GAME Digital is a UK retailer offering a huge array of consoles, accessories, games and digital content. Back in 2012, the GAME Group went into administration following ill-advised management decisions and inability to adapt to the modern market. Since then, GAME has embraced digital credit, and even partnered with Razer to stock various high-end PC gaming peripherals. However, according to the BBC, shares in GAME Digital fell 70.75p, or 34%, to 135p due to ‘challenging’ trading conditions. GAME Digital‘s financial report doesn’t make for good reading and illustrates how difficult it is to remain competitive in an industry moving towards digital distribution. Not only that, there’s huge competition from online giants like Amazon which don’t have to pay extortionate rent figures across various town centres.
The company’s chief executive, Martyn Gibbs provided a reason for the terrible operating numbers and said:
“The trading conditions in the UK video games market have been challenging,”
“The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market.
“The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year on year high street and shopping centre footfall. The pre-Christmas period and the winter sale are very important to our customers and with market leading offers we remain well prepared in our stores and online for the remaining peak trading period.”
Clearly, GAME was relying on the second-hand sales from the previous generation consoles while expecting more people to acquire the latest consoles. On the other hand, the uptake of the PlayStation 4 and Xbox One has been quite surprising, and it’s just that consumers are opting to purchase from cheaper options such as ShopTo, and SimplyGames. This doesn’t necessarily mean GAME’s future is in doubt, but it seems they’re going to miss their sales targets during the holiday period by a considerable margin. This is important because a huge proportion of the company’s profits come during the Christmas rush.