GAME UK has announced that they’ve had copies of Electronic Arts’s games, including Mass Effect 3, pulled from store shelves until further notice due to what they publicly called a “supply issue.” However, in a memo to employees, the company admitted that it was due to a lack of credit.
An internal memo was leaked to Eurogamer stating that the company was taking the stance because they were unable to gain “manageable” credit terms from EA, and that anyone who went in from the 1st to the 9th that had a valid preorder of Mass Effect 3 would get a £5 Reward Card/Elite Point credit. Other games affected by this policy include Tiger Woods PGA Tour ’13, FIFA Street ’13, and The Sims 3: Showtime.
This news comes after the company failed to stock Ubisoft’s PlayStation Vita titles on launch week, a situation that was recently rectified. The company has also had trouble with Namco and Nintendo by not stocking The Last Story, Tekken 3D Prime Edition, and Mario Party 9 on launch.
Yesterday, Ian Shepherd stated on his Twitter account that, while no one wins from such a situation, “as an industry (they) will pull through.”
GAME is currently trading at £4.80 ($7.66 USD) on the London Stock Exchange, down 15% on the Mass Effect 3 news.
Analysis: Disclosure: I do not live in the UK and don’t have intimate familiarity with their retail scene.
This isn’t just a publisher and a retailer having a disagreement. This is four different publishers within a month who this company is unable to stock major AAA releases for, including the most anticipated game of the first quarter of the year. Four publishers that a retailer who specializes in selling video games cannot or will not sell games for.
When you’re a video game retailer who can’t sell video games, what else do you have?
GAME has a unique problem that companies like GameStop don’t. GameStop has managed to buy into digital markets, and though there’s resistence to this, it’s worked out well for them so far. Meanwhile, while GameStop is also competing with companies like WalMart, Amazon, and digital distribution, GAME has to compete with many massive retailers, including Tesco (the second most profitable retail company in the world behind WalMart), as well as numerous online shops all throughout the EU. Unlike WalMart, these companies don’t play nice; they aggressively try to undercut each other on price. In fact, the strategy for these companies for the past couple of years—and still ongoing—has been to aggressively undercut games prices to bring customers into the store and then upsell them other items.
GAME can’t compete with that. Undercutting prices too much will cut into their already wafer-thin profit margins relating to new games stock. Focusing on used sales pisses off publishers and is becoming a losing strategy in the face of online passes. And digital is further undercutting them because they don’t have a hand in that market.
In short, vulgarity is called for to state GAME’s position: they’re fucked.
I see two choices for GAME: Either acquisition (GameStop comes to mind, and Matt Martin of GI.biz goes into this possibility), or administration. For those who don’t know what that is, think bankruptcy, only the government takes over your company and ruthlessly runs it to either make it palatable or sells it off. Administrators don’t care about your market; they go in, slash whatever needs to be slashed, and get out. If GAME goes into bankruptcy, I don’t see them coming out. The business climate in the UK is hostile to speciality shops, especially with major High Street retailers taking direct aim at that specialty. For Americans, imagine if you called your city’s retail centre “High Street,” in every city. Ian Shepherd is putting on a brave face, but he’s only half right: the industry will move on, but it won’t take GAME with it.
Will that matter? I’ll let Ben Paddon take it from here:
— GameJournos (@GameJournos) March 1, 2012