Two equity research firms have weighed in this morning on Microsoft's decision yesterday to give up on its Xbox One used games restrictions, region locking, and internet connectivity requirements. First up is BMO Capital Markets, who said in a note to investors this morning that this was good news for the industry – and in particular GameStop. Last night GameStop said that Microsoft had made the right decision on its Xbox One restrictions as did video game rental company GameFly.
BMO concurs with those sentiments:
"We see the primary beneficiary of these steps as being Market Perform-rated GME as its buy, sell, trade business, which is so critical to its profitability, remains intact. We expect a byproduct of this move to be that the console may have a stronger launch than we otherwise would have anticipated as one of the more controversial issues has been removed. However, we still believe that Microsoft needs to explain to the early adopter what the incremental $100 of value is that it is providing as compared with Sony."
DFC Intelligence also sent out a note this morning to investors advising them on the situation as it now stands:
"In our newly released forecasts for the video game market we estimated that the Sony PlayStation 4 would outsell the Microsoft Xbox One and the Nintendo Wii U. After last week's E3 show in Los Angeles we are even more confident in those forecasts. In fact for our next update in late August/early September we are likely to actually raise our forecasts for the PlayStation 4 and even further lower our forecasts for the Xbox One.
We feel that Microsoft's overall strategy for entertainment devices is deeply flawed. So far this has not had a major negative impact on the Xbox business but that is likely to change with the Xbox One launch. Right now the entire future of Microsoft's consumer entertainment business is in question and that is likely to have a major impact on the game industry. "