Game Group, in the wake of closing around half of its high-street retail stores, is heading for collapse as the company is set to enter administration.
The gaming giant, which sells platform and PC games to consoles, suspended shares on the London Stock Exchange this morning after it said there was “no equity value” left in the business.
Game acquired GameStation in 2007, bolstering its position on the UK’s high street. Now with 1,300 stores across the continent, including 600 in the UK, it could soon lose its title as Europe’s largest gaming retailer.
Piers Harding-Rolls, head of games at IHS Screen Digest, speaking to the BBC, said that with hindsight Game punched above its weight.
Amidst a world of Amazon, supermarkets, in-console gaming stores and the great recession of 2008–2010, Game failed to adapt its business model and compete with its competitors.
Game’s decline was initially felt in February when it failed to acquire key game titles, such as Electronic Arts’ Mass Effect 3 and Nintendo’s Mario Party 9.
While Game store staff will continue to operate in its remaining 300 stores, its 10,000 staff face being laid off. PricewaterhouseCoopers (PwC) is expected to be appointed as the company’s administrator, but no timeline has been planned out.
In 2010, Game made £90 million ($142m) profit. The company needs to pay a £21 million ($33m) rent bill before Sunday, and a further £12 million ($19m) to pay its staff, the Guardian reports. It also faces a £10 million ($16m) tax bill that lines the pockets of the Treasury, and a further £40 million ($64m) to its supplies.
While talks of a takeover from a rival firm are rumbling, any potential investor would have to pay up to £100 million ($160m) for the pleasure of buying the financially-crippled firm.
Image source: Mykl Roventine/Flickr.
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