GAME agrees new deal with lenders
Retailer thrown lifeline but admits tough times ahead.
Embattled European retail chain GAME has worked out a new agreement with lenders that will allow it to continue trading.
As reported earlier today, it met with its lending syndicate this evening in an attempt to hammer out a deal. According to MCV, that meeting is now over and the retailer has "agreed revised terms for its facilities".
The retailer will have to "operate within lower limits of its existing facilities than was previously available" and has agreed to submit an updated strategic plan covering all aspects of its activities and strategies, which its lenders will then have a say in approving.
No indication was offered as to whether, as widely speculated, it will offload its overseas operations.
With this show of support from its stakeholders, GAME's board now believes it will meet impending covenant tests that at the beginning of the year it predicted it would fail.
It now expects to report a loss of £18 million before tax for the year ending 31st January 2012, a figure lower than many analysts had predicted.
Despite being thrown a lifeline, CEO Ian Shepherd conceded that ensuring the company's long-term survival will not be easy.
"We're pleased to reach agreement with our lenders, but should be under no illusions about the challenges in our market or the hard work that is required to deliver our strategic plan."
GAME isn't the first major UK entertainment retailer to be saved by its lenders this year, with HMV recently securing a bank rescue package. Tough times on the high street.
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Comments (58) Latest comment 4 months ago
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2) Reduce the focus on second-hand and give more shelf space to the items above.
3) Reduce the amount of GAME branded tat and focus on quality merchandise
4) Enjoy the increased revenue from, you know, people who want to buy games and not get ripped off.
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Unfortunately the reason the Game branded tat is tat is that it is very cheap to make. They can get much more profit from these than the can the quality items.
Appreciate that but the shelf space can be put to much better use, if they can get the cost of the games down.
My local GAME has entire walls full of Wii tat literally gathering dust. Waste of space.
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Just the 2? We've got 2 Games AND a GameStation. All within 2 minutes walk of each other. The town has less than 100,000 population.
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Same goes with the second hand. They should stop buying rubbish games off people to sell second hand so they just have the premium second hand. I really doubt the make much profit from all the 50p - £1.00 games they sale and it takes up so much room and seems to never sell anyway.
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Plus there is a CEX (which does cheaper 2nd hand games and pays the owner more for them) just down the road. That really screws up their main business strategy.
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They will not change and they will die.
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They really don't seem to have much new stock other than what came out in the last month. Anything older than that is pre-owned.
And if you want something a bit more specific (a fight stick, specialist controller or decent headset) they've got sod all.
If there was a grown up, specialist retailer near me I would go out of my way to shop there. Would be worth paying an extra 10%. Otherwise I'll have to go online where everything's just a click away. Brick and mortar retail stores for entertainment goods are fast becoming a niche market.
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I think itd be good if they stocked some retro stuff too.
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This is bad news for staff not good- seems the penny might have finally dropped and they will start to close down some of their multiple stores in the same town.
They have had too many and should have bitten the bullet and downsized when they bought EB let alone when they absorbed gamestation too.
If their management don't get that, then this deal will be shortlived and it will all be over by Easter.
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In the bigger stores sell things like 21" to 32" perfect for gaming study/bedroom tvs. Have a wider range of pc stuff. Not only new and old games but have peripherals as well so we can try out fancy gaming keyboards before we buy them. The PC gamer use to make a large part of your customers until you decided we weren't worth going after as you couldnt buy our pc games to sell on to others. Have a system in your store that allows you to check stock of an item and if you don't have it physically in your store than allow us to order it in to collect from store or home.
Finally have staff that are knowledgeable and good sales people. Dont badger your customers with a thousand offers at the till we know we can sell your games to you and if your staff know their stuff then they may suggest to a customer future titles they may like. Also rebrand gamestation so that there is consistency. And ditch the purple.
Secondly get rid of the extra stores far too many.
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1) Impossible to beat online prices. Reduce costs, so you mean lay off staff and cut staff load at any one time then?
