EA concerned at financial health of "major European retail partner"

By Fred Dutton Published 1 February, 2012

Riccitiello fears "bad debt and lost sales".

EA boss John Riccitiello has voiced concerns about the financial health of a "major European retail partner".

Speaking during an investor call earlier today, Riccitiello didn't name the company in question, but explained that the situation could affect the publisher's next set of financials.

"We are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales," he said.

Chief financial officer Eric Brown also chimed in later during the call.

"We are focused on some isolated European retailer issues that have recently been announced. A negative outcome could adversely affect our Q4 results."

Could they be referring to GAME? As reported by Eurogamer earlier this week, multiple UK industry sources claim that the retailer has lost credit insurance with a number of agencies.

Picture of Fred.

About Fred Dutton

Fred Dutton is Eurogamer's US news editor, based in Washington DC.

Read more articles from Fred by visiting the Fred Dutton archive page.

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Comments (58) Latest comment 3 weeks ago

  • Srift #1 3 weeks ago

    gee, wouldn't have anything to do with that DLC overload and online pass now would it? idiots.
    Edited by 1 at 01/02/12 @ 23:28

  • chrism_scotland #2 3 weeks ago

    I'd imagine its GAME, we've not heard anything about any others...
    Not good if EA are talking about bad debt though, seems like they're expecting a retailer to go to the wall.....

  • Pinky_Floyd #3 3 weeks ago

    RIP EA.

  • el_pollo_diablo #4 3 weeks ago

    It's fairly obviously GAME, although HMV are going the same way too sadly.

    I love HMV. Spent most of my teenage years traipsing around it. :(

  • CrunchinJelly #5 3 weeks ago

    RIP GAME

  • Elfworks #6 3 weeks ago

    This does sound like possibly GAME since it was mentioned(the forums) the game they were turning away pre orders for was Mass Effect 3, an EA game.

    Times like this I worry for my local Gamestation employees, I like them alot, would hate to see them lose out.

  • Elfworks #7 3 weeks ago

    @el_pollo_diablo My teenage years were traipsing about Virgin! Zavvi was never the same, then that went bust...my boring "track around town" took a dive.

  • Optyk #8 3 weeks ago

    Game and Gamestation turned me away when I tried to pre order ME3 Collectors Edition. Shopto are out of the CE edition, Amazon dont seem to have it listed. Where do I get the CE edition from?!

  • Heitzu #9 3 weeks ago

    I believe the collectors edition is exclusive to Game... :confused:

    I've had it preordered there since it was put up last summer. So I hope they don't go before shipping me the game.

  • IncredibleKoosh #10 3 weeks ago

    @Srift No.

  • FortysixterUK #11 3 weeks ago

    I feel this article may be referring to Game and HMV as well.


    And in reference to some of the comments above, I too miss traipsing around the shops when they were "good".

    I liked Virgin Megastore when it was in the west end, spent hours in there, and their video game section used to be vast. Last thing I bought from them was the special edition of Jade Empire on PC ( tin box). It had been out for ages and was going for a fiver. A few months later they were gone and Zavvi took over. That didn't end well.

    Zavvi as an online entity have their faults ( you can't always cancel a pre-order ) but at least they are reasonably competitive if you stay on top of their offers. Much better than the retail store. Awful name however.

    A high street store that has become dull and crap is CEX. I remember the first store being on a back street halfway up Tottenham Court Road, then they moved down near the virgin Megastore, and they used to be exciting. It was the place to go for the unusual and rare PS1 import games, and they had a great stock of retro stuff ( PC engine , megadrive etc). Then I think Sony and Ninty clamped down on them importing stuff, and they just ended up being a bit rubbish really.

  • abigsmurf #12 3 weeks ago

    Looking pretty rough for Game.

    Where will that leave Gaming on the highstreet? Grainger Games don't seem to want to move south, Gamestop are scaling back their retail presence.

    Is it going to be a case that Blockbuster and HMV become the best places to buy games? Supermarkets can be pretty awful if you don't want a top 40 game.

  • xYOSSARIANx #13 3 weeks ago

    @Optyk It's on their website available to preorder, I went as far as the checkout and it never said there was a problem.

    I did notice the collectors edition is rated 18 but the normal edition is 15 what's that all about.

  • Gavilan #14 3 weeks ago

    Seems EA have shot themselves in the foot. They can't have their cake and eat it I guess. Hopefully they will rethink online-passes and day 1 DLC as both are flawed imo.

