GAME takes a hit as Brits stop buying for PS3 and Xbox 360

The video game business can be cruel at times, as British retailer GAME knows all too well. After weathering a complete collapse and returning to the London Stock Exchange in recent years, the company has reported mixed success as consumers gets to grips with newer consoles like the PlayStation 4 and Xbox One. In its latest financial results, however, GAME has been forced to admit that its sales and profits have been heavily impacted by a "challenging" UK market, one that has finally begun moving away from older hardware.

In the 21 week period ending on December 19th, the company says revenue fell 6.7 percent to £466.8 million. It blames the "reduction in low margin console sales," which were down 20.3 percent, as demand for older Xbox 360 and PS3 games fell through the floor. Sales of PlayStation 4 and Xbox One games did rise, helped by better-than-expected Black Friday trading, but UK consumers aren't switching to next-gen consoles quick enough to make up the difference.

The retailer now believes its half-year earnings will reach £30 million, compared to £43 million in 2014. "The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market," says GAME CEO Martyn Gibbs. "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."

At the beginning of the year, GAME admitted it was killing itself by pricing console bundles lower than the competition. Hardware sales rose by more than 25 percent but takings were still down compared to previous holiday sales. With the PlayStation 4 and Xbox One continually falling in price, the retailer knows that console margins are thin and games are where money can be made. However, digital sales and online competitors can impact game sales too, which means GAME has some very tough times ahead.