2) You have no idea the profit that is made off a Used game in comparison to a New game.
3) Game branded merchandise has probably 80% margin inclusive. Also who in the hell would buy an Official Nintendo Wii AV cable for 29.99 sterling?
4) People have wanted to buy games and get ripped off by GAME for the last 15 years. People are stupid. Its just now with the economic collapse in the world that people are being a little more wary. In other words GAME don't need to change anything for people to come to them. The problem is profitability.
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Also, there are reasonably local shopping areas that won't have any. I'll have to drive 30mins to end up in a place with 3 stores. Bizarre.
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Eurogamer made a big song and dance about having a dedicated US correspondent, but all he seems to report on is the British high street. The man's probably never even seen a Tie Rack. Let alone a Freeman, Hardy & Willis.
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/joking!
Now all they have to do is give back 70% of their shop to new games and retrain their staff so they aren't forced to bug the hell out of you, hawk used goods, strategy guides, loyalty cards and god knows what else...
Edit: Not sure why I've been negged, I really was only joking! Ho hum
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You have 2 GAME's in one location because of the EB take over of GAME (and re-branding of), they tried to keep open all stores during this period.
And then, you have GAME and Gamestations so close together because of that takeover, and they wouldn't have wanted to close any stores then either. If I remember correctly, the outcome of the government looking into this acquisition was that both stores had to be run as separate businesses.
Also, I would , and do (occasionally) shop at GAME (I worked for EB/ GAME on and off for 7 years), but, I'm not a fan of Gamestation and am unlikely to ever shop there. And as you can see in these comments, many people are the opposite (would shop at GS but not GAME). So, knowing that, it makes sense to keep both 1 GAME and 1 Gamestation in the same location.
2 of the same though? It's time to probably close some stores - unfortunately.
Also, on the subject of pre-owned, when I worked there and before it was all automatic (pain in the arse to do it manually..), we HAD to mark up the price so we would be making AT LEAST 30% profit from the trade-in. All new games cost different, so obviously are making different profits from them.
I was told by a District Manager once, that GT3 cost GAME 50p per copy, and it was being sold for £15 or £20 (on platinum) - this being an exception, not a rule.
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There USED to be a small concession store in Selfridges, but I thought they closed that ages ago?
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"stop selling all the items that make money and instead stock 90% of the store with items where the margin has been run into the ground"
*slow clap*
Very very unlikely that Game will sacrifice it's international division as this isn't the source of the problem. The UK is the problem.
They are running 3 websites, and 2 brands, and as many point out, multiple stores of both brands all very close together in many places.
I don't think you need to be a genuis to figure what the easiest solution is....
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I think an interesting future for game shops is if they become a little more like the old arcades we had when I was younger.
I imagine them still stocking the games and hardware, but really compress the space. They seriously don't need an entire shelf for a single game, just a few empty boxes stacked in front of one another for each is good enough.
Most of the space I imagine to be taken up with game stations that either run free demos of games or for a fee (that a small percentage goes back to the publisher) allow you to play the full game for a set time / number of lives (may need games to be developed to allow this to be detected) or allow you to play a demo for free.
These stations would be able to be linked up for LAN sessions or on-line gaming.
The stations should also allow the players to upload / download saves onto memory cards or onto the cloud so they can continue at home or again in store at another time.
Most of these stations I imagine the shop owner can put any game they want on, but some could be specifically designed for a certain game.
The stores could also pay publishers for exclusive early access to demos which they could run in store to attract customers or even early access to full games for customers to pay to play in store.
This type of plan would also make stores a lot more secure should a digital only future take place. If it does, I'd imagine you could still purchase the games in store with cash rather than using a credit card on-line and the game would be activated on your console at home so that they could boot up and start downloading it whilst you are still in town and be ready for when you get home. If you haven't got broadband you should be able to get the game (linked to your profile) uploaded to a high capacity memory card which you can then install from when you get home.
