Europe’s GAME retail stores are in trouble

In Europe, there’s a franchise of video game stores called GAME. They’re literally everywhere in the UK, with hundreds of shops dotted about cities. You can also find shops owned by the GAME Group plc in countries like France, Norway and even on the opposite side of the globe in Australia. They are the biggest retail gaming franchise in Europe, and they’re in a spot of trouble.

In September last year, video game suppliers demanded that GAME stores pay for stock up front as opposed to taking stock on credit and repaying once sales begun. Obviously, this was a major alteration to how GAME stores ordinarily conducted business.

GAME has just revealed, via an internal memo that was forwarded to website Eurogamer, that they will stop selling Electronic Arts’ March titles after the release of snowboarding game SSX. Hang on, Mass Effect 3 comes out after SSX, does that mean the biggest video game retailer in Europe is not going to sell Mass Effect 3? Yes, it means exactly that.

It’s not a good sign for the already flailing retail giant. At present, GAME stores are battling with credit options with European suppliers. The result is that certain suppliers are not willing to alter credit agreements in order to help the retail chain recover financially. According to the internal memo:

“We committed to only stocking products on which we could get the right credit terms, regardless of the title or the supplier. We will not stock products if the terms are not right for our business – we will not sacrifice long-term credit requirements for short term sales opportunities. As a result of us taking this position – a position that we believe is critical to our long term health as a business – we have taken the very difficult decision to not stock EA’s March release, including Mass Effect 3.”

What’s more, the Mass Effect 3 N7 Collector’s Edition was a GAME exclusive in the UK, which means people who ordered those are now left wondering how they’re going to get what they’ve paid for. To make matters worse, GAME has stated that people who have pre-ordered Mass Effect 3 will NOT be getting refunds, but will instead receive in-store credit.

On top of the loss of EA titles, Eurogamer has also learnt that Mario Party 9 will not be sold at GAME stores either. This is likely for similar credit agreement reasons.

Why should we care about a European retailer’s sudden nose-dive? Well, because our local gaming retail market isn’t too dissimilar to the European one – albeit much smaller. It’s also an interesting foreshadowing of the retail model for video games. It’s only a matter of time before physical games disappear and the actual shops you frequent go with them. With the massive growth of online retail and digitally distributed games, it’s obvious that retail stores will eventually die.

However, the situation with GAME is a little different. They’re not potentially dying because most people go off to buy games online or make use of Steam – they’re dying because their credit system was suddenly altered. This despite the fact that they have over 1200 shops worldwide and reported an annual turnover of £1.625 billion in the last financial year. The collapse of GAME stores would not be good for the gaming industry in the UK and Europe. In fact, it would not be good for the gaming industry in general, and considering how closely connected South Africa is to the EU market, it’s worth taking note of what’s happening.

If you want to read more about what this could mean, head over to Eurogamer and check out their article on the theoretical repercussions of a collapse in the retail industry.

Source: Eurogamer