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Game Group interview: is it really that bad?

Plummeting profits, 2012 and the road ahead.

There are a combined 610 Game and Gamestation shops selling video games across the UK. Do plummeting profits and share prices imply Game is collapsing?

Are we to believe that by November 2012 - a year away - things may be very different for the nation's dominant games outlet?

"No," Game's communications and investor relations director Simon Soffe told Eurogamer today.

"There might be a few less stores open - we're aiming for 550 by the end of 2013 - and I'd imagine there would be more digital cards and more digital products on display in the store, so you'll see those and you'll enjoy them.

"But in terms of the core," he added, "the backbone of the Game we all know and love - of course it's going to be there. That's what we do! And loads and loads of customers love us for doing it, so we're absolutely there."

"What we've got here, if you look back at the video game market over the last 15 years, you just see the market go up and down as new console launch and then mature. It is, in the parlance, a cyclical industry. And that's a situation we're in at the moment: we're towards the end of a particular cycle, in that we haven't had a new hardware launch for a long time.

"Plus, we're in a really deep consumer recession. So the statement last week was simply a statement on the market - it was nothing on our company. And anything you look at about our company tells you we're marching forwards and we're doing lots of exciting things for the first time ever and making sure our stores on the high street are the most connected stores there are, so that customers who are gaming in any number of channels can know that Game is behind them and Game will help them find their gaming wherever they need it."

That statement Game released revealed lowered full-year expectations for money earned. Share prices, which had been tumbling all year, plummeted.

"The key element of last week's announcement," explained Soffe, "was we were saying to the market the consumer isn't as confident, or as flush if you like, as they were last year.

"I don't think any of your readers need to be told that.

"The consumer isn't as confident, or as flush if you like, as they were last year. I don't think any of your readers need to be told that."

Simon Soffe, communications and investor relations director, Game Group

"It's just the state of the economy at the moment, but that is creating some lower expectations this Christmas for us.

Soffe reiterated that the company was "well positioned" to deal with "difficult" market conditions. "We've got banking facilities, we've got regenerating cash, we've got people in our stores, we've got some great plans for Christmas," he added.

He told Eurogamer he wasn't able to comment on stock valuation and share prices. "We never do," he said.

And while Game's shop closures - 37 this year, and a further 60 by the end of 2013 - look ominous on paper, Soffe explained that "in quite a few locations we've got two shops in the same town" - a by-product of Game's 2007 acquisition of Gamestation.

"So sometimes you shut an overlapping store," he said, "but the customers can then transfer. And we've said we're going to lower that number a bit more by the end of 2013. But still that leaves us with 550 stores in the UK, which more than covers all of consumers' needs in terms of being able to get to a local store, both in terms of buying new stuff and, of course, trading stuff in and buying pre-owned."

"When you look at if you're going to close a shop you look at how easy it is for customers to get to the next nearest one. And of course you want it to be as easy as possible."

One area Soffe singled as Game's strength was offering exclusive game 'edition' content, which is "fantastic for our customers and they clearly love that".

One area Game will improve on in 2012 is bonding Game shops with the relaunched Game website.

"All of the benefits of that new website will soon be available in our stores. Now, it takes a while to roll the technology out, but there will be that time when you can walk into a store and say, 'Have you got something from a year ago?' and it doesn't happen to have it because a couple of people bought it before you. Well the guy behind the counter can say, 'Well, I'll have it delivered to either here for you to pick up tomorrow, or we can get it posted to you or your work.'

"It's on trial at the moment," Soffe explained. "It does require quite a lot of technology, so it's on trial at the moment and is going to be rolled out through the stores next year."

In addition to that, Game will focus on offering "a lot more" digital Xbox Live and PlayStation Network content, and do "a lot more" with the Game/Gamestation reward cards.

"It's all about helping [our customers] on their journey to do all the different types of gaming they can do now," Soffe remarked, "because you know it's changing. And Game's got to be at the heart of it.