Analysts cool on impact of GAME closure

Industry analysts are questioning the notion that the collapse of The Game Group will have a significant impact on the industry.

The ailing high-street retailer announced that it was entering administration yesterday after weeks of rumour and speculation about its future. In the worst-case scenario, 13,000 employees will lose their jobs and 1300 stores across the globe will close - some stores and employees may remain after the pre-pack administration.

In terms of the industry, however, Nick Parker of Parker Consulting believes that the impact will be most keenly felt in the near future, though publishers will have taken appropriate long-term measures to cope with its absence.

"The impact will be felt significantly in the short term as all publishers will be reviewing their annual budgets which contain sales forecasts based on a known distribution platform in terms of store real estate and consumer populations," Parker told Gamesindustry International.

I don't think consumers are dependent on any single retailer to find games. If they want to play Mass Effect, then they will go somewhere else like Tesco to buy it

Colin Sebastian, analyst, RW Baird

"In the longer term, publishers will have negotiated alternative solutions with remaining retailers, and have a clearer picture of the shape of their distribution; this will have reduced the impact of the GAME closure quite considerably."

"For those with a new financial year starting in April, their budgeting process should be less disrupted than those who have months to run on their current financial year and will be making up for lost sales."

Ultimately, though, the ripples caused by GAME's absence from the high-street will be softened by some of the same forces that led to its downfall: the public no longer requires a single specialist retailer to buy products, and will likely turn to supermarkets, other retail chains like HMV, independent stores, or simply shop online.

"There could be some modest financial impact if there are unpaid bills and inventory that the publishers cannot collect, but I don't think consumers are dependent on any single retailer to find games," said RW Baird analyst Colin Sebastian.

"In other words, if they want to play Mass Effect, then they will go somewhere else like Tesco to buy it. On the margin, some of the less popular games might be modestly pinched by GAME closing, since those sales clerks won't be there to sell those products."

Wedbush Securities' Michael Pachter is rather more blunt, putting the impact of GAME's collapse at, "Zero."

"They have 5 per cent of the doors in Europe. People are obviously able to find games elsewhere."