that will be the case unless MSFT has scrapped that plan.

    And from what I heard the ONE will be able to play used games without an issue. Although understand that is probably where the industry (not just games but music, movies etc.) wants to go. I don't think it's necessarily MSFT driving that push but once "the cloud" takes over the internet and you have no physical discs anymore that's probably what they will force upon us.

  • Report this Comment On May 23, 2013, at 1:11 PM, ShamrockOne wrote:

    Sony is probably going to the cloud too.

  • Report this Comment On May 23, 2013, at 1:13 PM, pedron75 wrote:

    Considering that most gamers have a library of games unfinished and mutitudes more due to the length of this console cycle. As long as Microsoft Continues to support the 360 with XBL the acceptance of this new console could be slow in coming.

  • Report this Comment On May 23, 2013, at 1:50 PM, TheCodeWrangler wrote:

    Most gamers I have known kept their old systems when the new ones were released, so Game Stop won't really lose any customers. Further, the Xbox 360 will likely be sold for a while longer at even lower prices, attracting new gamers.

  • Report this Comment On May 23, 2013, at 4:32 PM, saxetman1 wrote:

    I really don't see anything beneficial of the new XBOX console other than what's on the surface. The biggest loser in this is not Gamestop, but the consumer itself. Microsoft has gone great lengths to build a following and has the XBOX360 as the highest selling/rated console in history. And now, you are going to tun your back on all those fans by stating the new console won't play used, or shared games, without a fee? And used bought outright won't play at all? In a day and age where every advantage is needed in a cutthroat environment, Microsoft is doing a damn good job of slicing its own throat. All Sony has to do now is sit back and enjoy the increase in revenue from new customers.

  • Report this Comment On May 25, 2013, at 2:23 AM, nothng2lose wrote:

    Xbox Turn on my PS4

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