It’s been a funny old week for the UK games industry. According to new figures from the Electronic Retailers Association (ERA), games sales in the UK hit £1.93 billion in 2011, making the games industry a bigger earner than films and music. This is the first time that games sales, in the UK, have outstripped DVDs and other video formats, which only reached £1.8 billion last year.
This news is further buoyed by yesterday’s Budget, with tax breaks finally announced for the UK games industry. But it’s far from an ebullient start to the year for Game, the UK’s leading games retailer and owner of the GameStation brand, as it lurches towards administration. As the owner of GameStation, the favoured brand for hardcore gamers, Game’s troubles are in danger of leaving UK high streets without a specialist chain to shop in.
Just in case you’ve been off-planet, I’ll give you a run down. Game Group has been struggling for some time now. But we really knew that things were serious when EA pulled its new releases off Game’s release schedule, including the biggest launch of the year so far, Mass Effect 3. Other publishers followed suit and last week the retailer confirmed that it was in discussions with lenders and potential buyers.
The writing was on the wall, yesterday, when Game filed for administration. More negotiations are taking place to try and strike a deal, but the retail vultures are circling with rumours of GameStop swooping in to buy the struggling chain and put its stamp on UK high streets.
Financial experts cite the beginning of the end for Game, as 2007, when it bought GameStation and expanded its UK network of stores. The beauty of hindsight means many see this move as an expansion too far. In today’s declining market, even the supermarket giants Sainbury’s, Asda, Tesco and Morrisons have seen their share of games sales fall – down 0.2% on the previous year. In contrast, online retailers accounted for 27.9% of all games sold in the UK last year, pushing them ahead of the supermarkets.
With figures like these, it’s no surprise that forecasters are heralding the end of games on the high street. Rumours of a digital-only Xbox have also fanned the flames, despite Microsoft’s continued denials of an imminent, disc-free console.
Amid all the doom and gloom, Ian Livingstone, President and CEO of Eidos Interactive, seems like a breath of fresh air. At this year’s British Academy Video Game Awards, he said that the industry is doing better than ever, with annual sales of $50 billion and set to rise to $90 billion by 2015. When pressed on Game’s troubles, he said the industry is in a "transition period". He went on to state that we are entering a shift from a "bricks and mortar world to a digital world."
I think there’s still room for a specialist retailer on the high street and I hope Game manages to strike some sort of deal. Of course it will have to be a different kind of Game. With so much pressure from online and the supermarkets, traditional retailers really have to step up to the challenge. I for one, prefer to walk into a store for gamers and chat to the staff, rather than popping a copy of Mass Effect in my shopping trolley, among the hummus and breakfast cereal, on my way through the supermarket.
We have to feel for all the people who may lose their jobs, even if a deal is struck, but my biggest worry is the end of the GameStation brand. These stores have been the home of the hardcore in British shopping centres and it’s such a shame to think that GameStation could become the sacrificial lamb in all this.
I will miss GameStation if it goes, but I’m still certain something will step in to fill the void. Whether it’s Game or another brand remains to be seen. Either way, I don’t think we can write-off traditional games retailers – not yet, anyway.
Most played: Mass Effect 3
Most wanted: The Last Guardian