Video-game retailer GameStop has decided to stop selling Microsoft’s Zune players at its stores due to what it sees as insufficient demand from customers.

“We have decided to exit the Zune category because it just did not have the appeal we had anticipated,” said a GameStop spokesperson. “It (also) did not fit with our product mix.” GameStop made the decision about a month ago. GameStop said it will sell Zune players online until it clears out its inventory.

GameStop has hundreds of stores across the country and losing that distribution channel could hurt Zune sales. Many of GameStop’s customers are avid users of Microsoft’s Xbox 360 console and could have presented a cross-selling opportunity for Microsoft.

Microsoft said that the Zune player continues to be carried by other retailers. “We have a set of great partnerships that give Zune a strong presence at retail including Best Buy, Target, Wal-Mart and others,” said Adam Sohn, director of marketing for Zune, in a statement. “We will continue to invest in retail partnerships and have seen good momentum online and at retail over the last few months.”

The decision to stop selling Zunes took a toll on the company’s margins in the first quarter. Gross margins for the quarter were 26.1%, down from 27.2% the same quarter year before, reported GameStop on Thursday.