Xbox's Monthly Subscription Service Could Be Bad News For GameStop

GameStop Corp. GME, the largest retailer of video games, has faced its fair share of challenges in its core video game business as gamers can buy and download games from the comfort of their own homes.

The competitive landscape got even worse for GameStop and other retailers as Microsoft Corporation MSFT's Xbox unit announced Tuesday a new service. According to a Reuters report, Xbox will offer consumers a monthly subscription service that costs $9.99 per month and gives users access to over 100 Xbox One games along with backward compatible Xbox 360 games.

The service, called "Xbox Game Pass," will be launched this spring with some notable games included, including Microsoft's "Halo 5: Guardians" and Take Two Interactive Software Inc TTWO's "NBA 2K16."

See Also: Are GameStop Sales A Good Indicator For Video Game Publisher Stocks?

Moreover, users that want to buy a game from the catalog can do so at a discount cost.

Microsoft's announcement sent GameStop's tumbling lower by nearly 8 percent. VentureBeat explained that offering consumers on-demand access to a large library of games could come at the expense of GameStop's future sales.

One of GameStop's most important business segments is secondhand sales of games in which the company buys a used game from a consumer and resells it. But now Microsoft's new library could reduce the supply of used games that end up for sale in GameStop's stores.