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Retail

GAME Group losses double in first half to £51m

Tue 27 Sep 2011 7:35am GMT / 3:35am EDT / 12:35am PDT
Retail

Retailer blames weak games market in a period where only L.A. Noire proved to be successful

Specialist retailer The GAME Group has suffered losses before tax of £51.5 million ($80.2m) for the 26 weeks to July 2011, blaming a weak games market and other macro-economic conditions.

That's more than double the £21.5 million it lost for the same period last year. Sales were £558.8 million, a drop of 10.5 per cent.

"Like many other retailers, we believe that trading conditions will remain tough for the remainder of the year, and have set our plans accordingly," said CEO Ian Shepherd.

"We are determined to again outperform a difficult market this Christmas, by using our unique specialist position to give customers the very best choice and value."

Like-for-like sales at the company, which runs GAME and Gamestation stories in the UK, Europe and Australia, were down almost 10 per cent.

Shepherd said that only L.A. Noire has stood out as a strong title in the past 6 months, achieving sales in excess of £20 million, while Nintendo 3DS sales were below expectations.

The company said that sales in the markets in which it operates are down 15.5 per cent in total - hardware down 13.7 per cent down and software down 16.5 per cent.

"The current shape of both the wider economy and the pc and video games market leaves us under no illusion about the challenges we face in the remainder of the year," said the company.

The company noted that it will carry 18 special editions of upcoming games for the Christmas period, where it hopes to show growth compared to the past six months.

19 Comments

Maybe focusing on pre-owned wasn't such a great idea after all...

Posted:2 years ago

#1

Andreas Gschwari
Senior Games Designer

558 607 1.1
@ Jamie: My guess would be that a large part of the 560 million they had in sales was actually from pre-owned product. The margins on full price titles is not that large for retailers like game and competition from the large supermarket chains definitely eats into their sales numbers for original packed titles.

Posted:2 years ago

#2

Andrew Goodchild
Studying development

1,244 401 0.3
If LA Noire was the only stand out success, did I imagine Zumba Fitness, becuase I was under the impression that had sold a copy or two.

It looks like the rest of the year will make up for it, Deus Ex and Gears seem to be doing good numbers, Rage, Batman AC, Skyrim, MW3 and BF3, with a smattering of Nintendo first part stuff.
But then they are planning to start selling CDs, so they will probably lose some extra money to make up for the increased sales.

Posted:2 years ago

#3


Between a lack of purchasing power for people, the rise of smartphones and tablets, and the need, IMO, for the next round of consoles, I'm really not surprised at all that Game are struggling.

Posted:2 years ago

#4

Nick Parker
Consultant

283 150 0.5
Game needs to diversify in store as online games sales, either as ecommerce, download or streamed, as well as social gaming and other MSN/Facebook activity seduces the gamer away from the high street. These results are not surprising as we receive weekly reports of the market declining and unless Game grows market share, it will fall off in comparable numbers. If you're a specialist in any market on the high street, you're going to be looking over your shoulder for years to come as the internet and supermarkets improve their range and service. For the record, retailer margins on most new games are at about 35% and on pre-owned 55%+.

I'm not sure the rest of the year will make up for all of it with expectations for another declining year but with some positive exceptions on Xbox 360 and PS3 software numbers.

Posted:2 years ago

#5

Glen Elliott
Partner/Head of Sales

57 2 0.0
Not surprising figures are down this much considering there hasn't been many AAA+ titles released and how the retail market has been in general, personally I feel that Games shares were already undervalued hence why the figures havent really effected the stock price (its up 11.365% currently).

The dividend Game pays out (Just under 10% of current stock price- Surprised GI didn't include it in the news post as its quite significant), customer service and its long term plans (already in the news for the past several months). Make the stock quite attractive at the current prices and in a better position to survive then someone like HMV (No dividend, mountains of unpayable debt etc). I predict that sales will be way above the market over Xmas for them.

Posted:2 years ago

#6

Helen Simm
GUI Artist

9 0 0.0
Have to mention that there will be a drop in online sales with Game from the effect of their horrendous website issues over the last few weeks, which have still not been solved...
Customer service seems to not be a priority.

Posted:2 years ago

#7

Harrison Smith
Studying Games and Graphics Programming

75 4 0.1
What they should do is get on board with steam, psn, xbla, other dd platform and have a machine in there store where you can buy using cash or card and download directly to disk or usb drive. This would be a great barrier breakdown for Digital Download and opens up Retailers to gain 5-10 dollars easy money from a market they see as as something that could end them.

