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Beleaguered games retailer Game Group has said it intends to file for administration just weeks after it indicated that it planned to modify its business model with a shift towards digital downloads.

A statement released this morning said that talks with stakeholders had not made enough progress, and it was now "of the opinion that there is no equity value left in the group".

Game Group shares have now been suspended by the London Stock Exchange.

Earlier this month we reported on Game’s plan to begin streaming demos this spring in an attempt to bolster its digital offering.

It said its new partnership with cloud gaming service Gaika would enable consumers to stream game demos at the critical moment within the purchase decision-making and checkout process.

However at the same time it was in dispute with Electronic Arts after the games publisher refused to let Game stock the forthcoming Mass Effect 3 title.

It was predicted that the retailer would lose £2m as a result of not stocking the best-selling game.

But realistically it is Game's inability to compete with online retailers such as Amazon and Play that has been its undoing.

It has massive overheads with 1,300 stores worldwide and 10,000 staff, and it was reported to be trying to raise £180m this week to stave off administration.

The retailer currently owes £40m to suppliers and £10m in VAT, while losses for the year to the end of January are likely to be around £18m.

It seems unlikely that the Game brand will disappear altogether though.

Even if it does get to the point where it is no longer feasible to operate brick-and-mortar stores, the brand could still operate as an online retailer in the same way that Zavvi reinvented itself after going bust in 2009.

David Moth

Published 21 March, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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Comments (1)

Eoin Kenneally

Eoin Kenneally, Ecommerce Consultant at Consultant

It seems that unlike HMV the suppliers don't want to rescue GAME. Is the long tail non-existent in video games?

As a business never offered a point of difference that digital could not replicate. Midnight launches can only do so much to drive footfall. Many gamers are happy to wait to get the tactile copy in their hands and pay somewhat of a premium but their price differences against online retailers where considerable for those aged 18-24 even people aged over 30 are willing to get robbed on the high street. Publishers also hated their ability to generate revenue through trade in games and sell them close to retail price

I would suggest that a contributor to their downfall has been that we are now in the longest hardware cycle since the gaming boom began and that the boost in sales driven by hardware launches (such as the wii launch) has dented the groups profit forecasts. All the other changes in the industry have largely passed GAME by, direct downloads, mobile gaming revolution, apple apps and the emergence of better MMO games which trap users in and reduce their willingness to spend on other titles.

over 4 years ago

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