Bye, bye Game

Yesterday the beleaguered Game Group gave up the ghost and finally entered administration after being unable to find a suitable partner to rescue the business from collapse. PwC, the administrators put in charge, announced that they would be closing 277 Game and Gamestation stores across the UK and Ireland, making 2104 staff redundant by the end of the week. This will leave 333 stores open which will according to PwC make the group a more attractive proposition to buyers.

It was a sad day for me as I read the announcement and the list of stores to be closed that was compiled on Gameindustry.biz , especially as the two closest stores to me in North Finchley and Brent Cross were ones earmarked for closure. No longer will I be able to enliven my trips to either destination by popping into Game to see if anything takes my fancy.  

It’s never a good day when that many people lose their jobs and it is especially tough with the current economic situation. Those 2104 employees will probably end up joining the 2.67m other unemployed people looking for work. However while a degree of sympathy is required for those who work in the trenches at Game, the same emotion should not be directed at the senior management who have quite clearly messed up, badly.

Administrators at PwC have blamed The Game Group's collapse on its "ambitious" overseas expansion and the "unfortunate" close proximity of its stores and it is the latter point that I think speaks volumes about the kind of people who were in charge of The Game Group. It is easy to see that Game had too many stores on our high streets. Ask any gamer at random and they will tell you how there are either two Game stores or one Game and a Gamestation store on their local high-street, often in close proximity.

I myself used to work for Game and was staggered when I heard that they were to open a concession store in a Debenhams just down the road from the store I worked in. Then when Game took over Gamestation you suddenly had a situation where the Game Group had three stores on one high-street. Anyone could see that this situation was hardly the best way to run a business–as all these stores would do was cannibalise each other’s sales; and you still have to pay rent and wages for each individual store. The Game Group already had too many stores in similar areas before they bought Gamestation and that purchase made things even worse. That the senior management never thought about cutting the number of stores it had is just plan madness. Throughout the last few months as the trials and tribulations of Game have been reported, comments under news stories and on message boards have often stated the same incredulity. If the public could see where the problem lies, why couldn’t high-powered business men?

The demise of The Game Group should go down as one of the biggest cock-ups in retail history. That you can take a group that is providing goods in what is predominantly a growing economic sector, and run it into the ground is just beyond belief. Many commentator’s believe that it was the rise of digital distribution and the increase in online sales that did for Game in the end, but retail still makes up 50% of all video game sales and the fact that Game couldn’t make a good fist of what is a buoyant sector is damming evidence showing that management just lost the plot.

I hope someone is able to come and save the remaining 333 stores and their staff. The high-street needs a video-game presence on it. Not purely for the reasons outlined in my previous blog, but because it serves as a reminder to the public at large that games matter. As it currently stands it’s a sad day for retail, a sad day for gamers, but an even worse day for the 2,104 people who have lost their jobs because of the terrible mismanagement of the company.  

Game over...please insert £295m to continue

At the back end of last week rumours started to circulate that the largest video game retailer in Europe, the Game Group, had lost its credit insurance, meaning publishers selling games to the company would have to take risks on games that do not sell, something they are normally unwilling to do, leaving Game in a position whereby they would have to pay cash in order to secure stock. In total it is believed that Game owe suppliers around £295m. That's a lot of cash to suddenly have to rustle up.

This kind of situation is often the first sign that a company in about to head out of business. If you can't secure funds to buy stock then it won’t be long before you start to run low, profits then fall and finally you end up going out of business. Luckily by Friday, Game Group announced that they had managed to make a backroom deal to secure revised terms with their lending banks-the proviso being that in return Game looked at selling its overseas arm. However whilst this deal secures Game's immediate future long term, analysts believe they will have to acquire sustainable working capital in the run up to Christmas.

All of this might sound a bit dull and dry, but the wider point is what would be the impact on the gaming industry if Game were to go under? With HMV also in trouble, theoretically by the end of this year we could be in a situation where there is no video game retail presence on the high street. With the growth of internet shopping and the digital market some would say good riddance to bad rubbish, an opinion borne out by the majority of comments left on sites like Eurogamer, but would such an occurrence really be good for the industry.

When the story first surfaced about Game's troubles, EA CEO John Riccitiello was quoted as saying the following about a major European retail partner:

"We are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales,"

If one of the largest publisher in the industry are concerned about how any failure of Game's business might affect them what about smaller publishers and developers. 


When it comes down to it, whilst internet shopping and digital sales account for a growing percentage of video game sales, bricks and mortar sales still provide the lions share, especially during the key fourth quarter. To suddenly see a large chunk of that sink beneath the waves would be pretty damaging for the industry. All you would be left with are the supermarkets and as they only tend to stock the best-selling games you can say goodbye to anything that isn't mainstream enough to sell in the millions. Publishers and developers could theoretically go out of business as the UK currently sits behind the US and Japan as the third largest video games market.

It's pretty scary stuff if you think about it and that's why it saddened me to see so much glee expressed on message boards and comment threads when the news first broke. Game provides a vital service as for many they are the only point of contact they have with the industry and to see that disappear would be a massive blow for everyone: publisher, developer and consumer. This isn't to say Game deserve a free pass. Some of its business practices leave a lot to be desired, especially their belief that selling games at RRP in the face of major competition is the way to build a solid business, but lets hope that this serves as a wake-up call to the company and that Game are able to turn it around and continue to provide a much needed source of income for the industry. If not we could be in for a rough ride.