BBC around 200 people are keeping their jobs at the new base of operations in Cambridge, England.
"Moving forward we are intending to focus exclusively on our successful marketplace, which is our main business area, and to phase out the direct retail part of our business," Play.com said in a statement.
Rakuten, a Japanese-based online retail company that also owns Buy.com, bought Play.com for $39.3 million in September 2011. However, Play.com suffered when the UK government terminated Low Value Consignment Relief in April 2012. The European Union operation formerly allowed Channel Island retailers to sell low-value exports to the UK without paying Value Added Tax (similar to sales taxes of some US states).
While Play.com is not a games-specialist store, the closure of its retail branch represents another seller of games to the UK struggling with current economics. The country's leading games specialist, GAME, closed almost 300 stores and laid off over 2000 employees when it went into administration last year before being bought by investment company OpCapita. Its major competitor on the high street, multimedia store HMV, continues to struggle as well, posting a loss of £34.7 million in 2012 despite its rival's plight. While today's news isn't nearly as seismic as GAME's troubles of 2012, it represents a concerning way for UK games retail to kick off the new year.