  • simsini #15 3 weeks ago

    The game industry is imploding on itself. The publishers screw the retailers with high trade prices, the retailers screw the publishers with pre-owned, and they both screw the consumer with no new games a month after release, store specific DLC, online passes and stupid trade in schemes.

  • Ranger_Ryu #16 3 weeks ago

    @xYOSSARIANx

    the 18 would probably be the PEGI rating and the 15 is the BBFC one (it'll be 15 for the collectors edition too I'd imagine)

  • FatalHybrid #17 3 weeks ago

    @abigsmurf The single purpose game store is on the way out. It's going to be even more prevalent if the games industry shuts out used gaming like they want to. The only stores that could subsidise carrying games are the likes of HMV.

  • morpheus2n2 #18 3 weeks ago

    @Optyk Not sure why as I ordered the collectors Edition earlier today and there's no problems with it (so far), its still listed on the site and orders can be placed (again so far).

    If you had tried in store then that's a different matter as each store is allocated X amount of each BIG game when it comes to CE copies.

    Yes Game is going through some money problems at the mo but show me a company that's not running at a loss lately, I mean EA posted a loss of $205m, Nintendo posted a loss of over $900m a few months back, Sega have posted a loss for the 3rd year running, Even MS and Sony have posted a loss (the company's as a hole not just the Gaming divisions)

    The world is still in a massive financial black hole where only the banks are making a profit.

    Game will not go under just like that if they do it will be a long drawn-out process and will not happen for a good few months yet it it ever dose happen.

    As they say its going to get worse before it gets better!!
    Edited by 1 at 02/02/12 @ 00:10

  • Optyk #19 3 weeks ago

    Im annoyed that something as big as a Prothean squad member in ME3 is only a CE edition downloadable. Same with Batman and all its exclusive content specific to different stores.

  • Laythe_AD #20 3 weeks ago

    Death by Amazon and Supermarkets. It's had an air of inevitability for ages. How many people here actually choose to by their games from Game? I almost always find i'd just pay more. Add to that their poor standards of staff and it's a no brainer.

  • Streetrip #21 3 weeks ago

    Gameplay (acquired by GAME in July 2004)is about to go into administration.....could be it.

  • Street89 #22 3 weeks ago

    As much as I think Game is overpriced (or it is compared to supermarkets and other store that aren't just dedicated to games) I use it because I like the atmosphere when going in and also the reward points system. I think it'd be a shame to see it go.

    @el_pollo_diablo The reason it could be HMV is the prices for games have stayed the same there since your teenage years. Saw Black ops the other day at HMV Hull for £40.

  • shadow651 #23 3 weeks ago

    @morpheus2n2 Those companies can afford the loss, GAME however has lost its credit rating and can no longer rely on its credit to get it through.
    It needs hard cash (which I doubt it has)to continue.
    Unless GAME change very quickly I'd say they will be placed in administration before the summer.

    I hate having to make this prediction (as I like GAME) but I believe its true

  • SpaceMonkey77 #24 3 weeks ago

    Sounds more daunting with ever post. Without EA support, Game (if its them we are talking about)could be on borrowed time. Such a shame.

    I worked for them when they were EB. It was an interesting job, but the very fact they worried more about their spiel than giving customers good advice and deals etc, rubbed salt in my wounds.

    Well, if the Game goes, its a sign of the times. The arcades made sense, but game stores is something entirely. While I rarely shop at Game, popping in now and then, you can find a gem or two on the cheap. We'll never get that, or such a vast selection of games on shelves again.

  • GavinUK86 #25 3 weeks ago

    Like some other people have said, I got ME3 CE preordered at GAME, have done for months, so I hope they can get them out for release. I think the turning away of preorders are in the bricks and mortar GAME stores not online. The online side of things looks fine.

  • varkdm #26 3 weeks ago

    @morpheus2n2 lots of companies are running at a loss, but thats because they can afford to run at a loss, for a period of time. Their downturn of fortune is usually pretty recent - that $900m loss of Nintendo follows several years of enormous profits, in fact i think its the first year they've posted a loss. That means they have assets and savings from previous years to keep them going. Game have been posting losses for many years now, the withdrawal of credit means that their financiers no longer believe they ahve teh assets and cash to justify lending them anymore.

    Without credit, they will struggle to afford imediate cash requirements - they need to maintain payments on existing debt whilst running salaries, stock purchases and general business running costs. Their income will move up and down depending on the release schedule - they've just come out of christmas, the biggest release schedule, so they might have cash to keep going. But they posted dissapointing sales results over christmas.

