The buzz is building for Microsoft's (NASDAQ:MSFT) recently unveiled Xbox One and Sony's (NYSE:SNE) PlayStation 4, which was announced earlier this year. A major selling point is the new core architecture, which in both cases will be anchored by Advanced Micro Devices (NASDAQ:AMD) processors.
Investors have cheered on the news, and AMD shares have more than doubled since bottoming out six months ago. Even game retailer GameStop (NYSE:GME) has raced to fresh 52-week highs on the hopes that Microsoft and Sony can breathe new life into the fading video game industry.
What if things don't go according to plan? One problem with moving to AMD chips is that older games on disc will no longer be playable. This is going to have some important ramifications in defining the value proposition of the new consoles. GameStop's high-margin business of buying and reselling used games and gear will also be challenged by the clean slate for both platforms.
In this video, longtime Fool contributor Rick Munarriz explains why this may be a deal breaker for gamers and why all four companies may feel the pain.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of GameStop and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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