If they do it right, with a good atmosphere, food and drinks allowed (and sold) and the playable games not being too expensive, these 'shops' could become profitable, digital safe and a social hub.
Sorry about that mass of text. It was really just a brain dump. I haven't thought about it heavily so might be complete bollocks. 8)
I'd be interested to know what other peoples thoughts on the future of high street stores are?
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No it's not that bizarre that it happened, but it is more than likely one of the things that wastes them a hell of a lot of money.
Yes some people prefer Game to GS and vice-versa, but many may more really don't give a shit and go to the one which has the game the cheapest.
I'm sure if one half of the business was shut down they would save loads of money and I doubt the government would mind as the situations have changed drastically since then and the acquisition was a long time ago now and Game have shown it wasn't done purely to remove Game Station.
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1) Impossible to beat online prices. Reduce costs, so you mean lay off staff and cut staff load at any one time then?
Close all secondary and tertiary GAME and Gamestation stores in each major town and city, leaving at most one GAME and one Gamestation. IMO, just have one GAME.
2) You have no idea the profit that is made off a Used game in comparison to a New game.
But here's what I do know. GAME are on the verge of collapse. Hows that second hand market gone for them?
Here's what I also know. I used to buy PC games regularly from GAME, 5-6 years ago. Perhaps even longer. I haven't bought a single game, PC or otherwise from their retail outlets since. Am I really the only one to have been turned away by their outrageous pricing?
3) Game branded merchandise has probably 80% margin inclusive. Also who in the hell would buy an Official Nintendo Wii AV cable for 29.99 sterling?
Yes, and GAME branded merchandise takes up valuable shelf space, which should be being used to bulk up the games selection. You know, the thing the company is named after?
And again, if the profit is so high on the reams of this stuff, why aren't they in a better financial position? That argument, that the second hand market and the second rate tat their trade on having such a great profit isn't holding any water any more. Is it.
4) People have wanted to buy games and get ripped off by GAME for the last 15 years. People are stupid. Its just now with the economic collapse in the world that people are being a little more wary. In other words GAME don't need to change anything for people to come to them. The problem is profitability.
They do need to change something. They need to give customers value for money.
Charging two quid less for second-hand copy of a new game, after paying out significantly less for it in the first place has turned people away. And don't forget, their ridiculous over-pricing of new games that often come in 5-15 quid over buying online.
GAME need to turn back into a game shop, first and foremost. Reduce the second-hand slice into a background item, put much more focus onto a bigger range of games across all formats (including PC, which has been reduced to a smattering of Train Simulator like games, occupying an entire floor to ceiling shelf) and reduce down massively on the tat.
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Your average game, that I had gone in there to look for = 0.
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Fred Dutton is actually British, he worked for Official Nintendo Magazine before he sodded off across the 'pond'.
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They will need to downsize and become more specialised but I'd say this gave management a good kick that it needed
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Thank fuck you don't run GAME! NEW GAMES DO NOT SELL. A new game will sell for a week, maybe two, then its tomorrows beer coaster. New games drop dramatically in price after a month, you expect GAME to have shelves lined with stuff noone will want in a month ? (im not talking about the odd two or three people wanting a game that came out six months ago) GAME agree a price for a new title, dont sell them all because people are reluctant to buy games at full RRP these days and have to sit and watch them go stale as the value drops and drops. Now that would be a poor business model.
A lot of you people are living in some dream world where their shop should be lined with mountains of the newest stuff on the off chance someone might buy one copy. The internet makes that impossible, also, as I said in the last story, people are coming in and swapping old old shit for new stuff, its money down the drain. Its a tough business thats only getting tougher as people dont want to spend and are internet savvy, as far as Im concerned GAME, and the whole of the high street is doomed. The only things that will survive are furniture and clothes shops.
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a lot of good points.
games never used to depreciate so quick......I'm sure......
what other businesses have the same issue?
