Here in the UK it would be a tough decision as to which supplier of console and PC games was the biggest, Game or Gamestation; that was until quite recently. Game have recently been struggling to keep the wolves away and in doing so find themselves in a never ending circle of financial hell. However more about the irony of the two companies.
Game is owned by The Game Group, and here in the UK Game Groups board members have been in strict negotiations to settle some financial “issues” with their lenders and suppliers. It goes without saying that the board are working tirelessly to rectify the financial difficulties and get the business on track, however this is where the vicious cycle begins.
Because of the companies issues, last month they where unable to honour orders for this years biggest game title “Mass Effect 3″ this was primarily down to suppliers slowing down orders until definitive resolutions have been established. Other big gaming titles have been left of the Game Store shelves which of course puts the company into a no win situation. No big game tiles to sell, then no large spats of revenue returns, etc.
For investors, this has also put them into a difficult situation, shares in Game have fallen 65% in the last six months, falling from £25 a share to £1.22. For investors, which did receive letters from Game Group today, minus the specifics of the problems, will obviously be losing big on any return they may have sought after. Not being an investor myself and therefore not an expert, it has hard to detect what the investors will do at this point, hang on in and hope that the board resolve the issues and so wait for share prices to grow. Or should they sell what shares they have now even if it is at a loss? Tough decisions no matter what.
Game have 1,300 retail stores throughout Europe and Australia, options that are possibly on the table would be to file for administration, which is not quite full bankruptcy, they could also down size by selling off some of the stores, however Landlords are already asking for unpaid rent and if these demands are not met soon, bankruptcy may be a option taken out of the companies hands. The third option could be to start talks with the company’s US rival GameStop, who are financially in a very positive position, a bitter pill to swallow maybe, however for the sake of the company and the share holders, it may be the best option. That is of course assuming Game Stop are interested in a merger or all out take over.
Going back to the beginning of this post where I mention Gamestation and Game, the two main Gaming High Street retail stores. I was always under the impression that in 2002 the US Video and DVD renting High Street chain here in the UK Blockbuster, purchased the then lucrative Gamestation. Then in 2007, due to Blockbuster struggling financially from their DVD and Video renting side, they sold Gamestation to Game Group, so that they could focus on repairing the Blockbuster name here in the UK. In the research I have done, I can’t find anywhere, stating that anything changed from 2007 onwards and so therefore suggesting that Game Group are still the current owners of both Game and Gamestation. If this is the case and Game Group have only reported problems with Game, then surely then have a moral obligation to the share holders of Game to incorporate Gamestation into the mix and perhaps come to a resolution that way. Perhaps an amalgamation of the two companies, selling stores from both names in the areas that are under performing and strengthening those in the more productive areas.
I’m no business guru, but I can see that unless Game Group find a resolution soon, Game will have no option but to close their doors, which would be a shame. Game, for some has become almost like a shrine, walking past any store on a Saturday in Durham is like a Mecca for Gamers.
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