UK retailer Game Group's financial woes continue following today's announcement of its latest fiscal results, which saw losses more than double and turnover fall by over ten per cent.
In the six months to July 31, turnover fell fom £624.6 million to £558.8 million, a drop of 10.6 per cent. Its pre-tax losses rose by almost 140 per cent, from last year's £21.5 million to a miserable £51.5 million.
Despite another dismal set of financial results, Game Group CEO Ian Shepherd said the company's performance was consistent with market conditions and that it was well-positioned to revive its fortunes with its increased focus on digital sales.
"2011 has been a very tough year for the videogame industry," he said in a statement. "A combination of a cyclical low point in the industry itself and unprecedented macroeconomic conditions have led to significant market revenue declines.
"For the future, we are investing for a different videogames market, with new consoles coming to market and customers exploring new ways of playing games, including digital, online, and cloud-based gaming.
"The Group, through its Dedicated To Gaming strategy initiatives, is taking a leading role in these developments in order to benefit from market recovery in the coming years."
Game has spent much of 2011 adapting as it explores how a traditional, bricks-and-mortar retailer can survive in the face of the rise of digital distribution and increased competition from online retailers and supermarkets.
After launching branded stores in PS3 social network PlayStation Home last November, Game announced plans in February to sell digital content in stores, beginning with Xbox 360 DLC.
It recently revealed that it would sell music and Blu-ray movies in some 300 of its stores, and an increased focus second-hand sales - long a cornerstone of its business - saw it start taking pre-orders of pre-owned games, available a week after launch at £6 less than the price of a new copy. It is also the official retail partner of OnLive, the cloud gaming service which launched in the UK last week.
According to MCV, this new strategy is paying off, with digital sales revenue up 40 per cent year on year. Early response from investors has been positive, with Game Group's share price up more than 10 per cent in the day's trading, though that must be put in context: Game's stock fell to an eight-year low in June, and has fallen further since.
Comments
6While it might grate with publishers, perhaps if they realistically valued pre-owned software and hardware rather than insulting people's intelligence with nonsense pricing, and stopped putting everything on the shelves at RRP when they're often close to a supermarket that is selling the same product for £5-10 less they might stand a chance but, with their current attitude, I won't be sorry to see them go.
Digital distribution is an inevitability, and with it, the death of second hand, and the death of retail.
GameStop have invested in Kongregate, Impulse, and Spawn Labs to capitalise on this future.
Meanwhile, Game continue to stagnate into irrelevance.
Game need to sharpen up their act. A sale should mean a sale not knock the prices back up then take money off.
They also need to start getting some decent offers ala chuck in MS Points when you buy a launch title on xbox 360 etc...
If they want loyalty the should also up their game when offering points on the loyalty card as I must have spend alot of money over the years and got little din return for it.
With others in the pre-owned market you can get deals elsewhere that are better e.g. HMV.
They also need to start getting some decent offers ala chuck in MS Points when you buy a launch title on xbox 360 etc...
I take it you didn't get Gears of War 3 then.
It's not competition from digital sales, its competition from online retailers where you can buy physical copies of games, brand new and for much less than you can in a bricks and mortar store and if you pre-order you often get the game the day before its officially out. Hell online retailers selling physical product are often cheaper than the pre-owned equivalent. It's the same problem HMV has only HMV has the problem across its CD, DVD, Blu-Ray and gaming ranges.
It's a case of simple economics. The online retailers don't have the huge overheads of running 300 stores. Therefore they can sell games cheaper than Game does. As we are all still suffering from the global economy collapse, we are all after the best deal. Game can't offer people the best deal and are losing out on sales.
That and they have always ripped gamers off with their prices!!!