    But they are hoping sales of vita and final fantasy will keep their cashflow alive. Normally when a company is temporarily out of cash, they borrow money to tide them over until their sales pick up. Game cant do that anymore, so they are running at an incredibly high risk of going under. It was the inability of banks to borrow money (and therefore lend it to anyone) that caused the financial meltdown in 2008. If businesses lose access to credit it can and does cause them to fail.

  • arcam #27 3 weeks ago

    This won't be long and drawn out. Without credit GAME are screwed. Unless they can fix that very quickly they will be out of business in a matter of weeks.

  • local_celebrity #28 3 weeks ago

    I feel for all the staff that are about to be shitcanned, but really GAME have brought it upon themselves. They've been arseraping the customer for years.

    Funnily enough, you can now pick up a brand new copy of Skyrim there for £35 - five quid cheaper than everywhere else (even Amazon). If only they had shown that kind of competitiveness a couple of years ago; we might not have arrived at this sorry state of affairs.

  • cheeky-sod #29 3 weeks ago

    GAME

    Serves them right, that'll teach them for ripping people off and having poor customer service. x)
    Edited by 1 at 02/02/12 @ 01:55

  • Raiko101 #30 3 weeks ago

    Whilst I feel sorry for the majority of the staff who will soon be out of work, the shop has really only given out a negative impression over the past 5 or so years. It's mostly to do with the pricing too, which comes out looking over-priced next to GameStation, which is part of the same family. Overly priced new products. Overly priced 2nd hand products and a lot of tat. I only ever went in there to kill time. I've not bought anything from there in a good 5 years at least. I've lost count of the number of times i've overheard conversations in which, seemingly, quite gullible customers are being sold things they're not even asking about.

  • m0dm0use #31 3 weeks ago

    Game have been a problem for a while, I've been noticing a patern with stock since November of 2011. Not only are most of thier retail almost deviod of pc games in London, but also they are mostly also filled with used games.

    Game are trying to be Gamestop withot the magic fairy dust Gamestop has in IE and US markets, and thus a downward spiral.

    Also they keep paying out to get exlusives such as pre-order bonuses and bundles and don't know what the consumer wants which is good customer service and games early or on time, at good prices.

    Not reward points and pre-order bonuses, they gave me £30 reward points last year due to certain website errors and technical glitches. I'm glad I have less than a pound in points to use with them now with the mess they have at the managers end.

    Also since the purchase of Gamestation it's even worse, what a stupid decision by the owners of Game.

    Ever since Game didn't stock Sonic Generations Collectors Edition in the UK but they did stock it in France in Game it has been noticable how much of a bad, bad, very bad situation they are in.

    I only hope they back out of the online market and just concentrate on saving the retail stores, if they go I have no video game retailers in my area. Just random stores who happen to sell very few video games.

    As for them killing of independant game stores, I have no idea what effect they have had. But if Game close I'm moving in on thier territory and going to start my own finaly the little guy wont be dwafed by a big company.

    Gamestation are surely in the same possition being owned by Game.

    And well EA, Game closing how can that effect Q4 sales! Look at online game stores such as Shopto, gameplay, amazon, tesco entertainment and many more exist if Game is that big for EA in europe then it shows how many parents who know nothing about video games walk in and have Game staff point them at the sims on ds and wii, ahem.

    No HMV in my area now, and thats another story.

  • mcmonkeyplc #32 3 weeks ago

    /camps outside GAME preparing for firesale.

    /freezes

  • NotSoSlim #33 3 weeks ago

    Rise of Shopto shows where money is. You get new releases to people early and at decent price gamers will flock to you

  • Casserole #34 3 weeks ago

    They're referring to Toys r us obviously

  • Tiel #35 3 weeks ago

    If only it was toys are us. There customer service borders on the illegal, and they sell mountains of overpriced highly marketed plastic tat. There are still some real toy shops in cities that I'd love to see have the room to blossom.

  • Shadders #36 3 weeks ago

    I think it's quite clear he's referring to GAME.

    I also think this clears up any doubts people may have been having about whether the death of GAME is really a bad thing for the industry. This will affect all publishers negatively, which in turn will affect the games that we get to play in the future.

