Outlook: GameStop Facing Digital Download Headwinds

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On Monday morning, Microsoft (NASDAQ:MSFT) announced Xbox One worldwide sell-through of three million units since its November 22 launch. Previously, on November 22, Microsoft announced that over one million consoles sold-through worldwide in under 24 hours. On December 11, it announced Xbox One sell-through of over two million units worldwide in 18 days.

Xbox One sales are in line with our expectations so far. The three million units figure is in line with our expectations for the PS4 as well, which launched in the U.S. and Canada on November 15. Of the three million Xbox One units sold, we expect more than 50 percent were sold in the U.S., with GameStop (NYSE:GME) getting somewhere between 45 – 50 percent share. This implies Xbox One sales at domestic GameStop stores of roughly 0.675 – 0.75 million units since launch, with a similar number of PS4 units sold as well.

We expect GameStop competed for up to an additional 10 percent of the Xbox One and PS4 consoles sold outside of the U.S., representing another 0.30 million next-gen console units. In total, we believe GameStop sold through approximately 1.65 – 1.8 million consoles as of December 31, as well as a modest amount of associated software and accessories.

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