It’s been incredibly hard to miss in the gaming press the last few weeks at what a state The Game Group are in. This group, as I’ve said previously, owns three major retailers in the UK – GAME, Gamestation and Gameplay.
The troubles began some weeks ago, when their credit agreements dried up. This meant that stock that is usually guaranteed by a credit arrangement couldn’t be covered, and so had to be paid upfront in cash. Why is this bad, you may ask? Two reasons – one, it gives them a period of grace time to sell stock (which they haven’t paid for) which allows them to cover the cost of the credit agreed. The second is this credit arrangement often makes the stock cheaper than paying by cash – you can order in much larger quantities and negotiate better prices. Buying by cash often restricts the quantity you can order, and therefore ends up more expensive.
But it goes deeper than that, and the trouble for The Game Group has been long brewing I fear, longer than the current economic woes and the slow decline of the high street. For The Game Group, it’s a tale of greed, bullying and getting around the rules, followed by hate campaigns and general unease into trouble with developers and publishers and its current crisis.
Because the problem started some time ago when The Game Group bought out GAME, Gamestation and Gameplay. These companies were its direct competition and, despite complaints, the government and competition commission didn’t see a problem with the former Electronics Boutique owners buying up the competition. It left them with a sizable chunk of the UK gaming retail market – at the time, the only real alternative was HMV, as supermarkets were not stocking games in high quantities yet.
In hindsight, you can say this was unnecessary and possibly damaging. But if you go to many city high streets, you’ll find GAME and Gamestation often competing against each other. Yes, despite being owned by the same parent group, the two stores were pitted against each other in some warped, twisted fight to the death. Both of course were being rapidly outsold by Gameplay, which was the cheapest of the three by far – and making the most profit, as it had no rent overheads, or staff turnover, to fund on a weekly basis.
As the years rolled on, GAME and Gamestation changed again – their stock began to change. Long since alienated from Nintendo, stock became limited for them. They also had frosty relationships with various other publishers, which meant that the stock that they were getting was not as cheap as it could – and should – have been. The answer was ridiculously simple – they had been accepting second hand games as trade-ins for years, and they simply had to offer good trade-ins on new games, reseal them in plastic and sell them as-new. This meant that they would pay up to £5 for a game, and could resell it for £40, after plastic costs making them over £30 of profit. Fantastic idea! That’ll show those nasty dealers and sourcing people.
Except that it made matters worse. As GAME and Gamestation went on, their new stock dwindled, and second hand titles took up more floor space. In their infinite wisdom, when they did get new games in, the second hand versions were merely a pound or so cheaper – and only very loosely marked as pre-owned in many cases for bigger releases. This cut the publishers, dealers and others out of the equation, and it pissed them off. The Game Group were unpopular behind the scenes as they felt they had to screw the industry to get their bite back – whereas it was becoming clear very fast that the industry itself had the power to really crack the nuts off The Game Group.
In order to sweeten the deal, The Game Group started to pay for exclusive extras in their copies of games to attract customers and offer an olive branch to the industry that was fast rearing back, ready to trample their hopes and dreams. But the next blow was gamers and supermarkets – gamers had long been abandoning high-street stores for ages, as gaming had become trendy and cool, and nerds became popular, it was seen as somehow beneath them to visit a shop and be told what to buy – they knew what they wanted, and how to get it, and get it cheap. Supermarkets also cottoned on to the idea of paying for exclusive perks in games, and with their huge size and buying power, also sealed a sound blow on supplying games en-masse. The Game Group haven’t had that power for a long time.
Slowly, the money has been drying up. Low customer numbers, bad press, regular horror stories circulating the net on how bad the staff are in these high-street stores, higher rent costs and the economic crunch have since seen GAME and Gamestation struggle. It’s been a long journey – and they have already cut off their most prolific and loved arm, Gameplay, which closes on March 1st. Lots of people argue this is because Gameplay was their cheapest outlet – but Gameplay, and its story, were more powerful than the high-street outlets. The closure of Gameplay has sealed the deal for many gamers, who feel cheated and upset that the cleanest, cheapest and most user-friendly of all three websites is the one that they close down.
Likewise, with no credit insurance and dwindling finances, The Game Group appear to be having a serious issue with getting stock again – Nintendo have all but stopped, Ubisoft are another which seems to be dropping them and THQ haven’t said nice things either.
Is it over? No, but it would appear that the end is indeed nigh for The Game Group in the UK. The business, as has been discussed on bigger more posh business sites about stocks and trading and all, is likely to go on sale as a going concern. It is most likely that GAME and Gamestation will be sold off individually, and Gameplay may indeed resurface in the hands of another organisation – time will tell. But even this will mean closures, job losses and more money out of the economy.
The decline of this organisation has taken many, many years. But inevitably, questions must be asked as to why there was no competition inquiry into these sales, the industry needs to ask whether it had a part to play in the horrid fights that the retail shops put up, and consumers will need to ask if they even want a retail high-street games store, when the internet is such a viable and cheap alternative.
The world has changed. The industry has changed. The markets have changed, and the retailers selling games have really changed. The Game Group, it would appear, could not change with the times. It was fat and bloated, swollen with greed, expanding too fast too soon. It ruined the names of those it sought to sell through, it has ruined its own reputation and now, it seems set to ruin the lives of innocent men and women it employed.
As the tale of The Game Group comes to an end, I would usually say something to cheer up the mood. But I cannot in this case. It is a sad, tragic tale and there is no happy ending to this story…
Game over indeed.