Game's troubles intensify following plummeting shares as gamers turn to online
Game has issued a profit warning today (23 December) following worse than expected sales in the lead up to Christmas, adding to months of underperformance which the retailer’s marketing has struggled to combat in the face of cheaper online rivals.
Shares in Game Digital fell by as much as 40 per cent as a result of a faster than expected decline in sales of second-hand games and last generation of consoles- PS3 and Xbox 360. This was coupled with its underwhelming sales of the newer consoles - PS4 and Xbox One - which were unable to offset the losses.
Game’s UK sales for the 21 weeks to 19 December fell 11.4 per cent to £353.4m leading the company’s chief executive, Martyn Gibbs, to admit that “the trading conditions in the UK video games market have been challenging".
The fall in shares illustrates Game’s inability to compete with online retailers like Amazon where the PS4 and Xbox One have been hugely popular. Since its November 2013 launch Sony’s latest console has so far sold over 30 million units in the UK, dwarfing PS3’s opening two year sale figures and even surpassing the immensely successful PS2 over the same time frame.
“The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market.” Said Gibbs.
He added that “the extent of the impact of this switchover has only become apparent in December which has been compounded by lower year-on year-high street and shopping centre footfall".
As was the case with high street retailers this year, Game suffered reduced customer numbers as a result of many turning their attention to online shopping. On Black Friday Amazon, which saw its busiest UK day ever, was selling PS4’s for £199.99 and Xbox One’s for £224.99, significantly cheaper than what Game was able to offer. Game will have more hurdles to overcome next year as Amazon continues to roll out its one-hour delivery service across the UK which is likely to further hamper its future marketing plans.