Editorial / GAME runs out of lives?

Just what is going on with Game Group?

So of course any British gamer is well aware by now of the tragedy that is the imminent collapse of Game Group and with that, the much loved high street retailers GAME and Gamestation. Back when I first head the news that GAME might, and that ‘might’ was always rather tentative, being filing for administration, it came as quite the shock. My local GAME is always bustling with customers, though granted the Sainsbury’s around the corner was always far better in terms of pricing. So just what is going on? Is the company going bust? Will there be any more GAME stores around for much longer? Let’s find out as the retailer takes the spotlight of this week’s feature.

The company, which had 1,275 stores worldwide as of November 2011, first began to see problems as early as September of this 2011 when it cut its revenue forecast and saw a £51.5m pre-tax loss and the drop of its shares value by over 70%. Its main issue? Eroded competition following the surge in online markets such as Amazon. Problems only increased when Electronic Arts would not supply the hugely anticipated Mass Effect 3 to the retailer in February 2012. Its reason that it would not supply the game was not initially stated, merely the firm apologised for not being able to supply gamers witha copy of the game. The company’s shares had dropped 90% over the last year due to credit issues and they simply found they were unable to order games that they did not have the credit for. Hence, it lost the supply support of other major developers such as Capcom and Ubisoft and was unable to supply various games such as Tekken 3D and games from the launch line up of the PS Vita.

Now that March is here, the timeline of events has sped up significantly and it seems the downfall of GAME is inevitable. In an attempt to cut its debts to suppliers, they heavily discounted stock on the 8th March in both GAME and Gamestation. There had been talks of the company axing Gamestation in a bid to save GAME. With 600 stores in the UK alone, GAME is one of the heavyweights of the game industry retail business yet it finds itself unable to pay rent bills. A poor Christmas, caused by the ever growing online businesses meant that GAME simply could not compete.

On 14th March, OpCapita, which owns electronics company Comet, put in a bid to save the dying company. It was to buy GAME’s debt and settle the bills with the lenders, but the lenders refused the offer plunging the company back into turmoil. The very next day, big players Microsoft and Activision ceased support, siphoning Xbox 360 games in general from the company and big sellers like the Call of Duty franchise. On the 19th March, the company suspended its shares from The London Stock Exchange and then, on the 21st, the board of directors announced their decision to file for administration.

This should have signalled the end for the sinking ship that was GAME. However, it appears that even those that relinquished GAME’s support have faith it can return to its former glory before it disappears forever. Electronic Arts on the 22nd March claimed at the Westminster Media Forum that they hope and believe that GAME will “be a phoenix and rise from the flames.” The UK boss of EA, Keith Ramsdale said that he felt it was a good store with good people and that they simply needed a new approach. Ramsdale was confident the company would be able to find that approach. Ramsdale says, “would I rather there is a GAME? Absolutely I would. I believe that a specialist retailer does a lot for the industry.” This writer happens to agree with Ramsdale. I for one would very much like to see GAME stick around. I agree that a specialist store does do a lot for the industry. Ramsdale later points out that HMV seems to be recovering nicely after cutting a lot of stores from the chain, but whilst HMV is a very good store, it stocks everything media. GAME was all about the games and gamers were better off for it.

I do think that GAME needs to become competitive. It has to realise that it is no longer the top dog, so to speak. The company retails games at their recommended RRP, which is usually the high bar of about £40 – £50 depending on expected popularity, age and platform. When compared to supermarkets like the aforementioned Sainsbury’s and online business such as Amazon, that sell new releases for £35, people are simply going to buy from them instead. There are a lot of jobs on the line if the company does not manage to turn its fortunes around. It was expected to raise £180 million in two weeks to save itself from administration and it failed to meet the number.

Yet, even with the bleak outlook, there remains hope. Published on the 23rd March, the Sunday Times reports that the company’s creditors are looking to buy it out of administration. Monday the 26th was the deadline. RBS (Royal Bank of Scotland) leads the charge. The administrator, PwC, plans to close the loss-making stores within the 600-strong firm and plunge a 6,000 strong workforce into jeopardy before selling off the now ‘profitable phoenix’ company. The other two bidders for the store include American rival Gamestop and the already mentioned OpCapita as it tries for a second time to acquire the firm. So right now, we are seeing a possible resurgence in the company’s fortunes. Though I for one would not mind seeing Gamestop on British high streets, there is something about GAME that I would want to see sticking around. With rent bills of £21 million and wage bills of £12 million going unpaid at the moment, the debts are still high.

After all of this then, what hope really does remain for GAME? I can only hope to see the store return to its former self after this tremulous fiasco. Although Amazon offers a brilliant alternative online, there is a place on the high street for a gaming specialist. So with this timeline of events in GAME’s busy last few months, we can see that the downhill slope is escalating with only a small chance of reprieve. Any news in the next few days could be the guillotine on the shop’s proverbial head.