6/14: Why Microsoft is GameStop's Nightmare

The most important thing in tech is …

Microsoft’s push to change the gaming business. Friday morning we got word that the company is working with TV manufacturers to build Xbox-branded gaming capabilities directly into connected TVs, without the need for a console. And meanwhile Microsoft is also working on lightweight hardware — less sophisticated than today’s Xbox line — that will be able to stream advanced games. Why is this so important? Gaming has always driven a lot more than entertainment revenue. It drives demand for high-end PCs, graphics chips and broadband. Lately it’s one of the main drivers of Apple’s App Store, the cornerstone of its services strategy. And there’s a new generation of companies in the gaming industry, including Epic, Unity, AppLovin and IronSource, that are using data and AI to change the business works, allowing game mechanics and monetization strategies to work across different platforms like consoles, mobile, PCs and streaming. This is a big deal because companies that successfully retool an industry’s business model tend to win a lot of margin. Why is it a nightmare for GameStop? Well, traditionally GameStop is a middle-man. It’s a third-party retailer where people go to buy consoles, games, accessories and collectibles. If Microsoft is working with TV manufacturers to allow Xbox-style gameplays on TVs without the need for a console, that’s one less thing for GameStop to sell. Two, if you count the console and the game. Three if you count the console, the game and the game rentals, all of which could in the future be available direct from Microsoft. See the problem? Now, that’s not to say that GameStop can’t reinvent itself and its place in the ecosystem. But e-commerce alone won’t help at all with the streaming problem.

Coming up today on TechCheck …

We’ve got Microsoft Executive Vice President of Gaming, Phil Spencer; Unity CEO (and gaming industry veteran) John Riccitiello; and Verishop CEO Imran Khan; NYT columnist, podcast maven and Queen of All Media Kara Swisher.

While you were sleeping …

S&P 500 futures were steady in early morning trading Monday as investors digested the S&P 500′s record level heading into a week with a key Federal Reserve meeting. CNBC

Bitcoin’s price surged after Tesla CEO Elon Musk said Sunday the electric vehicle maker could accept bitcoin transactions again in future. CNBC

U.S. chip goliath Qualcomm has said it is open to the idea of investing in U.K. chip designer Arm if the company’s $40 billion sale to Nvidia is blocked by regulators, according to a report from The Telegraph newspaper on Sunday. CNBC

In the broader world …

Wealthy nations in the Group of Seven have agreed to set up an infrastructure plan to compete with China’s Belt and Road Initiative — but that won’t stop Beijing’s massive program, an expert on global economic governance said Monday. CNBC

Biotech firm Novavax said Monday its Covid-19 vaccine was shown to be safe and 90.4% effective overall in a phase three clinical trial of nearly 30,000 participants across the United States and Mexico. CNBC

On the horizon …

6/15, Oracle earnings

I’m listening to …