Future Of Retailer GAME In Doubt After Latest Supplier Backs Out
The ongoing GAME saga took another twist as a source ‘close to the situation’ claimed the retailer will close its doors should more suppliers stop their support.
The situation seems more dire than ever as the report from Eurogamer states that the companies owners, the GAME group, are close to “pulling the plug” after the stores failure to stock upcoming Electronic Arts releases cast doubt over its potential long-term future.
“There is a real risk that GAME’s directors will pull the plug because they can’t be sure that the company can survive through the next trading season, and then insolvency becomes inevitable,” the source said.
The initial warnings came when GAME lost their credit insurance with a number of agencies, which meant the firm were forced to pay upfront for upcoming game releases. This difficult credit situation started to effect recent game releases, including Mistwalker’s The Last Story, where GAME announced the day before its release that it wouldn’t be stocking any version of the game.
However the full scale of the problem is now becoming apparent, as the store has detailed that it won’t be stocking Mass Effect 3, amongst other EA titles. With EA being gaming’s biggest publisher the loss of their support can have massive repercussion, as has so proved.
Mark Photiades, analyst for Singer Capital Market, has estimated that by not stocking Mass Effect 3 the company could lose out on £7 million in revenue and £2.5 million in profit.
A number of sources close to The Royal Bank of Scotland, GAME’s principle lender, have said the bank will be forced to take action if more suppliers withdraw products, according to The Express.
“The immediate response from RBS will be to push for more store closures, but the tipping point for the directors and the lending banks will come when the stores don’t have products to sell,” one of the sources said.
“This could happen if more suppliers follow suit.”
“Suppliers pulling their products is a stepping stone to administration, but the problem for RBS pulling the plug is that it will be an expensive and complex administration because GAME has 1,274 stores across Europe and Australia,” another source added.
The Game Group played down the seriousness of the situation and said in a statement last month that it was “working closely with its suppliers, as well as other stakeholders.”
A month is a long time in business, and with these latest revelations it’s difficult to see what’s in hold for GAME’s long term future.