GAME may be killing itself by selling consoles too cheaply
In early 2012, Retailer GAME seemed destined to join Woolworths in whatever place high-street brands go to die. Phones4u has ended up there since, but GAME was rescued from the brink of collapse and last year, made something of a triumphant return to the London Stock Exchange. New console launches helped turns thing around for the retailer in the short-term, but the reality is life's still hard on the (high-)street. Hence GAME has issued a note to investors today, warning them that despite a massive surge in sales, it's not going to make any more money than it did last year. And, that probably doesn't bode well for the future, either.
GAME had some of the best Black Friday and Christmas deals around, and therein lies the problem. Hardware sales were up over 25 percent during that period compared with last year, but customers getting good deals on consoles and cheap or free games as part of bundles meant the tills actually came out lighter than the 2014 holiday period. GAME's putting on a brave face, with its CEO Martyn Gibbs saying more consoles in more homes can only be a good thing:
"We now have a huge customer base within the new formats, to sell both mint and preowned physical and digital content and accessories to over the long term."
But, he seems to be forgetting you can buy content elsewhere, so GAME will be sharing the benefit, at best. How long can midnight launches at brick-and-mortar stores remain financially viable when Amazon will deliver the same game a few hours later for cheaper? Fun promotional stunts and new avenues like the "GAME Marketplace" for Android, set to launch in the next few weeks, might keep the retailer ticking over for now, but we wouldn't be surprised to see history repeat itself eventually. And when if it does, we don't see why anyone would step up to save it a second time.