  • Inmediasress #37 3 weeks ago

    Yep the industry already lives its second videogames crash only this time around it's not as spectacular.
    This time its more of a slow painfull kind that's been going down for a couple of years now.
    The patterns are there really, devs close down every month, now THQ will go probably bust and on top of that now reatilers go bust too. Then there are the console owners, if Sony botches the PS4 launch which seems very likely I am almost certain there won't be a PS5.
    As far as I can tell EA and Acti already own the gaming industry and have it in a vice grip.
    For the future I think gaming will be ruled by a cartell of publishers probably led by EA or Acti if enough people buy into their drip fed DLC nonsense and online passes.
    Gaming is in a for a real surprise next gen.
    I think that will be the critical point, wether it will alienate enough people with DLC and shovelware and face serious consquences or I quit gaming and watch how people let themselves get buttf***ed.
    Of course there is still the impendig problem of the world economy that will also be seriously restructured in the upcomming years and a new world order will arise.
    Resulting in a lot of misery and maybe even wars and bankruptcy of a lot of countries.
    Wonderfull times ahead indeed.
    Edited by 1 at 02/02/12 @ 08:52

  • SlackMaster #38 3 weeks ago

    But Game is just the UK right? Surely it's reletively small fry in the grand scale of the rest of Europe.

  • bad09 #39 3 weeks ago

    Post deleted at 08:51:36 02-02-2012

  • bad09 #40 3 weeks ago

    Post deleted at 09:09:57 02-02-2012

  • miiiguel #41 3 weeks ago

    Game's not only UK.

  • 00.00.01 #42 3 weeks ago

    Ofcourse they are refering to GAME. But this is GAME's own doing, their business model hasn't adjusted to the changing needs of customers, just as Woolworths a few years ago. And were did they end... indeed.
    Also, from all the european countries I've worked in over the past 8 years the UK is the only one with multiple high street retailers that specialize in digital entertainment. And even though the market 'forces' them to either adjust their strategy or go out of business, there is no other (european) country where the games-market is so competitive, and where games are so cheap.
    And a helluvalot of people order their games via a uk based website/retailer because it's so much cheaper (and sooner often) so it bafles me that GAME has never expanded in that area.

  • SlackMaster #43 3 weeks ago

    @FortysixterUK CEX still have that store in Rathbone Place, which is probably their better one, but I usually go to a little store called Game Focus which is just around the corner from Goodge St station and about 2 minutes away from CEX.

  • NotSoSlim #44 3 weeks ago

    <quote>Inmediasress wrote:
    Yep the industry already lives its second videogames crash only this time around it's not as spectacular.
    This time its more of a slow painfull kind that's been going down for a couple of years now.
    The patterns are there really, devs close down every month, now THQ will go probably bust and on top of that now reatilers go bust too. Then there are the console owners, if Sony botches the PS4 launch which seems very likely I am almost certain there won't be a PS5.
    As far as I can tell EA and Acti already own the gaming industry and have it in a vice grip.
    For the future I think gaming will be ruled by a cartell of publishers probably led by EA or Acti if enough people buy into their drip fed DLC nonsense and online passes.
    Gaming is in a for a real surprise next gen.
    I think that will be the critical point, wether it will alienate enough people with DLC and shovelware and face serious consquences or I quit gaming and watch how people let themselves get buttf***ed.
    Of course there is still the impendig problem of the world economy that will also be seriously restructured in the upcomming years and a new world order will arise.
    Resulting in a lot of misery and maybe even wars and bankruptcy of a lot of countries.
    Wonderfull times ahead indeed.</quote>

    What if MS bothch 720 launch or are they.immune from your pre judgement?

    This is where MS and lack of first party games will bite them in the arse. End of day if Sony dont makes new console there studios will make games on other platforms thus them making money

  • Rogueywon #45 3 weeks ago

    It does look like it's curtains for Game. Sad - I remember how much of an improvement over their predecessors they were back in the 90s.

    That said, I think they made a major mistake in choosing to pursue the wrong type of customers - those without much money. The heavy emphasis on pre-owned (crowding out any kind of variety in "new" titles and any kind of archive of games more than 2 months old) was clearly geared towards kids and students. And I know that many of the latter came to realise they could get a much better deal on their old games via ebay.

    At the same time, the quality of both their stores and staff seems to have been in decline in the last couple of years. The stores tend to be grubby and badly laid out and the staff tend not to actually know anything about games, beyond a script they've been given to promote the latest "big" release. (Yes, I'm aware of a couple of honourable exceptions - the staff in the London Victoria Station branch to tend to be rather better.)

    The spending power these days is often with older customers - either those who are still gamers themselves or those who are buying for their kids. If you don't have stores which are at least vaguely pleasant to be in, and staff who can provide useful advice to parents, then you've just sacrificed one of your few advantages against Amazon.