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I feel the main reason people are reluctant to buy games at full price is that places such as Game having been pushing 2nd hand sales so much, so I guess the perceived drop in value of a game is actually their own fault.
I disagree with the amount the Game push 2nd hand over new, but do completely understand why they did and now why they seem stuck doing it, but they really need to be a little more selective over what they trade second hand. As I said before do they really make much profit on games that they are re-selling for 50p - £1.00? I doubt it, yet these games still take up 2 entire shelving units in my local store and the products on them never seem to sell. Surely that shelf space could be put to better use?
Also, maybe by reversing their policy of pushing 2nd hand quite so hard and shrinking the space taken up by it, over time peoples perceived value of games 'may' actually start to creep up again and surely that would be good for the entire industry / resale market.
Edit: Just re-read my post and want to make it clear that I agree that it is not sensible for them to replace 70% of 2nd hand with new. They need other items that are desired that currently aren't supplied. Maybe even a section selling things such as PC components (Graphics cards, memory, etc)?
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I've noticed this recently in my local HMV in that they only stock the big releases.
Also has anyone been able to get Resident Evil: Revelation on the highstreet as virtually every shop I go to doesn't have it in stock.
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I think the problem you have now is that there are just so many games getting released and a lot of the world is in economic turmoil so not only are people less willing to spend but can't afford to buy too many games so stuff gets missed out.
This also isn't to mention that in previous generations by this point we were already entering a new generation. App store games have in a way devalued games a bit when the cost of making many boxed games has increased dramatically.
I think that this isn't sustainable and that the videogames market is in for another crash.
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I left in November
Games we sold for 12.99 preownd you got 2.50 back do what's that a 400% mark up?
And new? If a new release was 40 we gave at most 24 trade for it from launch and tried to sell it at 37.99 so whats that almost 80% mark up?
They were so greedy with trade in not realising that if we gave more trade in value and sold for a bit less ...... Yes our margins would be smaller but we would see more trade and have happy customers!
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so do not see the point of them being saved because its only a matter of time, online is killing the high street slowly but surely
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If stores are to survive they need to allow customers to get their hands on things and try things out. If someone something out in store and likes it, then there is a good chance they will buy it there and then rather than waiting for an online order to be delivered.
The more things such as headphones, joypads and consoles available in Game for people to try out the better it will be for them.
If they can come up with a service that people will pay for in store too then that will help (such as my thought on making them more like arcades with pay per play stations and exclusive early released games).
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I'm old enough to remember there being no specialist games retailer, with WHSmith being the main point of sale for video games. Things change.
In GAMEs case it's important to remember they are more than just a bricks and mortar retailer. They have 20% off all UK online sales, which includes their Gameplay brand as well. They are one of Europe's biggest games retailer, so the loss of the company could have massive impact.
From GAMEs own figures the problem has been the failing value of games (losing 30% in 30 days : source MCV) which affects all retailers: online and offline. I think you can point the finger at GAME and CEX and say that epidemic of trading in games has contributed to the falling prices, but it's also a symptom of low confidence in the market and over-supply.
There is a place for a high street retailer but that might be concession areas in other retailers (like Dept Stores) as GAME used to do. GAME need to join-up their online and store businesses so they can accommodate both family/casual shoppers and the enthusiast gamer. I agree with the posts that critise the quality of their stock - that has been an issue. As has their property portfolio. A GAME with 1/3 of the current stores in bigger high streets and shopping centres with more focus on matching consumer demand will be successful.
And for all those who feel the high street is dead, you might like to look at Apple and John Lewis who are making money and opening new stores. They are the new wave of joined up retailers who are having big success. John Lewis in particular have brilliant web-order & collect facilities.
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Yeah, I tried to get Soulcalibur V from my local Gamestation yesterday morning, and after waiting 20 minutes in the queue, they then decided to tell me that they only had pre-order stock and no free copies. So, that display stand full of boxes is there to... do what, exactly?
Oh well, sod it, Grainger Games had it.