Posted:2 years ago

#8

Nick McCrea
Gentleman

181 242 1.3
Game has got 'Blockbuster' written all over it.

Posted:2 years ago

#9

Mike Wells
Writer

61 28 0.5
You can dress it up how you like, but when a specialist retailer (and actually a pretty good one) has to rely on trading in pre-owned stock then that can't be anything but a huge warning that the existing value chain is broken (and it has been like that for a long time). They are undercut by supermarkets and pure online plays like Amazon (who do online sales of physical product far, far better). GAME has been treading water for a while and the recent lack of AAA titles, time-competition from phones/pads/facebook and the state of the economy are the sharks that will help drag it down and tear it apart. Publishers will move to download models and direct customer ownership as fast as the infrastructure allows. GAME's strategy of "selling DLC in-store" is actually crazy when you step back and think about it in the cold light of day. It's at best a stop-gap; the world's going in the other direction.

Posted:2 years ago

#10

Björn Loesing
Producer

16 0 0.0
Hmm, Portal 2 did better on the PC than on consoles. Witcher 2 was a PC only title.

Maybe if GAME would actually shelf some of the best selling titles, they'd sell more?

Posted:2 years ago

#11

Andrew Goodchild
Studying development

1,244 401 0.3
@Helen. Apparently they have a new computer system running there online sales, I found this out today when I realised that they charged my credit card twice for the same game, which I almost didn't notice.

Posted:2 years ago

#12

Private
VIdeo Games

103 14 0.1
I had a nightmare with their online sales, I think it was possibly the worst online experience I'd ever had.

I did speak to Ian Shepherd however and he seems solid and a nice helpful guy.

Posted:2 years ago

#13

Helen Simm
GUI Artist

9 0 0.0
@Andrew and Graeme, yes I was aware they were rolling out a new computer system, which companies do often, but where GAME went wrong was not the glitches with the system, as this can and will happen (although they may have been more serious glitches in this case) but in their complete lack of public support.

Yes there were individuals at the company who handled customer service very well, in particular on their facebook page, but the official customer service, both online and through phone, were understaffed and underprepared in every way.

This lack of awareness of the importance of customer service is why Game will ultimately lose.

Posted:2 years ago

#14

Gareth Sharp
freelance reviewer / beta tester

8 0 0.0
this goes hand in hand with the general (and sad) state of decline of physical shop sales.
the internet has made it so much easier to buy online at lower prices as there are fewer overheads and middlemen.
online only requires a computer a handful of staff and a warehouse, no shop to decorate, light heat etc.

Posted:2 years ago

#15

Private
VIdeo Games

103 14 0.1
"Yes there were individuals at the company who handled customer service very well, in particular on their facebook page, but the official customer service, both online and through phone, were understaffed and underprepared in every way."

This was pretty much my experience.. My experience alone must have cost them in excess of 200 pounds in time and postage.

Posted:2 years ago

#16

Alex Hutchinson
Creative Director

19 38 2.0
You can't really blame the 'market' or the 'release schedule' when the financial situations of almost identical businesses in different terretories are reporting significantly different results: compare to Gamestop in the U.S. for example. They just reported record sales in Q1 2011.

Posted:2 years ago

#17

James Butterworth
IT Hardware & Software

24 1 0.0
It might have something to do with their rubbish online system after taking over Gamestation. I recently pre-ordered FIFA 12, it didn't arrive until the day after release (it should have been on day of release or before), then they charged me twice after taking the money too early! Gamestation's new site is a shambles! Every time I log in I get the Apache webserver "REQUEST URI TOO LARGE" error and can't log in. Emails detailing despatch of FIFA have lots of error messages in too where the system has struggled!

Also the points I was supposed to have earned on my Elite card have never materialized, the last 400 I got were from buying Driver San Francisco in store with them. It's getting ridiculous, do they never roadtest new site systems before rollout?

Posted:2 years ago

#18

Wayne Gibson
UK Marketing Manager for GameKrib.com

69 8 0.1
If GAME doesnt fix its current online problems before Christmas then I can see those last threads its hanging by start to simply come apart faster. They can't afford to mess up what effectively is the biggest and busiest time for anyone in retail.

Posted:2 years ago

#19

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