  • Tiel #46 3 weeks ago

    I think gaming is going strong--what is wekaening is the old model of all games having one price and having a dominant console market.
    There are so many great (usually download only) games coming out all the time. From world of goo, the output of double fine, and yes--quite a few innovative ios games too. The market is returning to a more creative and experimental age, similar to the era of BBc's and Amiga's where small teams could invent whole new genres.
    I think the people to blame are EA and Acti and anyone else who just wanted to pump all their cash into the latest fps clone. I got bored of those games after Halo, but I've never been more insipred by gaming.
    This is just evolution at work--not the end!

  • GiarcYekrub #47 3 weeks ago

    This has got to be bad for the industry, Games have already been pushed into the limited space provided by the supermarkets in my home town with Woolworths closing and WHSmiths stopping stocking games in at least my local branch. Now it seems to be spreading to the Cities, I used to be able to nip in Electronic Boutique,Virgin/Zavvi,GAME,Gamestation and HMV to compare prices and offers.

  • persus-9 #48 3 weeks ago

    @SlackMaster Nope, Game are in a fair few countries. I know they're here in Sweden and looking at their website they have local versions for France, Spain, Portugal, Norway, Denmark, Czech Republic and Australia as well.

  • Brodie #49 3 weeks ago

    @Streetrip They are? Where did you hear that?

  • jetsetwillie #50 3 weeks ago

    i guess he's not talking about bob's video games on the corner of monks road near where i live.

  • killuminati2911 #51 3 weeks ago

    Could they be referring to Game...
    Could???

  • darkmorgado #52 3 weeks ago

    @Srift

    Erm no, it wouldn't. It would be to do with the fact that Game are on the verge of going bust.

    Finally.

  • foxdie_01 #53 3 weeks ago

    I think the major issue is that Origin hasn't been established yet. And without retail support they wont make the money they need through origin alone. Imagine the lack of success EA would have had with Battlefield 3, if it wasn't supported by GAME. PC versions would rely on origin, which just isn't big enough. Good news is, it puts EA on the backfoot for negotiating with steam, my prefered online host, and the only reason i've not purchased Battlefield 3.

  • INSOMANiAC #54 3 weeks ago

    Owning a indie games shop myself (I sound like a stuck record) I can tell you one major problem games shops have at the moment is that the current crop of machines have been out so long that there is just mountains and mountains of 5 pound shite knocking around. It's a big problem when people want a new game and bring in a pile of unsellable old crap. You could turn it away but risk them going elsewhere. I shudder to think of the tens of thousands of pounds game must have tied up in useless old shite

  • Elfworks #55 3 weeks ago

    @Optyk I have the CE pre ordered at my gamestation, but I did pre order ME when it was still meant to be released in 2011, then upgraded to CE. Depends how much in advance you ordered maybe :/

  • Machetazo #56 3 weeks ago

    @Tiel "I think gaming is going strong--what is wekaening is the old model of all games having one price"

    That would be incredible if that awkward fitting model would disappear for next generation. Price according to value of content - digital are leading the way on this. Although, I do wonder if we wouldn't see multiplayer games costing more expensive than they are now, as pubs argue there's higher value in that, long-term, if people play on the servers for a long time...We can already see starting evidence of that intent from EA, with BF3/FIFA.
    Edited by 1 at 02/02/12 @ 12:18

  • gav082 #57 3 weeks ago

    Game have always been rubbish, I'm just sorry they bought gamestation and dragged them down with them

  • varkdm #58 3 weeks ago

    Isnt Valve/Steam bigger than EA & Acti? Gabe Newell is listed as one of the most important (and richest) people in the IT industry - he was listed alongside the likes of Steve Jobs in the.. Forbes is it? List that came out for 2011. I think Publishers wil get less of a stranglehold though as digital download takes over and boxed copies disappear.

    I could envisage a future where either MS, Nintendo or Sony (or some new player) opens up their consoles to the open web on digital download services linked into the consoles - so a 3rd party like Steam, Origin, D2D pays a license to operate for that platform and then supplies the download. It may never happen, but that competition between download services would help keep prices down and be a draw for whichever console went that way. It would aso be a big draw for developers, not having to rely on EA/Activision etc. to take over publishing of their game. Publishing houses may end up being nothing more than advertising agents and develoeprs will make a chocie wether to handle adveritisng in house or outsource it to them.

    Whats happening in the games industry is the same as with books - book shops are closing and the "big six" publishers are taking fewer and fewer risks on new authors because they have less shelf space with which to sell them. So Amazon, Kobo etc. digital books are taking off. Authors are moving to them because they get a chance to sell their wares and they get better terms, as the publisher (in some cases Amazon will act as publisher, other cases they just act as the storefront) has far less costs.